Even though retirement portfolios have nearly recovered from the financial crisis, investors haven’t, say the majority of financial advisors polled in a recent survey by SEI, a fund manager and investment management business outsourcing provider. Most advisors say their clients’ retirement portfolios have largely rebounded, and 10% say that portfolios are in even better shape now than before the recession. But even so, the biggest worry, for boomer clients at least, is the possibility of another significant stock market decline, according to the majority of the advisors (60%) surveyed.
Other findings showed that one-third of advisors use a “traditional, single 60/40 portfolio strategy” to manage retirement assets, meaning they allocate 60% to stocks and 40% to bonds and other lower-risk securities, the survey found. More than half (54%) use what’s known as “bucketing” whereby they match investors’ multiple goals — such as income, growth and capital preservation, for example — to a goals-based portfolio, in which separate pools of assets are aligned to each objective. About one in 10 (12%) use annuities to manage retirement assets.
“The old mantra for retirement investing was, ‘income, income, income.’ In reality, that’s far too simplistic,” Steve Onofrio, managing director of wealth management services provider SEI Advisor Network, said in a statement. Onofrio added that “bucketing” was “an effective means of managing market volatility while ensuring that goals are met.”
In addition to worries over another stock decline, boomers also are concerned about “how much income they need for retirement,” almost three in 10 advisors (28%) said. Boomers were less worried about the impact of inflation eroding their savings (7%) or making bad investment decisions (3%).
The survey was completed in March by more than 200 advisors during a webinar hosted by SEI about new approaches to retirement strategies.
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