Risk-averse advisors may be losing opportunities to grow
their clients’ portfolios, Allianz Life found in its inaugural “RIA Retirement
Risk Review Study.”
Nine out of 10
financial advisors in a survey of 289 advisors (or 88%) said it was more
important to effectively manage risk in their clients’ portfolios than it was
to have the highest return on investment. Seventy-nine percent said that their
clients at or near retirement are concerned about outliving their savings.
The closer in age a
client was to retirement, the more wary the advisor was in recommending
high-risk/high-reward financial products, the study found.
“Nearly 60% of
advisors note that clients need to accumulate more money in order to have a
financially secure retirement, but are too close to retirement to take on the
risk of investing in high-risk/high-reward financial products,” Allianz said in
a press release announcing the study.
More than half of
advisors in the survey (53%) said that clients 10 years away from retirement or
closer feared a substantial loss of money in their retirement accounts in the
event of a stock market drop.
The respondents also
said that their clients 10 years or more from retirement have the highest
portfolio risk in terms of high-equity valuations, taxes and inflation. In
contrast, the greatest portfolio risks to those in or nearing retirement are
longevity risk and low interest rates.
Four out of 10
advisors participating in the study said they were considering new risk
management solutions for 2021. Of those advisors, 52% said they would recommend
low volatility ETFs to their clients; 44% said they would recommend buffered
outcome ETFs (which add a degree of downside protection); and 37% may recommend
annuities.
Heather Kelly,
senior vice president of advisory and strategic accounts at Allianz Life, said
in the news release announcing the study’s findings that financial advisors
were grappling with a difficult challenge.
“First and foremost,
their priority is to protect their clients’ assets,” she said. “However,
advisors also need to ensure clients are generating enough income to enjoy
their golden years without financial worries.”
Allianz Life
Insurance Company of North America is headquartered in Golden Valley, Minn.,
and is a subsidiary of Allianz SE, a global financial services company based in
Munich, Germany.
Allianz Life and
Zeldis Research Associated Inc., based in Pennington, N.J., conducted the
online survey in February and March 2021 with a national sample of 289
financial advisors. Respondents included investment advisory representatives
(IARs) and hybrid advisors with five years or more of experience, managing at
least $25 million or more in client assets, and who make investment product
recommendations.
Click
here for the original
article.