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CU System
Study notes shift in traditional retirement income plans
BOSTON (12/19/11)--The retirement income industry in the U.S. is still in its infancy, with the shift from accumulation to decumulation evolving slowly, notes a new report from Aite Group. With the demand generated by the retiring Baby Boomers, this can impact credit union operations, and products and services for employees and members.

Based on a July-to-September Aite Group survey of 22 senior financial services executives who serve the retirement income marketplace, the report considers the industry's progress and the issues it faces in moving from wealth accumulation to decumulation.

The report assesses the state of the U.S. retirement income marketplace, which includes retail-distribution financial advisers, asset managers, insurance firms, online brokerages and financial institutions.

"The shift from wealth accumulation to decumulation is where financial advisers and distribution firms must transform their practice-management skills," says Greg Cherry, senior analyst with Aite Group and author of the report.

"The accumulation practices of the past are simply not sustainable as consumers demand less market risk and an increased focus on one day replacing their paychecks with retirement paychecks," he added.

In the report, executives agree there is over-emphasis in the industry on building up a portfolio before retiring. Today's investing dynamics for accumulating assets are far different from those living off those assets. They agreed new compensation models are needed to encourage financial advisers to adapt to decumulation.

Investment outcomes and lessons from the 2008 financial crisis continue to weigh on investors' minds, and many consumers were unable to do the one thing necessary to enjoy a comfortable retirement: Save adequately, Aite said.

As a result, retirement-income firms across various areas of the industry are dealing with how to construct appropriate and suitable retirement income plans for clients with differing levels of wealth.

Aite Group is an independent research and advisory firm focused on business, technology and regulatory issues and their impact on the financial services industry.


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