Retirement Reality Check: Provide Brutal Honesty, Realistic Guidance
March 9, 2009
Over the past year, as the S&P 500 has hit 1997 levels, the U.S. gross domestic product shrank 6.2% in the fourth quarter of 2008 and investors' retirement savings have been severed in half, we have hailed the resilience of investors' faith in the markets. Our customers have continued to believe in the soundness of investing in mutual funds, the premise of long-term investing and modern portfolio theory, and the overall wisdom of saving for retirement.
Thirsting for Advice
It is remarkable, frankly, how our customers, rather than blame investment professionals, are now seeking honest advice from reputable asset management firms and financial advisers more so than ever.
That's why now is the time for no-nonsense, practical guidance on how investors can best equip themselves for retirement. Those mutual fund companies that can work one-on-one with their customers, or through trusted financial intermediaries, to help them confront and plan for all of the basic needs they will have in retirement, will be the ones to keep their trust in this recession and over the coming years-even as the economy turns around.
That may mean walking customers anew through a risk tolerance test that may suggest moving more of their assets out of equity funds and into fixed income and money market funds, or even annuities. That may mean asking them to plan for a more humble retirement that does not include trips or a lasting legacy.
It should include planning for longevity and, accordingly, assisted living and long-term care. It could even encompass help on part-time jobs.
A Decent Living
The business of planning for retirement can no longer be conducted through a rose-colored marketing lens that features a couple in their 60s frolicking along the beach, taking in a round of golf or sailing off on a luxury liner. The business of planning for retirement has, at its essence, always been about helping people maintain a decent, stable standard of living throughout their older years. Those firms that help investors realistically save and navigate the current market conditions will be the new winners.
(c) 2009 Money Management Executive and SourceMedia, Inc. All Rights Reserved.