Michael Doshier is the vice president of retirement marketing at Franklin Templeton Investments. SmartBrief caught up with Mr. Doshier following the IRI Vision Annual Meeting earlier this week in Chicago and asked him to share his insight on the ever-evolving landscape of retirement planning.
What trends have you seen develop in the retirement landscape during the past year?
We have seen an increased awareness, among both consumers and financial advisors that preparing for retirement, and developing a strategy for sustainable income in retirement, is different than investing for accumulation. It requires a different approach to managing investments, measuring outcomes and, critically, engaging with clients. Clients are realizing these are no longer just numbers on a statement – they are how the mortgage gets paid, or healthcare, or seeing the grand-kids.
We have also seen that consumers are thinking about this, worrying about it, even, much earlier than previously understood. Our annual survey shows people as far as 15 years from retirement age have an increased level of anxiety related to their retirement income planning. This leads to another trend – as consumers grow concerned, they look for advisors who can help them develop and implement a retirement income plan, so we are seeing an increase in the numbers of advisors who are looking for thought leadership as well as practical, tactical help in that area.
What are some of the things advisors are doing to adjust to those trends?
They are looking for help, in a couple of ways – for those whose firms don’t already have a retirement income planning process in place, they are looking for guidance on effectively building simple plans that their clients will understand and follow. But one of the bigger developments is that they are looking for help in changing their investment approach. Volatility, for instance, has a much more profound effect with portfolios that are in income mode. So they are beginning to re-evaluate their clients’ portfolios with an eye to sustainability of income through all market cycles. When it comes to mutual funds, they are looking for guidance on withdrawal strategies, and building portfolios optimized for income. Of course, they are also looking at product mixes, such as how much of a portfolio to put into guaranteed products like variable annuities, and how much in mutual funds, what types of funds to use, etc.
What is the biggest challenge advisors face in communicating strategies with clients?
One major challenge is the fact that the retirement conversation is an emotional one. It isn’t just numbers on a statement, it is what clients have been working towards for most of their lives. We have seen a rise in advisors who are looking for guidance in how to connect these goals and concerns to specific strategies that are both practical as well as aspirational, and do it in a way that a client connects with and feels confident in.
How is technology changing the way consumers prepare for retirement?
Just like in most other areas of life, consumers have access to staggering amounts of information, which is great, but can also be overwhelming, and difficult to make personal. We are focused on using technology to reach more people with education, and to get them engaged in the process. Social Media has been very helpful there, as have our blogs. It is helping to shape the conversation. We think it also helps the advisor to focus on the deeper, relationship-oriented conversation. If consumers already have some technical knowledge, or have at least started asking educated questions, the advisor is that much further along in helping them figure out what is right for them. Our message remains for consumers to use the calculators, apps, and web sites for education and to get started, but work with an advisor to make and implement your own plan, which is unique to you.
What are some of your key takeaways from the IRI Vision Annual Meeting?
We had a number of people attend the IRI Vision Annual Meeting this year, and two key concepts keep coming up as we talk about it: leadership and innovation.
We are at a critical point in our nation’s history, and need bold leadership, both in politics and in business, to not only make some tough decisions, but to look for new solutions. Whether talking about Social Security, Medicare, or retirement savings, there are a lot of good ideas on the table, we need leaders who are ready to roll up their sleeves to make things work, and we as an industry need to lead in finding and testing solutions. That leads to the second takeaway, innovation.
This conference had a strong focus on innovation, both in the formal agenda, but also in discussions among attendees. Whether it was new ways to manage risk, bring products to market or communicate better with our clients – nothing was off the table.