Page 29 - Investment Advisor January/February 2022

‘There will be growing happy in the present and help them cre-
ate resiliency for whatever life throws
recognition that retirees have their way.”
Milevsky points out that due to
multiple viable retirement the pandemic, and high death toll at
advanced ages, the “raison d’etre” of
styles, and advisors able to annuities has lost some of its punch and
efficacy.” He says that “the discussion of
provide strategies that can old-age will have [to] transition from the
resonate with more than fear of excess longevity towards a more
balanced view of horizon uncertainty,
one retirement style will be and how different types of insurance
products can help with the financial cost
better positioned to serve of that uncertainty.”
However, Blanchett sees an increased
more clients.’ interest in lifetime protected/guaran-
teed income, especially due to uncertain
— Wade Pfau, American College markets and life spans. A trend started
of Financial Services in 2021 with more products like this
he sees continuing, and advisors “will
increasingly get into the fold in terms of
different models that are a lot more actively thinking about and recommending these products to
granular for the variety of clients. “As the retirees as part of a comprehensive retirement plan.”
cost of these more personalized options
fall, other packaged products are going More mergers between wealth managers
to become less attractive,” he says. 7 and 401(k) advisors.
Convergence, or the large crossover where retirement firms
Retirement will change. have been acquiring wealth firms and vice versa, has been
5 Piggybacking on the changes in client models is the growing. Where there was a lack of retirement advice in
vision that retirement itself will have different aspects as well. defined contribution plans, that is changing. Advisors on the
Wade Pfau, professor of retirement income at the American wealth side have historically tried to get that DC money to
College of Financial Services, noted that, “There will be grow- roll over while advisors on the plan side want it to stay. Due to
ing recognition that retirees have multiple viable retirement this M&A crossover, however, “more advisors are playing both
styles, and advisors able to provide strategies that can resonate sides of that coin,” Michael Doshier, lead retirement strategist
with more than one retirement style will be better positioned of T. Rowe Price, noted recently.
to serve more clients.” Although the overlap of the two isn’t “as much as you
Milevsky adds that as the pandemic continues to hamper would really think,” believes Hopkins, “if you’re an advisor,
travel and entertainment, spending too is hampered. and you haven’t looked at the offerings [of 401(k) plans],
“Financial advisors should prepare for clients who are that is something you should do because they are better than
in the retirement income phase but are slowing down they’ve ever been.”
their decumulation rate,” he said. “That excess money
will either return to the original portfolio and nest egg RMDs may jolt retirees.
that hatched it or will be distributed [to heirs] as early 8 The last required minimum distributions were in place
bequests. Either way, get ready for old money in a different in 2019, and RMDs have been put on hold during the pan-
kind of motion.” demic. Due to the legislation, those who turned age 72 by July
1, 2021 must take their RMD by April 1, 2022.
The COVID hangover will continue to This could cause some concerns for those who haven’t had
6 impact planning. to take an RMD before, Hopkins notes. Further, the Secure
“COVID put people on notice that life is precarious and Act 2.0, which he sees passing this year, will scale the age back
unpredictable,” McClanahan said. “Financial planning has to 75, which will cause some confusion on the due date and
focused too much on predicting an unpredictable future at age requirements. He adds, however, that by the time 80% of
the cost of not maximizing joy in life in the present. We’ll people reach age 72, they will have to take out at least the RMD
see financial planning morph to help make sure people are “just to make it through retirement.”

JANUARY/FEBRUARY 2022 INVESTMENT ADVISOR 27