A brief study that examined how financial advisors are responding to the needs of baby boomers nearing retirement found that many are sticking to the tried-and true mutual funds, despite the growing popularity of exchange traded funds (ETFs).
According to a recent study by Practical Perspectives and GDC Research, fewer than one in 25 advisors has shifted the primary focus of his or her practice to serve the retirement market.
On the plus side, though, ETFs have grown in popularity among advisors building retirement income portfolios, according to the study. Such demand has prompted ETF providers to focus on creating new fixed-income-oriented ETFs, says Marianna Lemann for Ignites.
It appears that a majority of advisors are sticking to the tried-and-true investment products that they have used over the years, such as mutual funds. The concerns over the creditworthiness of the provider and the overall reputation of them plays a large part in which funds they select.
One of the study’s key findings is that advisors have not gotten on board with products designed to help retirees spend their savings. Twp reasons may be the fact that financial advisors may not be fully sure about how these products work within an overall portfolio and a general lack of understanding. [ETFs Slowly Replacing Mutual Funds in 401(k)s.]
ETFs have grown in popularity for advisors who wish to build retirement portfolios. However, few ETF providers have answered this calling. For example, iShares offers 32 fixed-income funds that provide income. Of those, 10 are iShares S&P AMT-Free Municipal Funds that provide tax-advantaged income that is of particular interest to income-seeking investors, says an insider.
Many income-focused investors should get more selection as providers address this part of the market, which is fairly untapped at this time. [How ETFs Are Breaking Into 401(k)s.]
For more stories about retirement, visit our retirement category.
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.