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Financial Firms See an Opportunity In Providing More Advice As the Giant Generation Heads Into Retirement
Vanguard Group is sailing into the uncharted waters of the baby boomers' retirement years.
After three decades of purveying dependable, low-cost mutual funds to a loyal following of do-it-yourself investors, the Malvern, Pa., firm is bolstering its resources to provide advice to those same folks as they head into retirement.
Vanguard Group has doubled its staff of financial planners over the past four years, to about 100, and expects to grow further. Many of the people paying as much as $1,500 each to take advantage of the 10-year-old planning service are approaching or in retirement.
Later this year, Vanguard officials say they expect to roll out a simplified and possibly free planning service for a wider audience. Also in the pipeline: a service that retirees can use to make scheduled withdrawals from their investment portfolios while having their mix of securities automatically rebalanced.
Plenty of other financial-services companies are also positioning themselves to provide advice to retiring baby boomers, including Fidelity Investments and T. Rowe Price Group, two other fund firms that, like Vanguard, are prominent in selling funds directly to investors and also managing 401(k) plans. Other financial-services companies tailoring products and services to people approaching retirement include brokerage firms and insurance companies.
Baby boomers usually are defined as people born between 1946 and 1964, meaning the oldest boomers turn 60 in January. The progression of this population bulge into retirement bodes big challenges for fund companies and other financial-services firms, which in recent decades have focused primarily on people accumulating rather than tapping their retirement stashes.
Fund companies that administer corporate 401(k) retirement-savings plans are hoping that plan participants at retirement will keep their dollars in the plans or roll their balances into individual retirement accounts at the same firms; meanwhile, the fund companies hope to capture assets moving out of other employers' plans.
With people moving around retirement-account balances that can be hundreds of thousands of dollars or more, "there is an opportunity for firms to lose market share or gain market share," says Chris Brown, director of retirement market research at Financial Research Corp. in Boston. Over the next 10 years, FRC estimates that $2 trillion of investors' assets will shift from an accumulation mode to a focus on capital preservation and retirement income……
Vanguard hasn't widely advertised its existing financial-planning service. But it does highlight the program's availability in communications to customers, particularly higher-balance Vanguard investors to whom planning is offered at reduced rates. The basic planning program costs $1,500 for a non-Vanguard customer, $1,000 for even the smallest Vanguard fund investor, $500 for customers with at least $250,000 in Vanguard funds, and $250 for customers with $1 million or more………….
In coming months, Vanguard plans to beef up its plans to include more detailed guidance about insurance policies that cover nursing-home care and about the order in which to tap various investment accounts for cash in retirement. See attached for more info
Financial Firms See an Opportunity In Providing More Advice As the Giant Generation Heads Into Retirement
Vanguard Group is sailing into the uncharted waters of the baby boomers' retirement years.
After three decades of purveying dependable, low-cost mutual funds to a loyal following of do-it-yourself investors, the Malvern, Pa., firm is bolstering its resources to provide advice to those same folks as they head into retirement.
Vanguard Group has doubled its staff of financial planners over the past four years, to about 100, and expects to grow further. Many of the people paying as much as $1,500 each to take advantage of the 10-year-old planning service are approaching or in retirement.
Later this year, Vanguard officials say they expect to roll out a simplified and possibly free planning service for a wider audience. Also in the pipeline: a service that retirees can use to make scheduled withdrawals from their investment portfolios while having their mix of securities automatically rebalanced.
Plenty of other financial-services companies are also positioning themselves to provide advice to retiring baby boomers, including Fidelity Investments and T. Rowe Price Group, two other fund firms that, like Vanguard, are prominent in selling funds directly to investors and also managing 401(k) plans. Other financial-services companies tailoring products and services to people approaching retirement include brokerage firms and insurance companies.
Baby boomers usually are defined as people born between 1946 and 1964, meaning the oldest boomers turn 60 in January. The progression of this population bulge into retirement bodes big challenges for fund companies and other financial-services firms, which in recent decades have focused primarily on people accumulating rather than tapping their retirement stashes.
Fund companies that administer corporate 401(k) retirement-savings plans are hoping that plan participants at retirement will keep their dollars in the plans or roll their balances into individual retirement accounts at the same firms; meanwhile, the fund companies hope to capture assets moving out of other employers' plans.
With people moving around retirement-account balances that can be hundreds of thousands of dollars or more, "there is an opportunity for firms to lose market share or gain market share," says Chris Brown, director of retirement market research at Financial Research Corp. in Boston. Over the next 10 years, FRC estimates that $2 trillion of investors' assets will shift from an accumulation mode to a focus on capital preservation and retirement income……
Vanguard hasn't widely advertised its existing financial-planning service. But it does highlight the program's availability in communications to customers, particularly higher-balance Vanguard investors to whom planning is offered at reduced rates. The basic planning program costs $1,500 for a non-Vanguard customer, $1,000 for even the smallest Vanguard fund investor, $500 for customers with at least $250,000 in Vanguard funds, and $250 for customers with $1 million or more………….
In coming months, Vanguard plans to beef up its plans to include more detailed guidance about insurance policies that cover nursing-home care and about the order in which to tap various investment accounts for cash in retirement. See attached for more info
