Retirement Spending Plans Should Follow Pension Strategy: Russell

"While generating sustainable retirement income for their clients is already a challenge for advisors, the eventual rise in interest rates could certainly further impact the financial security of those in or near retirement," he said. "With the Fed's quantitative easing measures drawing to a close and the American economy back on line, there could be momentous implications for retirees once interest rates rise."

The Outlook also asked advisors how they're addressing their clients' risk capacity. Risk questionnaires are useful in the accumulation phase, according to Russell, when advisors are trying to determine how much risk the client can stomach. However, in retirement, it's important to know how much risk their assets can withstand before their significantly impacted.

Although the majority of advisors agreed there are important benefits to yield-focused strategies—their clients understand them, they're sustainable and they protect the clients' initial investments—30% said they avoid them. Among the reasons they gave for eschewing yield-focused strategies is that current yields are not high enough to meet clients' future needs. Furthermore, because they change over time, it's hard to generate a predictable income, and the risk-return trade-off is too high.

"We understand why clients ask for yield-seeking strategies – they are simple and clients like the idea of preserving principal while living off dividends and interest. It seems like a safe plan to eat the eggs but spare the chicken," Greenshields said. "However, in this low yield environment, what seems simple may end up increasing risk. If income isn't sufficient, clients have to cut back expense or chase yield."

Greenshields urged advisors to take a more anyaltical, mathematical approach to determining spending plans for clients than falling back on old standards like the 4% rule.

"Reading between the lines of the research, we believe that advisors and their clients need tools that help them think and talk about how the math and science required translate into real life decisions about spending and investing," he said.

Russell recently launched the Retirement Lifestyle Solution, which provides advisors with three model strategies for different funded ratios and risk capacities. The portfolios are globally diversified with bonds, alts and an equity allocation that ranges from 20% to 70%.

"Many baby boomers are reaching the age of 65 every day and looking for help with a difficult question: 'Will I outlive my money?' We believe that a retired investor's asset allocation should adapt through time as their situation changes and as their assets grow or shrink relative to their future spending," Greenshields said.