Hands down, the number one driver sending clients looking for a financial advisor is retirement planning. Some 52.39% of clients say that’s their intention, while only 34.04% say they are looking just to build wealth.

“It’s not surprising to see that retirement comes ahead of wealth accumulation, because pretty much everyone can see themselves retired, but not everyone can see themselves accumulating significant wealth and needing support in managing it,” says Mat Powers, vice president of strategic retirement solutions at Commonwealth Financial Network.

To illuminate the contemporary shifts in client expectations and add to the industry’s understanding of just how important retirement planning is to an advisor’s business, Financial Advisor conducted a retirement survey of 376 advisors, 68.09% of whom have been in business more than 20 years.

Aside from retirement planning and wealth-building, these advisors say comprehensive financial planning—including estate planning and tax planning—is the third-most-common reason that a client starts an advisory relationship. The mean client asset minimum of those surveyed was approximately $760,000, and 59.31% said their retired clients have between $500,000 and $2 million in saved investable assets.

With such minimums, it’s not surprising that pre-retirees and retirees often can be the bulk of an advisor’s practice. Some 46.54% of the survey takers say that 61% to 80% of their clients are 55 and older, while 31.65% say 41% to 60% of their clients are. Another 13.03% of advisors say 81% or more of their clients are 55 and older.

Clients And Advisors Are Afraid, For Different Reasons
These clients have unique needs depending on where they are in their lives. People of all ages can worry about a stock market crash, the cost of healthcare and inflation, or having to support adult children. But advisors say a little more than 38% of their pre-retiree and retiree clients are most afraid of outliving their assets. The top concern for another 31.92% of clients is generating a reliable income stream.

That fear of running out of money can actually keep them from spending as much as they need to, says Sal Capizzi, executive vice president at San Diego-based Dunham & Associates Investment Counsel. “And that is sad because they’re not doing some things that they should be doing in retirement. It’s so ingrained in their head: ‘Be careful when you retire; don’t overspend, you’re going to run out of money.’ And that’s their fear.”

Advisors with more than 20 years’ experience pretty much have seen it all, and their assessment of what their clients should really be worried about is a little different. From their point of view, the number one threat to clients is unanticipated healthcare costs, something named by 54.52% of advisors in the survey. Outliving assets came in second, with 38.83% of the advisor vote.

The third greatest threat to a client’s retirement, in advisors’ minds, will be their need to support adult children and other family members, a problem named by 35.37% of advisors. (They say this risk is something only a tiny percentage of clients recognize.)

Coming in fourth is whether the clients will be able to generate a reliable income stream, something noted by 32.18% of advisors, while 31.92% say the biggest risk is when a stock market crash happens early in the client’s retirement. (The surveyed advisors could choose multiple threats.)

“I’ve been doing this 24 years, and I don’t think the fears have changed at all,” says Ryan Williamson, a financial consultant at Horizon Wealth Management in Chicago. “So much of it is psychological, where people are changing their headspace from W-2 income to solely relying upon all the work they’ve done in saving.”

To add another layer of angst, Williamson says, new retirees often dwell on how they compare to their neighbors and social circle. “A lot of people have the anxiety, too, of, ‘Well, shoot, I see my neighbors and they have a boat, they’re traveling all the time. I don’t feel like I have enough.’”

The Details Of Decumulation
Advisors are fairly evenly split when it comes to the best way for clients to start withdrawing their assets, with no one approach getting more votes than others. For example, 36.44% of advisors say they recommend their clients begin with a starting point between 4% and 5% of their portfolio, and then adjust annually for inflation.

Following that, 27.66% recommend their clients start off a little more modestly, pulling out between 3% and 4% in the first few years of retirement. Another 27.13% say they adjust the withdrawal rate every year, depending on several factors.

When asked the question himself, Williamson wrote “other.” He instead barbells his clients’ withdrawals (having them take more earlier and later in retirement, and take less in mid-retirement, to better align with the ways their anticipated expenses will be distributed across their retirement timelines). He says he keeps in mind the three phases often referred to as “Go-go, slow-go and no-go.”

“Nobody knows what tomorrow is going to bring. We’re not promised anything. So I encourage [clients to] do their traveling, do all the stuff that’s physical, and so expenses typically are higher earlier on,” he says. After that, the expenses will decline in their middle retirement years. “Then in the third phase, where the only priority is making sure healthcare is taken care of, expenses pop back up.”

Many clients seem to have unrealistic expectations for when they would have to stop work. The advisors in the survey say that an average of 62.88% of their clients 55 and older intend to work to 65 and beyond. Yet only 29.89% of their clients who are 65 and older are actually still working.

Those who are still working aren’t necessarily miserable. Their advisors say 91.2% of them enjoy it. But keep in mind that 48.27% also feel their savings isn’t enough to live on and 41.6% need the health insurance, according to their advisors.

All that said, 44.68% of clients are putting away 10% to 15% of their income toward retirement and 27.13% are saving 15% to 20%, the survey respondents say. And advisors say 73.95% of their clients between 50 and 65 are on financial track to reach their retirement goals.

The Takeaway For Advisors
The upshot for advisors in this environment is that they are likely to see a lot of interest in what they do (and an opportunity for client acquisition) in workplace retirement plans.

“What we are seeing in the industry is more plan participants are looking to engage with advisors—the plan advisor that’s been brought into place by their employer for them. And they more and more are looking for those advisors to be able to extend support outside of the context of the plan,” Powers says. “Where we’re at now, the younger generations are really expecting and seeking that holistic support. They don’t want the decumulation plan for their 401(k) assets. They want a decumulation plan that’s inclusive of their 401(k) assets, but also considerate of their broader financial situation.”

Plan advisors are therefore in a good position to offer extended services that come outside of the plan relationship—where they can offer holistic planning support. In fact, 53.99% of advisory survey respondents say they currently manage between one and 10 company retirement plans, and 11.17% say they manage between 11 and 50. For the remainder, 8.24% manage more than 26 plans. Only 26.06% of advisors say they don’t manage any.

But the plans tend to be small: 70.75% of advisors say they’re handling plans with less than $5 million in assets. Another 17.82% say their plans are between $5 million and $10 million, leaving 11.44% of the plans larger than $10 million in assets.

But even as these advisors strive to make inroads with plan sponsors and their employees, one can’t help but hear, “Physician, heal thyself” echoing through the industry. Only 58.78% of the polled advisors have succession plans in place for their own practices, while 27.66% are “starting to think about it” and 13.56% say flat out that they have not put any plans in place.