Decumulation and New Ways of Thinking about Retirement Assets

Retirement Assets

Looking ahead, fund advisors will be faced with a myriad of challenges. One of the biggest—how to keep the relationships created with your soon-to-be-retired Baby Boomer ongoing into their retirement years.

Thinking about tomorrow isn’t necessarily a pretty picture when it comes to retaining an aging client base. With outflows projected to top $1 trillion to fund retirement by 2010, if today’s advisor hasn’t shifted their focus from “accumulation’ to “decumulation”, they could see their client base dwindle.

Kurt Cerulli, founder and principal of Cerulli Associates, sees the retirement income issue as one of the most important issues that investment professionals will have to deal with over the next two decades. “There needs to be a move from building up a nest egg to obtaining a retirement income,” said Cerulli in a panel discussion on the future of fund distribution at the Investment Company Institute’s annual General Membership Meeting in Washington, DC. “And, very little emphasis has been put on that.”

To help advisors focus on the income needs of clients in or near retirement, Cerulli offers some “Old Outlook” and ” New Outlook” sales ideas:


The Old Outlook way of doing business centered around telling stories toyounger clients about ways to accumulate assets. The New Outlook advisor acts as a holistic planner who meets their maturing clients’ big picture needs. And, is a value-added professional who thinks outside the investment-product-only box.Performance:

Top performance ruled in the Old Outlook way of doing business but it is consistent performance that the New Outlook advisor looks for when addressing her retiring clients’ needs.

Product focus:

In the New Outlook retirement income arena, downside protection is what it is all about— not upside potential.


The Old Outlook advisor focused on savings. Those with a New Outlookwork with their clients seeking asset preservation and are concerned about the future distribution of their client’s assets. Retirement Vehicles: Yesterday’s advisors focused on products best designed for asset accumulation. Today’s successful ones know that income distribution is the name of the retirement game.

To make that shift from the “Old Outlook” to the “New”, advisors need to remember that retirement income planning is something that’s sold and not bought. And, that the time to address your client’s retirement concerns is today—not tomorrow.

Did you know? Third-party distributors are big business at T.Rowe Price.

For the past 10 years, selling through advisors and other intermediaries– like banks, insurance companies and financial planner— has helped this Baltimore-based fund family’s bottom line ballooon.

“It’s the fastest growing business within the company, ” says Steve Norwitz, a vice president at T.Rowe Price. “Twenty to thirty percent of our assets come to us through those channels.”

Norwitz added that this part of their business is a “very important part of the whole distribuiton effort for the firm now.” To insure that the bucks keep flowing in, T.Rowe works closely with advisors and intermediaries in terms of helping them educate their clients and providing educational materials that help expalin marfkets and the economy.

by: Featuring Kurt Cerulli and Steve Norwitz