Eighty-one percent of retirement plan advisors are discussing retirement income with clients, according to a BlackRock survey.

With America in the first year of a historic period where over four million Americans turn 65 each year from now until 2027, millions of consumers are trying to figure out how to convert their savings into income to fund a retirement that could last 30 or more years.

Plan advisors are rallying around retirement income as a solution to help their clients’ employees invest with an eye for the long term, Blackrock said.

But advisors also repor that they struggle with communicating a clear benefit in terms of improved outcomes (44%) and delivering “clear participant education and communications (42%),” BlackRock said of its survey of 300 advisors.

“These barriers, though, could be an opportunity for plan advisors to add value: 59% mention their defined contribution clients reach out to them for providing participant education and communication on retirement income,” Blackrock said.

“In these uncertain market conditions, plan advisors are looking for solutions that will help more Americans achieve better retirement outcomes,” said Carrie Schroen, head of BlackRock’s U.S. defined contribution intermediary business.
“Our research demonstrates the importance of access to affordable solutions and education, areas that are vital to providers and participants alike.”

Even wealthy investors are having a hard time nailing down a retirement income plan from their advisors, according to a panel of advisory clients at the recent Alliance for Lifetime Income’s 2024 Protected Retirement Summit in Washington, D.C

The panel of five, all over the age of 50, said they feel that advisors are more interested in focusing on accumulation rather than income planning.

That sentiment was born out by Alliance’s “2024 Protected Retirement Income and Planning Study,” which found that 62% of advisors say they bring up the topic of secure income with clients; but only 27% of investors report ever hearing their advisors discuss the subject.

The survey also found that 96% of advisors said they discuss when clients should withdraw from certain accounts, but only 66% of clients agree these discussions are going on.

Rarely do advisors ask clients if they plan to take income from their assets in the next 10 years, John Kennedy, the executive vice president and chief distribution and brand officer at Lincoln Financial, said at the conference.

Suzanne Norman, an education fellow at the Alliance for Lifetime Income, said that advisors have to change their orientation from “investments, investments, investments to secure income planning. This is an opportunity for us to step into this space. Tremendous pressure comes off the [investors’] investment portfolio when you can solve for income,” Norman said.

Legislative changes which paved the way for plans to offer guaranteed income products and annuities will mean all advisors need to get better at income planning, Nick Lane, president of Equitable said at the Alliance confererence.

Thanks to the SECURE 2.0 Act, 401(k) plans can now offer default annuity investment options, so younger investors are putting money in these vehicles.

The law also gave plan participants the right to make tax-free rollovers of up to 25% of their plan assets to qualified longevity annuity contracts (or QLACs). Such rollovers would reduce investors’ required minimum distribution by that percentage. And the income from the contract can be deferred as late in the client’s life as age 85.

Such income-producing products give plan advisors a leg up in holding onto assets, experts agree.

Blackrock said that plan advisors are working to close some of the communications gaps by ensuring that valuing their plan participants is a central part of their strategy.

“Plan advisors are taking an active approach to their own businesses, too, identifying how they can differentiate themselves from the pack. The majority (55%) say they do this through their expertise in meeting participant needs and education,” BlackRock said.

Some 48% of plan advisors currently offer what they call “financial wellness plans” for their clients, and 30% plan to staff to assist with greater participant communications in the next year, BlackRock said.

Blackrock data also shows that more advisors are planning to use AI to streamline practice management. While currently only 9% of plan advisors are using AI-powered tools, 53% report being likely to use them in the next 12 months.