Retiring US Baby Boomers Cause Wealth Advice Shift - Report

Tom Burroughes

17 March 2008

The number of US financial advisors will decline in the short run because they will struggle to find work as an ageing Baby Boom generation focuses on living on their assets and less on accumulating wealth in the first place, a report by consultants Celent, a division of Oliver Wyman, predicts. As citizens begin to retire, new advisors coming into the market are likely to focus on chasing after relatively high margin business available from high net worth and ultra-HNW individuals, instead of prospecting in the mass market, says the Retirement Income and Distribution Planning report author Robert Ellis. Even so, within three years, the amount of retirement income and distribution planning technology and advisory support will rival the established wealth-accumulation business, he said. In 10 years' time, this part of the financial planning sector will be more important than the wealth accumulation part. The report, while focusing on the US market, has lessons for other mature industrialised nations such as the UK, France and Japan, which are wrestling with the impact of a large cohort of retirees who may live at least another 30 years or more, Mr Ellis told WealthBriefing. A number of companies already provide investors with web-based analytical and data tools to manage their portfolios. Celent’s report looked at 15 services such as Advice America, FundQuest, Money Tree Golden Years and Fidelity RIE. The wealth management industry has boomed as an increasingly affluent US middle class has accumulated assets through tax-advantaged pensions funds like 401k plans. In the US, there are 73 million people who were born between 1946 and 1964 and this cohort of the population is now retiring, digging into their assets. The assets held by those already retired in 2012 will be worth more than $19.5 billion. “Facing this brave new world, only a few financial advisors, financial product developers, and planning systems vendors have really stepped up to deal with the complex issues of post-retirement income and asset distribution,” the report says.