The psychological effects of the pandemic, global conflict and economic uncertainty have wormed their way into younger clients’ attitudes toward retirement, creating a new set of challenges for advisors, according to a new survey.

A survey of more than 1,500 affluent and high-net-worth investors found that 20% intended to retire earlier than they had planned prior to the pandemic, with a heavy tilt toward younger investors.

In fact, 45% of the survey participants under 35 years old, and 39% of investors from 35 to 44, have changed their minds about their retirement age specifically because of the pandemic, said 2022 Advisory Solutions: Expectations and Experiences, the first report in a three-part series conducted by the Money Management Institute (MMI) and Aon plc.

Ideally, these investors say, they will be retired at 55, or 62 at the outside.

“We created this program of research three years ago to look at the gaps around experiences and expectations. The gaps between clients and reality, between clients and advisors, and between advisors and reality,” said Craig Pfeiffer, MMI president and CEO. “I think something to note is that this research was put into the field in March 2022. The war in Ukraine had started but hadn’t gotten up to full steam, on inflation there was chatter but not a big concern, the stock market had dropped but then bounced right back—all that perpetuated the idea that if there’s a bad day, it goes away quickly.”

In addition, added Peter Keuls, global head of wealth management at Aon, many younger people who are just now becoming investors and financial planning clients spent a good chunk of time working from home during the pandemic.

“They had a certain amount of freedom. They saw there were other lives to be lived,” he said. “And younger investors heavily invested in crypto, where it looked like 20% or 30% gains could be achieved reliably. The combination of those two things made this generation think of retiring earlier. It’s the new status symbol.”

The challenge for financial planners is that there’s an expectations gap between this shift and the funds required to support it, the survey found. While 24% of those surveyed said they’ve increased their expected retirement budgets, almost as many (20%) said their retirement budgets have declined because of the pandemic.

Overall, this leaves just 43% of investors very confident they will achieve their goals.

Worst off are those in the “sandwich generation,” ages 45 to 54. Only 23% of them are very confident they will reach their retirement goals, as the pressures of paying for college for their kids, helping their parents and the shrinking window for retirement savings have given them a heavy dose of reality, the survey said.

“The younger people think they’ve got it for no real reason, and the older people think they’ve got it because they’ve earned it. They see their balances,” Pfeiffer said. “This middle group has much lower confidence levels.”

One issue for planners to be aware of is it’s easy to focus on retirees and soon-to-be retirees, especially since a rollover 401(k) means bringing in more assets to manage. But the younger and middle-aged investors need help, too.

“The first message to advisors is to be very sensitive to the generational differences. For the younger clients who might seem unrealistic, don’t rain on their dreams. Don’t dismiss them,” Keuls said. “Be supportive and taken them through the analysis. Show them what lifestyle changes would have to be made, what savings has to be committed to, in order to achieve it. Support the goal.”

And for the middle-aged clients, a little self-reflection might help, he said.

“If they have such low levels of confidence, then financial advisors aren’t doing their jobs. Make sure they’re educated and grounded in reality,” Keuls said.

The survey also looked at investor satisfaction with their financial advisors, and this area showed room for advisors to improve their communication with their clients.

Overall, 60% of investors said they were very satisfied with their advisors. However, that sandwich generation reported the lowest level of satisfaction—just 46%—which the survey researchers said they believed tracked with this group’s general financial anxiety.

One standout finding was that only 45% of the youngest group of investors, those under 35, felt their advisors showed a real understanding of their full financial picture, possibly related to crypto holdings they may not have disclosed in the first place, the survey said.

“This investing is often done on the side because most advisors don’t work in crypto. So advisors aren’t eager to discuss it because the firm doesn’t deal with it,” Keuls commented.

But since successful planning requires a full understanding of an investors goals and investments, probing for the full picture may require more effort for younger clients before moving to an analysis and making recommendations, the survey said.

Helping clients understand the realities of investment returns and drawdown rates is another area where advisors should up their game, as 26% of participants said their advisors had not discussed long-term return expectations and withdrawal rates within the last 12 months.

While only 20% of advisors said they expected returns to be 10% or more per year, 59% of investors said they did expect their returns to be 10% or more, and a full 40% expected their returns to be more than 25%.

On the withdrawal side, investors ranked inflation and market volatility being the greatest risks to their portfolios, while longevity risk was the number one concern among advisors.

One piece of good news is that advisors don’t seem to suffer from the same aspirations as their clients. “Interestingly, advisors are more conservative than investors when it comes to their expected retirement age, with only 21% expecting to retire before 63 and 43% expecting to work until the ages of 68 to 75,” the survey found.