A wave of 78 million baby boomers may lead to the biggest change in financial services since those same Americans helped transform the industry in the 1960s. So writes Joe Mont at The Street.com.
While the point is a bit obvious, Mont runs through the numbers, and the message is clear; for financial service professionals, change or die.
"New retirees, who hold a combined $14 trillion in investment assets, are increasingly moving money into income-generating accounts from stocks and mutual funds. Companies that want to profit from a shift in the burgeoning retirement-income field need to retool their operations and products, analysts at consulting firm Deloitte LLP say in a report.
Boomers, who were born during the two decades that followed World War II, may put 62 percent of their investment assets into accounts that produce a stream of income to pay for retirement expenses such as housing and vacations, Deloitte estimates. The rest will likely be saved and eventually transferred to beneficiaries."
The challenge for money managers, explains Mont, isn't just handling the sheer number of retiring boomers or the magnitude of the money in motion. The larger issue is how to adapt from a focus on asset accumulation, which includes equity-based mutual funds and other growth-oriented investments, to the distribution-centered retirement-income market.
"Most people are going to have to cobble together what's left of a defined-benefit plan," says Don McNees, a Deloitte principal in financial services. "They may have a couple of 401(k) plans from a few different employers, as well as some different pieces of an individual investment portfolio. Now, they have to try to figure out how to pool those disparate products into something that provides a monthly paycheck that matches up pretty well with their expense outflow."
While the point is a bit obvious, Mont runs through the numbers, and the message is clear; for financial service professionals, change or die.
"New retirees, who hold a combined $14 trillion in investment assets, are increasingly moving money into income-generating accounts from stocks and mutual funds. Companies that want to profit from a shift in the burgeoning retirement-income field need to retool their operations and products, analysts at consulting firm Deloitte LLP say in a report.
Boomers, who were born during the two decades that followed World War II, may put 62 percent of their investment assets into accounts that produce a stream of income to pay for retirement expenses such as housing and vacations, Deloitte estimates. The rest will likely be saved and eventually transferred to beneficiaries."
The challenge for money managers, explains Mont, isn't just handling the sheer number of retiring boomers or the magnitude of the money in motion. The larger issue is how to adapt from a focus on asset accumulation, which includes equity-based mutual funds and other growth-oriented investments, to the distribution-centered retirement-income market.
"Most people are going to have to cobble together what's left of a defined-benefit plan," says Don McNees, a Deloitte principal in financial services. "They may have a couple of 401(k) plans from a few different employers, as well as some different pieces of an individual investment portfolio. Now, they have to try to figure out how to pool those disparate products into something that provides a monthly paycheck that matches up pretty well with their expense outflow."
