It is true that for many people, retirement means slowing down.
The need to get up and get moving in the morning is removed from the daily schedule. The need to accomplish something every day no longer exists, at least not to the degree of necessity there was before.
Motivations change. While many retirees remain active in other pursuits besides work, the engine that runs their lives no longer operates at full capacity.
That change in daily events alters a retirees’ attitude toward investing as well.
Retirees likely (hopefully!) have made all the correct decisions prior to retiring, so that they do not need to concern themselves daily with the machinations or performance of their portfolio. Part of the joy of getting older and leaving the workplace is seeing certain responsibilities removed or lightened from one’s routine.
Spectrem’s study – Evolving Investor Attitudes and Behaviors* – asked investors of all stripes to describe their attitudes toward the practice of investing, as well as the desired results from their investing. In those two topics, retirees are much different than those investors who are still working and still operating at a faster pace than retired investors.
It is not that retirees care less about their investment performance; it is just that they are perhaps less in need of regular updates.
For the study, investors were asked whether they like to be involved in the day-to-day management of their investments. While 58 percent of working investors agreed with that statement, only 49 percent of retired investors did so.
That’s still half of retired investors who have the desire to know what is going on with their investments on a daily basis, so it is not like advisors can ignore them. But there are as many retired investors who do NOT want to be involved daily with their investment performance. Advisors should take note of which of their retired investors want to maintain daily involvement and which ones don’t, and perhaps make plans to regularly notify those investors who are not paying close attention to let them know how their portfolios are doing.
Investors were asked if they enjoy investing, and only 42 percent of retired investors agreed with that statement (compared to 54 percent of working investors). That lack of enjoyment with the process of investing can translate to a lack of interest in results (why do we think this?), and is not necessarily a good attitude to have. This trait, too, is something advisors should consider when thinking about their retired clients.
The lower level of participation translates to a different attitude as well.
Among retired investors, 44 percent expect their advisor to provide a rate of return no more than 2 percent above average stock market performance, and 24 percent want their returns to simply match average returns for investing. That is a low level of expectation for advisors, and perhaps relates to the static nature of investments for the portfolios of retired investors.
There are still 35 percent of retired investors who expect a rate of return of at least 3 percent above average stock market performance, so it is clear advisors can not just sit back and watch a retired client’s portfolio collect dust.
What Spectrem research shows is that retired investors do not want to be ignored, want a higher rate of communication, and want to know their advisor is paying attention to their accounts. They may just not be as loud about their desires as working investors are.
*This research is part of your Spectrem subscription.
Keywords: investing, investors, advisors, Spectrem, retirement, attitudes, behaviors