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Bridging the Gap: How Advisors Can Better Serve Clients in Retirement Planning
A more tactical approach is needed
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Happy Sunday everyone, and welcome to Benzinga’s financial advisor newsletter.
Today we’re discussing a huge gap between what advisors say they discuss with their clients, and what those clients remember hearing. This huge gap can seriously affect client satisfaction with their advisor as well as their wellbeing in retirement.
So, let’s get into the Industry Chatter!
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INDUSTRY CHATTER
Recent research by David Blanchett, managing director at PGIM DC Solutions, reveals significant disparities between the retirement planning services financial advisors believe they're providing and what clients actually report receiving. This gap highlights areas where advisors need to improve their communication and service delivery.
For example, while 97% of advisors claim to discuss Required Minimum Distributions (RMDs) regularly, only 54% of clients report experiencing such conversations. Advisors need to ensure clients understand the importance of RMD planning to avoid penalties and optimize tax strategies.
Huge Gaps in Lifestyle And Tax Planning
In terms of retirement lifestyle planning, 70% of advisors say they frequently discuss how clients will spend their retirement time, but only 29% of clients recall these conversations.Emphasizing the non-financial aspects of retirement planning, including social connections and healthy habits, is crucial in helping clients have a good retirement.
There's also a gap in the perceived importance of wealth protection and lifetime income products between advisors and clients. Addressing this discrepancy will help advisors better align with their clients' needs and expectations.
Tax minimization is another area of concern, with 95% of advisors reporting they provide such strategies, but only 64% of clients acknowledging this guidance. Significant gaps also exist in discussions about monthly budgeting and account withdrawal strategies. Advisors should provide more granular guidance in these areas to help clients better prepare for their financial future.
Communication Is Key
To bridge these gaps, improving communication is crucial, and advisors should consider develop more tactical approaches to address specific retirement issues, ensuring clients understand and remember the guidance provided. Implementing comprehensive checklists or materials that cover all key aspects of retirement planning can help ensure thorough coverage of essential topics. Regular follow-ups to review and reinforce important retirement planning concepts can also help bridge memory gaps.
Ultimately, advisors should strive to provide more comprehensive retirement planning services that align with clients' expectations and needs. By addressing these areas, financial advisors can better meet their clients' retirement planning needs and ensure a more aligned understanding of the services provided.
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MARKET RECAP
The S&P 500 and Dow Jones Industrial Average both achieved record highs this week.
A strong kickoff to the third-quarter earnings season fueled both indexes, offsetting concerns from last month's unexpected inflation surge.
JPMorgan Chase & Co. (JPM), Wells Fargo & Co. (WFC), Bank of New York Mellon Corp. (BK) and BlackRock Inc. (BLK) all exceeded analyst earnings forecasts Friday. This triggered a stock rally and propelled the financial sector to new highs.
In contrast, Tesla Inc. (TSLA) faced investor disappointment. The Austin, Texas-based car company is one of the worst performers within the S&P 500 this week.
The much-anticipated "We, Robot" event on Thursday was partly to blame. The presentation failed to impress analysts and investors, alike. Critics said it was more fanfare than substance.
While the company showcased its CyberCab and Optimus robot, key details about commercialization and timelines were lacking. The event sparked mixed reactions from investors, with concerns about whether Tesla can deliver on its ambitious autonomous vehicle promises.
As a result, the Elon Musk-led EV manufacturer saw its share price plunge Friday.
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Economic data disappoints
September inflation reports for both consumers and producers come in higher than expected, while jobless claims posted the sharpest rise in over a year.
Despite the inflation uptick, interest rate expectations remained largely unchanged, with most traders and economists maintaining their outlook for a November rate cut. The unemployment spike was attributed to temporary factors, including Michigan auto layoffs and Hurricane Helene.
No Stimulus Measures In China
Chinese stocks saw their worst weekly performance of the year. The absence of expected stimulus measures from Chinese authorities weighed heavily on investor sentiment, despite a strong rally in recent weeks.
Mortgage Rates Surge
Mortgage rates saw a sharp reversal last week, jumping to 6.36% and leading to a 5.1% drop in homebuyer applications. The housing market awaits further rate cuts, but rising Treasury yields —driven by a resilient labor market — pose significant challenges to mortgage rate relief in the near term.
Google fights back
Alphabet Inc.‘s (GOOGL) Google is challenging the Department of Justice’s efforts to break up its search dominance, labeling the proposed antitrust remedies as radical.
The tech giant argues the DOJ's recommendations could dismantle its core business, impacting innovation and consumer choice.
THE WEEK AHEAD
Economic Data
Monday: OPEC monthly report, US consumer inflation expectations
Tuesday: EU industrial production and economic sentiment
Wednesday: UK inflation, US import/export price index
Thursday: China GDP numbers, US retail sales
Friday: UK retail sales, US housing starts
Earnings
Click here for the full calendar of economic data and earnings reports.
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