If you want to engage investors in the retirement planning process, avoid talking about “financial planning” or worse, “retirement income.” Both elicit very negative responses from investors, Timothy Noonan, managing director of Capital Market Insights at Russell Investments, said at a media roundtable this month.
When investors hear “retirement income,” they think they’re about to be sold an insurance product and are reminded of their private retirement “
HR/benefits professionals should talk instead about “lifestyle design,” a concept that appeals to investors. “If you want a get a disengaged person to re-engage, maybe you should try talking to them about what you can do to help them design a lifestyle that’s sustainable,” Noonan said.
Russell Investments has taken the research to heart, naming its recently launched retirement planning tool the Retirement Lifestyle Solution and the tool’s main software component Retirement Lifestyle Planner. The new tool is based on the concept of adaptive investing, a style of investing that investors are responsive to, according to the two-year study.
Investors see adaptive investing as a middle ground between the investing style extremes of changing asset allocations frequently and not changing them at all. More importantly, it incorporates “asset-liability matching,” which is central in getting “individual investors to engage meaningfully on preparing for their retirement and getting income from their retirement portfolios,” Noonan says.
“Fundamentally, adaptive investing is managing your portfolio and building an asset allocation that is connected to the spending it has to support,” says Rod Greenshields, consulting director of Russell Investments’ private client consulting group.
One of the major roadblocks to getting investors to think about and plan for retirement is their inability to
Margarida Correia is Associate Editor of