Even mid-level investors don’t have a formal retirement plan

According to The Cerulli Edge-Retirement Edition, 3Q Issue, most households with between $100,000 and $500,000 in household investable assets for retirement have not developed a formal retirement income plan or engaged with a financial advisor. 

"This finding is a significant concern because that means some investors are entering retirement without an income plan for the next 20 plus years of their lives. In addition, we found that many retirees in the $100,000 to $500,000 asset range are not working with a financial advisor," explains Tom Modestino, associate director at Cerulli Associates. 

"The silver lining is that this represents a great opportunity for asset managers, broker/dealers, and retirement plan providers to increase retirement income planning education, guidance many investors will welcome. This lack of planning can result in rollover opportunities after retirement," said Alessandra Hobler, an analyst at Cerulli. 

Interestingly, Cerulli points out that the few investors who are working with a financial advisor were not likely to move or switch their assets to another advisor.  

Of those households with less than $500,000 in investable assets, concerns are more strongly centered on cash flow. Asset managers may develop relationships with these households by offering budgeting tools and educational information on Social Security. 

Cerulli also found that investors with between $500,000 and $2 million in investable assets were more prepared for retirement and many were working with an advisor. And, investors who fell within this income range were found to be more likely to switch assets to another advisor. This is likely due to the fact that once these investors enter retirement they look for an advisor with strong, established retirement income planning services. 

"Preparing for retirement can be a difficult task. Investors spend most of their lives saving and accumulating assets in order to generate future retirement income," said Hobler.  

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