Study calls for stronger adviser education on retirement planning

May 31, 2012

Consumers should be very picking when selecting a financial planner to work with.

A joint study conducted by InvestmentNews and The American College discovered a need for stronger adviser education to improve the retirement income planning industry. The study showed 93 percent of consumers feel financial advisers could benefit from further education in retirement income planning to better guide consumers as they make decisions on financial products such as life insurance and annuities.

This past year, the first wave of baby boomers reached retirement age. This commanding generation had made a significant impact on many aspects of American culture, and as they retire, they will affect the financial industry, specifically in the field of retirement planning. As the large population of aging Americans seek guidance on retirement choices and financial products available to them, financial planners must be able to navigate the complexities facing consumers who want a guaranteed stream or source of income after they are done working. Thus, consumers should search for a well-educated and experienced planner when seeking advice.

The study revealed one of the biggest challenges for advisers who lack sufficient education is having a clear, systematic approach with retirement planning, and selecting the right strategies and products to generate a lifetime income. Many consumers are worried about outliving their retirement savings due to increased costs of healthcare and more Americans living well into their 90s. Thus, advisers should understand other options, like life insurance, to help alleviate these costs and make retirement affordable and comfortable.

The data found 68 percent of consumers believe there is a need for a serious professional designation to retirement planning, and 69 percent believe the certification would build more effective and trusting relationships with investing consumers.

"With market conditions, and clients' retirement needs and demands more challenging to manage than ever before, income planning skills will be a distinguishing factor for all financial advisers over the next decade," said Mark Bruno, director of online content and data at InvestmentNews.

If there was a professional certification program for retirement planning, many people throughout the country would have financial counselors they could seek out for their unique retirement needs. Non-U.S. citizens and U.S. residents with foreign assets face a set of retirement challenges and needs the majority of Americans are unfamiliar with. Many of these residents have assets in foreign banks, as well as overseas relatives who may be the beneficiaries of life insurance policies or other assets. Thus, professional retirement income planners could help these residents sort out their financial plans so no loved ones are placed in financial hardship.

"Protecting your wealth and your family as an immigrant is a unique, complex process that requires consistent surveying of the landscape for changes in estate and tax planning," said John McManus, trusts and estates attorney.

For example, a non-U.S. resident with taxable estates should consider purchasing life insurance through an irrevocable life insurance trust to provide liquidity for surviving loved ones and spouses from the death benefit. This move would eliminate the estate tax on the first spouse's death when the beneficiary is awarded the assets, or when the beneficiary dies.

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