Recent warnings that baby boomers are ill-prepared to fund their retirement rang a chord with bank executives who oversee investment sales and advice.
The predicament - which is worsened by rising life expectancy - presents them an opportunity to step in with advice and products, and they are starting to figure out how to do it, said executives from Commerce Bancshares Inc. in St. Louis, National City Corp. in Cleveland, Bank of America Corp. in Charlotte, and Associated Banc-Corp in Green Bay, Wis.
Half of U.S. workers have no retirement plan, and of the 40% that are in defined contribution plans, the average account balance is just $29,000, according to a PBS "Frontline" report broadcast last week.
National City last fall opened a "retirement resource center," from which phone representatives advise callers on retirement account rollovers and related issues. The advice is free, said Katherine Liebel, a senior vice president in the company's retirement development group, because the bank hopes to gather rollover assets.
"Final retirement rollover is one of people's largest financial decisions," she said. "We've added a level of expertise to advise them on it."
Banks have long worked to educate their customers about preparing for retirement, and St. Louis-based Commerce is now seeing a bigger appetite for information at its seminars, said Charles Kim, the executive vice president of consumer banking.
"We're finding that there is a lot more interest in those than there used to be," he said. "It's not just retirees looking for social time and ideas anymore - you're now getting people in the 55-to-65 range."
And bank retail investment sectors for several years have been moving away from simply selling products toward a financial planning approach.
"Our challenge as advisers is to help clients avoid potholes or fill them in so they're not quite so bumpy," said Terence Condren, the director of planning solutions at Bank of America.
The North Carolina company uses rigorous analysis to give clients a realistic picture of how much they will need to retire, he said. The problem, several bankers agreed, is how to get customers to follow through on the advice.
It is "amazing" how many people fail to take advantage of 401(k) availability, even when employers match their contributions, Mr. Kim said. Some new type of investment vehicle may be needed to make saving more attractive, he added.
Ms. Liebel noted that one product well suited to funding retirement - annuities - is often misused. "The vast majority of people don't use annuities for the best reason, which is to annuitize and create an income stream from them," she said. "There is an opportunity there" to better educate customers.
Mr. Condren agreed that variable annuities - essentially mutual funds in an insurance wrapper - are a potentially attractive way to protect one's retirement savings.
"But they are not as simple as they could be, and it becomes very bewildering for clients - which is another reason to use an adviser," he said.
A broad problem is that many Americans, though they want guidance, are dubious of financial advice from brokers, and do not want to pay for it, Mr. Kim said. "It's kind of a conundrum," he said. "They need advice, and we need to be compensated for giving that advice, one way or another."
The St. Louis bank is studying different approaches to serving baby boomers, he said, but "I don't think we've figured out yet what the model is to deal with it."
A Wisconsin executive voiced skepticism, however, about the extent of the retirement readiness problem.
Wealth transfer to the boomer generation from their parents "will mitigate to some extent the concern," said Curt Fuszard, the president and chief executive officer of Associated Investment Services Inc., the retail brokerage arm of Associated Banc-Corp in Green Bay.
A challenge largely overlooked by the news media, he said, is how Americans can minimize estate taxes and husband their inheritances for increasingly longer life spans.
"I've been in this business 26 years, and for almost all that time we were training people to help customers accumulate," said Mr. Fuszard, "and now we are training to help people prepare for distributions."
Associated helps its customers minimize inheritance taxes that can eat up as much as 71% of a legacy - trusts and insurance policies are among the ways to shelter an inheritance. It also helps them decide how aggressive their investments must be to provide income adequate to their life expectancy, he said.
