Consumer anxiety about retirement risks has jumped dramatically in the United States as a result of the economic crisis, which last year reduced the value of US household financial assets (excluding real estate) by an average of 18 percent. Yet the vast majority of US consumers haven’t changed their investment portfolios and don’t plan to postpone retirement, according to our nationwide January 2009 retirement survey of 2,000 US consumers. This finding suggests that many of them have not yet figured out how to react to the crisis.
The reason, in part, may be that financial advisers have provided only limited guidance to their clients over the last six months, reaching out to just two in five of them—perhaps fearing an angry response after 2008’s staggering $2.4 trillion decline in the value of retirement assets in defined-contribution accounts and IRAs.1 The overall level of advice from financial advisers fell significantly, compared with 2007. But the best advisers were smarter: they reached out systematically and proactively even to clients with significant losses. The results, according to our survey, were significantly strengthened relationships, referrals, and asset flows.
To be sure, retirement fears have spiked across the board, as the results from our...