Conversations about Social Security benefits and rollovers are levers investors and advisors can control to achieve better financial results without more risk. And current technology can show how much larger their nest egg will be due to tax and cost savings.
The Rollover Is The Spark That Leads To Consolidation
Most people come to advisors with a hodgepodge of retirement accounts and investments they acquired over time. In the aggregate, they are held at various places with little rhyme or reason to the portfolio regarding asset location and allocation.
The most recent rollover is the spark that leads to what they want to do anyway—consolidate all their money under an advisor’s care for greater cost, risk and efficiency, and administrative simplicity. This sounds elementary, and many advisors say, “We already do this. What are you talking about?”
Not quite. Morgan Stanley boasts over $2.5 trillion in managed assets. Their clients hold an additional $2 trillion elsewhere. With a sample size that large, it is fair to say most advisors could achieve more wallet share. To do so, they need buy-in from the incoming throng of Boomer retirees, and they need to demonstrate the rollover process is as easy as it is profitable.
As Baby Boomers Retire In Droves, Quantifying Financial Value Is The Differentiator
And it cannot be done “by hand.” Take it from my colleague Paul Samuelson, whose late father—a Nobel-winning economist and advisor to five presidents—could not chart a long-term retirement plan without costly missteps.
Why? Because it is complicated when retirement income is considered, something we will explore next month as we examine a coordinated approach to tax-smart asset location and allocation during accumulation; and the optimal sequence of withdrawals from Social Security, annuities, investment accounts and other income sources during retirement. All this can be maximized and quantified to produce improved outcomes for both the investor and the advisor.
As baby boomers retire in droves and “money in motion” continues to accelerate, the industry’s biggest platforms are building digital on-ramps to capture client rollovers, answer Social Security questions, and suggest intelligent withdrawal sequences. Most importantly, these platforms show how much more money the investor—and the advisor—would have by consolidating assets in one place.
These innovations cannot come soon enough. Guiding investors responsibly through retirement will be the work of our lifetimes.
Jack Sharry is co-chair of MMI's Digital Advice Community, on The Next Chapter Advisory Council, host of the WealthTech on Deck podcast, and executive vice president of LifeYield. Learn more at www.LifeYield.com.