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Survey Says: Retirement Planning Anxiety Spikes One Month After the Onset of COVID-19 Market Volatility

Survey Says: Retirement Planning Anxiety Spikes One Month After the Onset of COVID-19 Market Volatility

The American College of Financial Services
April 9, 2020

93% of Retirement Advisors Report Client Concern About Retirement Savings, Up 27% from Early March

In just one month, COVID-19 has halted nearly every aspect of American life and thrust the economy into the steepest slowdown since the Great Depression. In early March, The American College of Financial Services launched its first RICP® Market Volatility Flash Survey and polled Retirement Income Certified Professional® (RICP®) designees to gauge client reactions to market volatility resulting from domestic spread of COVID-19.

The outbreak continues to expand and quarantines, curfews, and social distancing have become the new normal--the world around us is changing at an astonishing speed, and client outlooks are changing with it. To this end, The College has reengaged with their retirement income professionals in a second-round survey on how things have changed for them and their clients in the past month of the COVID-19 pandemic.

Needless to say, the results were eye-opening.

 

Key Findings of the 2020 RICP® Flash Survey on Market Volatility, COVID-19, and the CARES Act 

Some of the important takeaways from the survey include:

  • Over 59% of advisors reported that clients are more concerned about their retirement prospects than they were a month ago.
  • Nearly 93% of advisors indicated that their clients have already reached out to them with concerns about their retirement plans due to the escalating impact of the COVID-19 pandemic and resulting market volatility, compared to 66% in early March.
  • Consumers are adjusting their retirement plans: 68% of advisors reported having clients who made changes to their retirement plans due to the escalating impact of the COVID-19 pandemic and resulting market volatility, compared to only 36% one month ago.
  • Younger savers are increasingly concerned: When asked what group best represents the majority of those reaching out with concerns, advisors noted an uptick among those clients approaching, but not quite near, retirement age:
    • 41% of advisors reported that a majority of those who reached out with concerns were either 5-10 years away from retirement or 10-20 years away from retirement, compared to 27% one month ago.
      • Those 5-10 years away from retirement also saw the biggest jump compared to a month ago, with advisors reporting a 10% increase among this demographic.

The survey also highlighted a strong correlation between the passage of the CARES Act and proactive communication between advisors and their clients:

  • 83% of advisors said they were reaching out to their clients about the CARES Act.
  • 60% of advisors said that they had clients reach out to them for explanation or support regarding the CARES Act.

 

Retirement Income Experts Share Their Insights 

The American College of Financial Services' esteemed retirement income professors have deep experience in navigating recessions and can offer insights into how clients are reacting to the current crisis, how sentiment has changed in the past 30 days and the importance of building a secure, long-term plan that can weather an uncertain future.

Wade Pfau, PhD, CFA, RICP®, Co-Director of the Center for Retirement Income and Program Director for the RICP® designation at The American College of Financial Services:.

About the survey results, Pfau commented, “Our findings show a real and marked increase in anxiety, which is certainly understandable given how quickly things have shifted in a month. The good news, though, is that that we’re also seeing advisors and clients alike increasing their communication with each other to respond to these concerns, which is the key ingredient to successful financial planning.”

Steve Parrish, JD, RICP®, CLU®, ChFC®, RHU®, AEP®, Co-Director of the Center for Retirement Income at The American College of Financial Services:

Parrish added, “When we conducted our last survey a month ago, we were more than overdue for an economic slowdown, but the surge in concern that we’re seeing underscores how unprecedented the depth and breadth of this crisis has been. Even though these findings are sobering, I’m heartened to see just how plugged in our RICP®s have been to their clients’ needs as these uncertain times have progressed.”

Colin Slabach, MS, ABD, Assistant Director of the Center for Retirement Income at The American College of Financial Services and Guardian Deppe Chairholder of Pension and Retirement Planning:

“This survey just reiterates how wide-reaching of a financial impact the COVID-19 crisis is having on retirement savers,” said Slabach. “It’s no longer something that only those in or near retirement have to watch, but something that consumers in all stages of retirement planning need to be aware of so that they can make adjustments where needed to their saving strategies before it’s too late to recover the losses.”

The RICP® Flash Surveys underscore that both financial advisors and consumers can benefit from education and the importance of planning when it comes to retirement security.

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