Data and Research May 1, 2018

Investors Want Adviser Discussions to Expand Beyond Risk to Retirement Income

While 80% of investors say their adviser discusses risk tolerance, only 50% say they bring up the subject of guaranteed lifetime income.

Reported by

Investors are interested in discussing how they can protect themselves in times of market volatility, but they are also interested in discussing guaranteed retirement income, AXA found in a survey of more than 1,000 individuals and 300 financial professionals.

Seventy-nine percent of individuals are interested in learning about an option that offers principal protection and the potential for growth. However, only 50% of people say their adviser has discussed guaranteed lifetime income, whereas 80% say they have discussed risk tolerance.

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When their financial professional brings up the topic of lifetime income, 56% of individuals rate them highly. When they do not, only 34% do so.

Additionally, the survey found that 66% of investors prefer investments with a certain return, 83% say that not losing principal is extremely or very important, 73% are concerned that their income will not last throughout retirement, and 92% expect inflation to negatively impact their retirement expenses.

“Financial professionals play a key role in supporting their clients in reaching their retirement goals,” says Kevin Kennedy, head of the individual retirement business at AXA U.S. “Clients want their financial professionals to move beyond the standard risk tolerance questionnaire and engage them in a thorough discussion of options, including income planning for health care expenses.”

The research also found that nearly 60% of individuals say they are only somewhat or not at all well prepared for a major health event and only 20% say their adviser has helped them estimate retirement health care costs.

“This research underscores financial professionals’ pivotal role in helping retirement savers to gain comfort around their ability to withstand market volatility and the potential role of high quality annuity products in helping to achieve financial security,” says Catherine Weatherford, president and CEO of the Insured Retirement Institute. “In return, financial professionals will be rewarded with higher client satisfaction.”

Greenwald & Associates conducted the survey in the fourth quarter of last year.

Ask the Experts May 1, 2018

(b)lines Ask the Experts – Amending Retirement Plans for Final Disability Regulations

“I administer an Employee Retirement Income Security Act (ERISA) 403(b) retirement plan, and our plan provides for early retirement distributions in the event of disability. I was just informed that final disability regulations took effect April 1st, but I know that we did not amend our plan to reflect these new regulations. Should I panic?”
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Stacey Bradford, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer:

 

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You should probably not panic, as an amendment is not required for most retirement plans, but you should confirm with appropriate counsel that no amendment was necessary.

 

There were indeed final regulations that were issued by the Department of Labor (DOL) regarding claims procedures for plans providing disability benefits, and such regulations did become effective on April 1st. However, the good news for you and other retirement plan sponsors is that the final regulations only impact retirement plans where a plan fiduciary has the discretion to determine whether or not a participant is disabled. In the Experts’ experience, most retirement plan disability definitions rely strictly on a disability determination by an outside party, such as the Social Security Administration, NOT a plan fiduciary.

 

Thus, if your plan’s definition of disability is like most, a plan amendment would not have been required by the April 1st deadline, though, again, you should check with counsel with specific expertise in this area to make certain that no deadline was missed. And, even if it turns out that an amendment is required, the Experts again suggest that you do not panic, as there is a special remedial amendment period for 403(b) plans that may provide some flexibility to amend the plan.

 

 

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

 

Do YOU have a question for the Experts? If so, we would love to hear from you! Simply forward your question to Rebecca.Moore@strategic-i.com with Subject: Ask the Experts, and the Experts will do their best to answer your question in a future Ask the Experts column.

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