A new LIMRA study breaks down advisory client types
according to their emotional responses to market moves, with the goal of
helping advisers better tailor portfolio solutions for different client
segments. Advisers can help their more affluent clients better achieve their
retirement goals by applying findings of a new LIMRA study, that organization
says.
According to LIMRA Retirement Institute research,
pre-retirees and retirees fall into one of three categories based on their
emotional attitude toward their savings. By understanding these “money
mindsets,” advisers can recommend the portfolio solutions most appropriate for
each client, the institute says.
LIMRA’s research group quizzed 2,000 pre-retirees and
retirees, aged 50 through 75, who own a minimum $100,000 in household assets,
to learn what income product features they value most. Cluster analysis of
their answers revealed the three different mindsets but also underscored the
importance of looking beyond the common demographic profile, wealth level and
lifestyle goals that make these clients appear alike. A client’s attitudes are
the best predictor of his portfolio solution preference, the study said.
First, LIMRA identifies a class of “guarantee seekers,” who
want peace of mind that their income will last. Having a floor of lifetime
income, they would convert even more of their savings into a pension-like
contractual guarantee and prefer that their income remain stable and
predictable over pursuing its maximum growth potential. This group is least
likely to own individual stocks, mutual funds or corporate municipal bonds and
most likely to own deferred and immediate annuities, the research finds.
Next are the “estate planners,” a more financially savvy
group that wants to maximize their investments, even if that means weathering
some volatility. They want control to make decisions and adjust their income
and spending as life conditions change. They are most likely to hold individual
stocks, mutual funds and exchange-traded funds (ETFs), LIMRA finds.
Last, LIMRA identifies the “asset protectors,” often
long-time savers, who fear running out of money in retirement and will live off
their dividends and interest from savings but not touch their principal. They
want to hedge against unexpected future expenses, and invest the most
conservatively of the groups, often through annuities and government
bonds/Treasury notes.
The Money Mindset quiz can be found here,
LIMRA notes, and can help advisers better understand a given client or group of
clients.
Click
here to access the full article on PLANADVISER.com