The baby boomer-fueled retirement-income planning wave is coming and it might pinch the profit margins of advisors unless they have the products and fee structure to handle it.

   At least 25% of new business for financial planners in the next year will involve IRA rollovers as more baby boomers enter retirement, marking a trend away from wealth accumulation and more toward income distribution among those clients. In turn, that might accelerate the trend toward charging fees for service rather than a percentage of assets under management, according to a new study by the Financial Planning Association entitled 2007 FPA Financial Planner Attitudes and Perceptions about the Retirement Income Distribution Market.

   From an income standpoint, advisors who charge a fee based on assets under management or custody could likely find themselves spending more time working for clients who generate less revenue, thus necessitating a "fee for service" based model. Advisers are already anticipating this trend, with more than 40% expecting their fees for service to increase as clients continue to retire.

   Among the findings of the study was that many financial planners need to become experts in IRA rollovers in order to serve the new market. Many already are creating or expanding referral networks among clients and among other professionals that will be crucial to retirement planning, the survey showed. Because of this changing emphasis in the financial planning business, a reliance on a small base of existing clients may limit a planner's growth, which is prompting some to turn to mass marketing techniques to gain new clients. The effectiveness of these experiments appears marginal and mixed.

   "Those who support financial planners must provide planners with the tools and technology that will help them make sure their clients don't outlive their assets or spend down their nest eggs too quickly," advises Jim Sholder, a principal at Diversified Services Group Inc., a consulting and research firm for the financial services industry that produced the FPA study.

   The study was sponsored by Fidelity Investments, a part of Fidelity Institutional Wealth Services which provides financial services to registered investment advisors.