RIA Rising

Long odds on middle-class retirement planning

Will the chasm between the retirement planning needs of middle-income Americans and the financial advisor industry ever be narrowed? A new report released today by the Insured Retirement Institute doesn’t hold out much hope.

“Middle Income Boomers and Retirement” is based in part on telephone interviews of 800 Americans age 50 to 65, conducted in February by Woelfel Research. It defines the middle income demographic as people earning $30,00 to $74,000. It’s not a group with deep pockets; median retirement account holdings ranged from $11,000 to $35,000, and median stock holdings ranged from $9,000 to $13,000, the report says. Most can expect an inheritance that would increase their assets by about 30 percent of their current wealth, but that still leaves their wealth at a level that falls short of the interest of most advisors, who often insist on minimum investable assets of $250,000 or more.

The report noted an odd disconnect among boomers. By wide margins, they have concerns about their ability to plan for retirement—48 percent question their knowledge of investing, and 49 percent haven’t tried to determine how much they’ll need for a comfortable retirement. Yet the biggest reason given for not using a financial planner was, “I don’t need to,” at 19 percent. (“Can do it myself” ties for second place at 17 percent.)

“The opportunities for advisors within the middle-income market are significant, and advisors would be remiss in discounting this large segment of the population,” the report states, without saying exactly what those significant opportunities are. In fact, many practice management consultants are recommending that advisors shed their lower-asset clients in order to operate more profitably by focusing on wealthier accounts. No question Middle America needs a hand with planning its retirement, but it looks as if their choices will involve embracing the growing discount trading platforms of the world—and being forced to rely on their own limited judgments.

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