PLANADVISER - May/June 2021 - 13

Advisers Confront Risk
Longevity risk and inflation are the 'biggest challenges'
THAT advisers face a complex dual challenge
was underscored in the inaugural
Allianz Life " RIA Retirement Risk Review
Study. " Fifty-nine percent of registered
investment advisers (RIAs) said their
clients need to accumulate more money to
have a financially secure retirement. Yet,
most clients are too close to retiring to
take on the risk of investing in a high-risk/
high-reward financial product.
The biggest threats for retirees and nearretirees,
the RIAs said, are longevity risk
(47%) and low interest rates (44%). Perhaps
for that reason, 88% said they are more
concerned about efficiently managing the
risk in their clients' portfolios than about
generating the highest gains.
Heather Kelly, senior vice president of
advisory and strategic accounts at Allianz
Life says, " Factors such as inflation and
the rising cost of living are raising red
flags for many near-retirees and retirees
when it comes to longevity risk. Advisers
must communicate regularly with clients
about these risks and the evolving set of
investment solutions available to help
meet clients' needs. "
Forty percent said they may suggest
new risk management solutions, including
low-volatility exchange-traded funds
(ETFs) (52%), buffered outcome ETFs (44%)
and annuities (37%).
Granted, adjusting a client's portfolio
in that way may not be easy, says Kelly,
" Advisers should conduct extensive due
diligence and leverage the expertise of
industry providers to help ease concerns
and educate clients about evolving strategies
available. "
Among clients 10 years or more from
they will
retirement,
57% worry
that
outlive their money and 56% that they will
overspend; 43% worry about high medical
bills. Among clients who plan to retire in
the next 10 years or who are already retired,
54% worry about outliving their money and
56% about overspending; 53% worry that
the stock market could plummet, depleting
much of their savings.
The survey also asked the advisers what
risks their clients' portfolios face. Thirtysix
percent said, for those 10-plus years
from retiring, it is high equity valuations,
followed by taxes (31%) and inflation (30%).
Allianz's findings are based on an online
survey it conducted in partnership with
Zeldis Research in February and March
among 289 advisers. -Lee Barney
To Set It and Forget
It Can Affect Returns
Managers of target-date funds are
favoring their own fund families at
the expense of performance when
investors have a set-it-and-forgetit
mentality. Performance is lower
than that of nonaffiliated funds by
2.9 basis points for each year from
the vintage year. For an investor holding the fund for 50
years, that indicates a 21% reduction in performance.
Source: The Unintended Consequences of Investing for the Long Run: Evidence From Target-Date Funds
ON THE MOVE
➜ T. Rowe Price Group
has announced that Ken
Brooks, senior institutional
business development
leader, will retire on
June 4. Brooks helped
grow T. Rowe Price's U.S.
institutional business to
over $200 billion in assets
under management.
➜ HealthEquity Inc. has
entered into a definitive
agreement with Fifth
Third Bank, National
Association, to transition
custodianship of Fifth
Third's health savings
account portfolio to
HealthEquity.
➜ The Certified
Financial Planner Board
of Standards Inc. (CFP
Board) has named Dawn
Harris as its director of
diversity and inclusion for
the Center for Financial
Planning.
➜ Mid Atlantic Capital
Group has acquired
PensionPro, of Harrisburg,
Pennsylvania. PensionPro
is a provider of work-flow
automation software for
third-party administrators.
➜ Voya Financial Inc.
has entered into an
agreement to purchase
Benefit Strategies LLC, a
third-party administrator
of health savings and
spending accounts.
planadviser.com May-June 2021 | 13
➜

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PLANADVISER - May/June 2021

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