Are Advisors Underestimating Their Clients' Retirement Anxiety?

To say investors are anxious about their personal finances in today's turbulent economic environment may be something of an understatement. It would be more accurate to say they're downright terrified, according to survey results released Monday by Nationwide.

Fifty-one percent of investors who are not retired expressed high stress about their long-term and post-retirement financial futures, and 43% said they check their retirement accounts more than three times a week.

This habit is more common among women than men, even though men are slightly more likely to say they are terrified about their long-term financial futures than women.

"As the holiday season approaches, it may be best to take a break from obsessively checking retirement balances," Eric Henderson, president of Nationwide Annuity, said in a statement. "This can create self-induced anxiety which can lead to short-sighted, emotional decisions."

A better approach, Henderson said, is to have a conversation with an advisor or financial professional and establish a long-term plan, or revisit the plan that is already in place to ensure it remains aligned with one's goals in the current environment.

The survey found that although male respondents were marginally more likely than female ones to say they are nervous about their post-retirement financial future, women were twice as likely to say their retirement expectations will change drastically if the U.S. economy enters a significant downturn.

Women were somewhat likelier than men to say that they are taking steps to adjust their retirement portfolio in light of recent market volatility. Nationwide said this proactive preparation may help explain why 41% of women agreed that they feel confident in their financial plan despite market volatility, compared with just 11% of men who expressed confidence.

The Harris Poll conducted the survey in the U.S. from July 27 to Aug. 16 among 506 financial advisors and 521 adult investors with $10,000 or more of investable assets.

Investors Rethink Retirement Timing

Investors grappling with today's macroeconomic stressors are facing more uncertainty about when they will be able to retire. The survey found that just 2% of men with near-term retirement plans and 1% of women plan to leave the workforce within the next five years.

Thirty-eight percent of women and 26% of men said the threat of a recession and high inflation have prompted them to rethink when they can retire.

Investors have varying degrees of confidence in their retirement plans, according to the survey results. Forty-three percent of men said they are very nervous about spending down their nest egg in the current market environment, compared with 38% of their female counterparts.

A much bigger difference appeared among the 24% of all investors preparing for retirement who said they currently have enough guaranteed income in their retirement portfolio to weather a recession. Thirty-eight percent of non-retired women but only 13% of non-retired men said they have enough income in their retirement portfolio to survive a downturn.

Advisors Could Be Underestimating Clients' Stress

Among the advisors and financial professionals surveyed, 34% said their pre-retiree and recently retired clients are canceling or delaying retirement. Only 17% of advisors reported that most of this group of clients have contingency plans for a major market downturn.

However, only 23% of advisors described their pre- and recently retired clients as "very anxious" about the current market environment, despite this group's apparent lack of preparation.

Henderson said the survey results suggest that some advisors may be underestimating the level of anxiety their clients are living through. "Advisors and financial professionals should seize the opportunity to engage with their clients to reinforce the importance of sticking to their long-term plan," he said.

He said advisors could also address client anxiety about forces beyond their control by helping them understand the value of protection solutions, such as annuities, that can guarantee income in retirement and guard against market volatility.