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Financial Professionals to Ramp up Retirement Income Planning Business

First of its kind retirement plan advisor study from The Principal unveils best practices

September 28, 2011 (Des Moines, Iowa) – A significant number of financial professionals plan to ramp up their retirement income planning practices over the next few years according to a new first-of-its-kind study.

Sponsored by the Principal Financial Group®, the 2011 Best Practices in Retirement Income Planning Study[1], is the first survey focusing exclusively on financial professionals who serve qualified retirement plans. The report provides insight into how plan advisors are or will be tapping into the growing baby boomer market opportunity.

The survey reveals that six out of 10 plan advisors provide retirement income planning services to retirement plan participants today. The vast majority (78%) plan to spend more time and resources on income planning over the next three years. Nearly 70 percent say they are or will be investing for growth in their income planning service with 30 percent focusing on better planning tools.

“Retirement income planning is a fast-growing revenue source for many financial professionals. This study provides valuable insight into best practices for those who want to tap into this vast opportunity—whether they are just getting into income planning or want to improve their current practice,” said Tim Minard, senior vice president, retirement investor services, The Principal®.

Missed opportunity

The survey also found that plan advisors may be missing out on a key opportunity to build their retirement income planning business: being notified when participants leave the plan. More than a third (34 percent) are not being informed when participants leave employment or retire. Of those that are, 60 percent prefer to have all participants referred to them, which may be challenging when needing to spend the vast majority of time building their plan business.

“Advisors can gain efficiencies in this area by working with plan service providers,” said Minard. “By asking to be notified when participants leave the plan, advisors can be handed ready-made leads. Because it may be impossible to serve them all, advisors can ask providers to refer only those with higher account balances and then let the provider service the others. This is exactly what our Principal Asset Retention Program offers advisors.”

No silver bullet investment solution

When asked to evaluate retirement income products, plan advisors favor options that can be personalized to each retiree’s situation. While a variable annuity with a Guaranteed Minimum Withdrawal Benefit (GMWB) rider is a widely accepted retail option, a vast majority of advisors (73%) do not recommend in-plan GMWBs or in-plan guarantees as an investment option inside a retirement plan.

“Clearly the vast majority of plan advisors believe as we do that there is no one-size-fits-all approach to retirement income planning,” said Minard. “Financial professionals play a critical role in the complex task of helping retirees turn a nest egg into a lifetime of income. And participants know that. Fifty-percent of pre-retirees plan to work with a financial professional to convert their retirement savings into income[2].”

A complete summary of survey results is available at Benchmarking Retirement Income Planning Best Practices.

About the 2011 Best Practices in Retirement Income Planning Study

The study was conducted with PLANADVISER in June 2011 on behalf of the Principal Financial Group. A total of 249 financial professionals serving qualified retirement plans responded to the survey, which results in a 6.2 percent margin of error.

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About the Principal Financial Group

The Principal Financial Group® (The Principal®)[3] is a retirement and global asset management leader. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, investment services and insurance through its diverse family of financial services companies. A member of the FORTUNE 500®, the Principal Financial Group has $335.8 billion in assets under management[4] and serves some 16.5 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG.

Conducted with PLANADVISER, June 2011 on behalf of the Principal Financial Group.
The Principal Pre-Retiree Survey, spring 2011.
“The Principal Financial Group” and “The Principal” are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
As of June 30, 2011.

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