Is there an advisor in the house?

The human body is a highly complex, self-contained entity that relies on several subsystems to function.  A failure in any one of these systems could create a real crisis.  No one would like being told that his/her brain, cardio-vascular, endocrine, nervous or other system might stop functioning or begin to “over function.”   The results could be disastrous.  Like the human body, the global economy is an extremely complicated organism that has many different parts.  Regulation, taxation, business climate, employment, politics and other systems — all have the potential to dysfunction, creating a crisis that can impact your wealth.

Just as many people would seek a doctor for treatment to help with a problem with their body, many retirement plan participants have decided to seek professional help with planning their wealth at retirement.  According to a recent survey by Sun Life Financial, 53% of Canadians are concerned about running out of money during retirement, and 37% are concerned they will need to lower their standard of living.  Only 34% believe they will be able to afford healthcare in retirement.  These statistics for Canadian concerns are not unique to Canada.  A survey by Merrill Lynch of affluent Americans found similar concerns.  These and other surveys show that confidence increases when a professional advisor is working with participants.  Access to advisors can also help plan sponsors meet their fiduciary responsibilities to the plan.

So what’s the big deal?
Over the past 30 years, the sources of wealth for retirement have shifted dramatically.  From an era dominated by Social Security and defined benefit plans to an era of participant control and choice among various wealth building instruments, the need for a doctor (advisor) has never been greater.  The challenge for advisors is access to information.  As employees have moved between jobs, they have often left retirement accounts with their former employers.  Add the explosion in retail investments directly owned, and a typical investor may have a relationship with five or more financial firms.  What are advisors to do?  How can they properly help their clients plan for the future in such a realm?

Is the answer merely a technology solution, creating a central platform that allows access across multiple banking, mutual fund, insurance, and other financial institutions’ detailed record systems to present a consolidated view of investors’ wealth?

Does a solution require a fundamental shift in the way the financial services industry does business today, becoming more collaborative and working together to meet the needs of its constituents?

Has your organization found a way to address the issue of advisor access to data across multiple providers?

Credits: 1.  www.sunlife.ca/unretirementindex, 2.  www.ml.com/affluentinsights