How to Provide the Best Retirement Advice in 2020

The American College of Financial Services
December 3, 2019

Every decade brings change, particularly on financial fronts. For those planning for or entering retirement, the thought of change may be worrisome. Yet, with a strong financial advisor at their side, clients can take advantage of many opportunities in the years ahead.

What will 2020 look like for retirement planning?

We can safely assume that employer retirement plans, particularly 401(k)s, will remain quite popular in 2020. You won’t have to work hard to convince clients to take advantage of them, but you can help them improve the way they use their 401(k)s. Specifically, you can encourage clients to optimize the employer match on their 401(k)s and help them choose a contribution percentage that better fits their retirement goals. Additionally, if their 401(k)s have a Roth option, you should encourage them to put some contributions into it. If not, you can help them select a Roth IRA as a way to ensure some of their retirement income will be tax-free.

What should clients add to their retirement planning in 2020?

Many of your clients may not be properly diversified, which can increase their overall risk. One way you can help them diversify and mitigate risk is through insurance. Not only does life insurance protect a family against a member’s premature death, many cash-value insurance products provide tax-deferred retirement savings.

Annuities are another good option for many clients. With employer pensions being increasingly rare, annuities offer clients an opportunity to secure stable, lifetime income in retirement.

Many annuity products have been around for a long time but, in the coming year, expect to see fee-only annuities and real annuities increase in popularity. Fee-only (as distinct from commission-based) annuities can be offered by more advisors, while real annuities are immediate and include an inflation factor in the payout. Additionally, Quality Longevity Annuity Contracts (QLAC) are likely to become more popular, as they allow clients to take an annuity in retirement and avoid required minimum distributions (RMDs).

What role will technology play in retirement planning?

Technology is heavily interwoven within financial markets. For retirement planning specifically, a number of tools exist to help both you and your client make the most of investments. For instance, many 401(k)s include modeling tools that allow participants to see how different contribution levels affect the total accumulation at retirement and, more importantly, how much retirement income the total accumulation is likely to generate.

Clients can also take advantage of target-date funds that are designed to adjust risk as the target retirement date approaches, which saves clients from having to constantly rebalance their portfolios. Another risk-management product made possible through a technological assist is dollar cost averaging (DCA), which reduces the effect of price swings on investments.

Finally, robo-advising is becoming more available, and newer versions are geared toward retirement planning, rather than being just for investing. Run by advanced algorithms, these tools can be enticing to certain clients, but they cannot provide the kind of personal service—and value—offered by a highly knowledgeable financial advisor.

What can you do to provide you clients more value in 2020?

One of the best ways you can help you clients in 2020 and the years ahead is by advancing your retirement income planning knowledge and skills through a program like the Retirement Income Certified Professional® (RICP®) designation offered by The American College of Financial Services. The RICP® will help you learn the kinds of advanced knowledge you need to provide expert-level advice and guide your clients toward their personal retirement goals.

Invest in your career with a professional designation.

Baby Boomers are retiring at an unprecedented rate, meaning that more and more Americans are facing the challenge of using their investments to maintain their quality of life. For them, the usual investment advice no longer applies. They need the unique strategies you can learn through the three-course Retirement Income Certified Professional® (RICP®) designation program. Help your clients thrive while growing your career.

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