Retirement Income and Distribution Planning

February 26, 2008

Abstract

New York, NY, USA February 26, 2008

Beginning in 2008, 73 million baby boomers will start to retire or qualify for Social Security, putting US$19 trillion in assets, $12 trillion of which are currently in retirement accounts, into liquidation mode. If firms are not ready to advise on the distribution phase and build an appropriate business model that rewards financial advisors while creating a good value proposition for the clients, they could see a considerable outflow of assets.

Retirement distribution and income planning has been described as "the missing link of financial planning" for households in the developed world. Until the last year or so, financial planning had been exclusively focused on the accumulation phase, often leaving a void in clients’ financial plans when it came to the important decisions that investors had to make as they approached retirement. Many aspects of retirement, from lack of tools to advisor compensation, conspire to work against baby boomers, who thought they had accumulated enough assets to enjoy a comfortable transition.

In a new report, , Celent discusses the underlying factors of the post-accumulation world, the difficult decisions involved, and the tools available to advisors as they guide clients in planning a successful retirement. New tools have been developed, but more are needed to handle the many uncertainties that may occur over the distribution phase, a period of time as long or longer than the accumulation phase in which people saved and invested in building a pool of assets. " constitutes the Holy Grail for North America’s mass affluent and high net worth client segments," according to Robert J. Ellis, senior analyst with Celent’s Wealth Management practice and author of the report. "The ultra-high net worth do not need to plan, and the mass market segments often don’t have enough assets to make planning worthwhile."

Ellis adds, "For target groups, mistakes in the post-accumulation phase can have a dramatic impact on one’s retirement lifestyle. There is simply no room for error."

The report offers a look at the nature of and examines its significance in terms of both individual clients and society as a whole. The report also discusses why the distribution phase is so different from the accumulation phase.

The report goes on to assess a variety of planning software providers’ offerings for handling the post-accumulation planning phase, including systems from AdviceAmerica, ASI, CGI, EISI, eMoney Advisor, Fidelity, FundQuest, Impact Technologies, Money Tree, NorthStar, PlanPlus, PIE, and Windham Capital. These planning systems are examined in a high level of detail, then compared utilizing Celent’s ABCD Vendor View. This analysis shows at a glance the relative position of vendors based on Advanced Technology, Breadth of Functionality, Customer Base (number of paying clients), and Depth of Client Services.

Additionally, the report analyzes unique tools from smaller vendors, as well as some types of tools that are generally less well known. Lastly, the report makes some projections for the future of and reaches some general conclusions about the space.

The report is 78 pages and contains 37 figures and five tables. Many of the figures are screen shots of different existing and developing post-accumulation financial planning systems. These screen shots are selected to highlight tools that advisors need to help their clients plan their post-accumulation retirement phase and appropriate distribution of their assets.

The report’s table of contents is available online. 

Members of Celent's Retail Securities & Investments research service can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.  

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

New York, NY, USA February 26, 2008

Executive Summary 04
Introduction 06
Why Is Important? 08
How Is Planning for the Post-Accumulation Phase Different? 13
Tools for Retirement Planning and Distribution Planning 18
Vendor Evaluations and  ABCD Analysis 69
Future Trends 75
Conclusions 78

 

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