How investors allocate wealth during and approaching retirement, and what products are used, can have a significant impact on their ability to meet retirement goals. Filling the gap in available guidance on such decisions will be the key to helping investors craft winning retirement strategies. To meet this challenge effectively, a retirement income solution needs to combine an overall asset allocation with product-specific features into a framework that is dynamic but easy to understand.
The Investment Strategies Division at Mesirow Financial has developed a retirement income framework that seeks to optimize both the product allocation and asset allocation for traditional investment products and advanced retirement income products. Mesirow Financial believes that four types of clients will benefit from this framework:
- 401k providers targeting rollover assets
- 401k providers offering in-plan guaranteed products
- Institutional guaranteed product manufacturers
- Financial advice providers
Mesirow Financial's solution for a particular investor is based on responses to a risk and preference questionnaire. In addition to traditional risk tolerance, the retirement income questionnaire assesses the following investor preferences and risk characteristics:
- Wealth/Bequest Goals
- Longevity Expectations
- "Income Risk" Tolerance/Desire for Income Guarantees
- Age and Retirement/Rollover Scenario
Retirement income solutions for a range of such investor characteristics are generated using the asset classes and guaranteed income products available, and investors are mapped to appropriate solutions through the questionnaire.