NEW YORK, NY, August 10, 2022 – A new survey shows one in five investors expect to retire earlier than they had planned before the COVID-19 pandemic, according to the Money Management Institute (MMI) and Aon plc. The 2022 Advisory Solutions: Expectations and Experiences report, the first study in a three-part series, examines how the COVID-19 pandemic impacted investors’ retirement expectations. It shows the trend is driven by investors who are younger than 35 years old, 45 percent of whom expect to retire earlier. Of those younger investors who expect to leave the workforce early, 65 percent plan to retire by age 55.
“This research highlights the critical role advisors play in helping close gaps between clients’ life goals and the practical steps they are taking to accomplish those dreams,” said Craig Pfeiffer, MMI President and CEO. “The findings also illustrate that planning gaps are different for different generations of clients, which has significant implications for how wealth managers and advisors approach and structure their planning process by age cohort.”
“Younger investors often have unrealistic return expectations, which means that financial planning must be an educational process with data and insights – and can sometimes require delivering difficult messages,” said Peter Keuls, Global Head of Wealth Management at Aon. “Rather than discounting younger investors’ ambitious life goals, advisors should engage these clients on the investing and lifestyle changes required to accomplish them in an iterative planning process that helps clients make better decisions.”
The first report found that:
- Many investors benefited financially during the pandemic, with 24 percent of investors stating that they increased their expected retirement budgets after the pandemic. That number rose to 54 percent among investors under 35 years old and 47 percent for crypto investors.
- Despite lofty aspirations, less than half (43 percent) of investors are very confident of achieving their retirement goals. Younger male investors are the most optimistic of those surveyed. Only 23 percent of the sandwich generation of 45- to 54-year-old investors are very confident about achieving their retirement goals.
- Overall, investors expressed a generally high level of satisfaction with their financial planning experience. Sixty percent of investors indicated that they were very satisfied. However, satisfaction drops to 52 percent among 35- to 44-year-olds and to 46 percent among 45- to 54-year-olds. These two age groups also rated their advisors lower on developing an understanding of their personal goals and values as part of the planning process.
- There is a gap between investors’ interest in guaranteed income and the solutions offered by advisors. Younger investors are more interested in guaranteed income solutions than their older peers, with 39 percent being very willing to give up returns for certainty as compared to their older counterparts (18 percent). On the other hand, 32 percent of advisors feel that annuities are too expensive to be a good source of retirement income as compared to fixed-income and dividend portfolios.
“The study underscores the need for the industry to design and market more guaranteed income solutions that are easy to understand and provide strong value to appeal to younger investors who are open to annuity solutions,” Pfeiffer added.
About Advisory Solutions: Expectations and Experiences:
Now in its third year, the 2022 Expectations and Experiences research is a three-part series based on a proprietary research program sponsored by the Money Management Institute (MMI) in association with Aon, that explores the gaps that have emerged between client expectations for investment advice and the solutions delivered by wealth managers. The research also explores how these gaps are undermining client satisfaction and wealth management firm performance.
About the Money Management Institute (MMI):
Established in 1997, the Money Management Institute (MMI) is the industry association representing financial services firms that provide financial advice and investment advisory solutions to investors. Through conferences, educational resources, and thought leadership, MMI facilitates peer-to-peer connections, fosters industry knowledge and professionalism, and supports the development of the next generation of industry leadership. MMI member firms are dedicated to helping individual and institutional investors, at every level of assets, plan for and fulfill their financial goals. For more information, visit www.MMInst.org.
About Aon:
You can learn more about Aon here.
Contact:
Kelly Caporale, Money Management Institute, kcaporale@mminst.org, (646) 868-8514
Michael Marinello, Aon plc, michael.marinello@aon.com, (917) 683-8610
