Sources of Financial Planning Retirement Advice: One Size Does Not Fit All

Sources of Financial Planning Retirement Advice: One Size Does Not Fit All

Chia-Li Chien, PhD, CFP®, PMP® Mar. 15, 2018

Can customers expect good advice from AUM-driven robo-advisers, especially if they prefer face-to-face interaction? One such “big-box firm” has a majority of business helping customers approaching retirement. The company’s advisers use the centralized planning services to help customers (with minimum investible assets) set up a complimentary financial plan coupled with advice and implementation. The company has specific topics for advising regarding retirement. Recent research by the author points out that many households at or approaching retirement are house rich but cash poor and would not meet the minimum investible asset level, thus unable to obtain advice from this “big box firm.” The firm does not offer advice on reverse mortgages. There is opportunity for fee-for-advice service practitioners to fill the needs of these households. The author provides some software and online sources to assist the client and adviser.

Bobo-advisers to reach $250 billion by 2020

According to the Stat Bank in the March 2018 issue of Journal of Financial Planning (Stats & Facts, 2018), $75 billion in assets under managements (AUM) are managed by robo-advisers in “big-box firms.” The momentum of AUM is projected to continue, increasing 233% or to $250 billion by 2020. Customers can possibly get limited advice over the phone, but how about those clients who still want face-to-face interaction with their financial adviser?

Want face-to-face interaction with their financial adviser

I recently interviewed a Certified Financial Planner—let’s call him Andy—who works in the centralized planning department for one of the Fortune 100 financial services organizations—which we will call XYZ Financial. Andy indicated that the majority of XYZ’s effort is helping customers as they approach or are already in retirement. XYZ’s client-facing retail adviser leverages the company’s centralized planning service to help customers via a complimentary financial plan along with advice and necessary implementations. XYZ’s goal is to gather as many assets as possible through the complimentary financial plan service.

Andy mentioned that the typical clientele of XYZ has a minimum of $500,000 investable assets. The investable assets don’t need to be in XYZ to qualify for the complimentary financial plan. Andy produces about four to six plans per business day along with two to three coaching calls with the client-facing retail adviser about implementation opportunities. For those simpler cases, a planner can produce up to ten financial plans per business day.

Here is a list of common retirement income advice topics received by XYZ’s typical client who is near retirement:

  • the appropriate safe withdraw rate (SWR) from the portfolio to meet the longevity risk
  • proper diversification of the portfolio in qualified and non-qualified account holdings
  • maximizing qualified plan contributions to take advantage of the preferred income tax treatment
  • Social Security retirement benefits breakeven age analysis to determine the ideal age to claim for the benefits to maximize retirement income
  • proper level of risk management to protect existing assets—for example, liability insurance for a primary home, or long-term care
  • contingency planning for adverse events such as sudden job loss or death
  • accessibility of the portfolio accounts in case of death or incapacity

Many customers believe the axiom “Don’t put all your eggs in one basket.” Customers will do business with many different types of financial services organizations. According to Securities Investor Protection Corporation or SIPC, “the limit of SIPC protection is $500,000, which includes a $250,000 limit for cash,” in case of financial service organization failure. Therefore, some of the customers can receive a complimentary financial plan from one of these financial service organizations.

My recent working paper (Chien, 2018) uses Survey of Income and Program Participation (SIPP) from the Census Bureau. The surveyed household data was collected during calendar 2011. The working paper found that the weighted population average of the investable assets is $185,763.63 for couples households, and $66,309.98 for singles households. Most of the population of 24 million retirees in the study probably would not qualify for a complementary financial plan that is based on XYZ’s $500,000 investable assets criteria.

That being said, the weighted population average of the home equity is $176,099.45 for couples households and $108,259.76 for singles households. According to Andy at XYZ, the company is aware of the idea of generating income from home equity because of attending continuing education sessions, but the idea is not on the list of items to advise. How could these households that are house-rich but possessing limited investable assets to get retirement income advice without qualifying for a comprehensive financial plan?

The increasing popularity of the robo-advisers or the big-box stores like XYZ may not help most of the retiree population. There are a few online resources to consider:

Unlike the movie Groundhog Day, retirees don’t get a start-over chance. Retirees either make it through the end of life successfully or not. The only financing available is the reverse mortgage—if you qualify. Consider working with a CFP practitioner to guide you through the complexity of retirement income planning to avoid any regretted mistakes.


Chien, C.-L. (2018). Practical Strategies to Enhance Retirement Success Rates in the United States . The 2018 CFP Board Registered Programs Conference . Arlington, Virginia: CFP Board.

Pfau, W. D. (2016). Reverse Mortgages: How to use Reverse Mortgages to Secure Your Retirement. McClean, VA: Retirement Researcher Media.

Pfau, W. D. (2017). How Much Can I Spend in Retirement? McLean, VA: McLean Asset Management Corporation.

SPIC. (2018, March). What SPIC Protects. Retrieved from Securities Investor Protection Organization:

Stats & Facts. (2018). Stat Bank March 2018. Journal of Financial Planning, 17-17.

Tuchman, M. (2017, Aug 18). The 25 Best Retirement Websites. Retrieved from Forbes:

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