Nationwide Financial Services introduces RetireSense to help advisors structure client assets into personalized retirement income portfolio
Investment and draw-down strategy helps clients balance income, growth and protection needs in retirement
Jeff Whetzel (614) 249-6354
Chad Green (614) 677-1679
COLUMBUS, Ohio— At a time when 36 percent of advisors surveyed admitted they’re less confident than a year ago about managing retirees’ assets1, Nationwide Financial Services is introducing a new program to help advisors build personalized retirement income solutions for clients. Nationwide’s RetireSense® is an investment and draw-down strategy that is grounded in best practices that helps advisors and their clients address risks and income needs in retirement.
Nationwide developed the RetireSense strategy and supporting tools in response to advisors who say they are looking for more education and assistance with the retirement income planning process for clients.
“As clients retire and begin to tap savings and assets to produce income in retirement, advisors must manage risks very carefully to help ensure income goals are met throughout longer life expectancies,” said John Carter, president of Nationwide Financial Distributors, Inc. “RetireSense provides advisors with a comprehensive retirement income strategy that effectively balances insurance and investment products to help address the market, inflation and longevity risks their clients will face in retirement.”
Carter added that with 64 percent of working-age U.S. households at-risk of being financially unprepared for retirement2, there’s a tremendous opportunity for advisors to help consumers right now. RetireSense can be utilized to assist those clients approaching or already in retirement.
RetireSense is not a tool or calculator, but an innovative strategy that includes extensive support for advisors to help them meet their clients’ goals. Itprovides a clear road map in retirement that identifies which investments to harvest for income, and when to do so.
How it Works
RetireSense suggests building a guaranteed income floor first to cover a client’s basic -- or essential -- income needs. Next, it divides the client’s retirement into five-year periods, or Life Segments, and assigns a product and asset allocation to each segment to cover discretionary income needs. Since the potential impact of risks changes over time, RetireSense targets risk reduction techniques to when they’re needed most.
“Assets you need for income today should be invested differently than the assets you’ll need for income years down the road, and RetireSense accounts for that by creating separate, duration-based pools of money, each having a different investment rule,” said Brad Davis, vice president of retirement income solutions for Nationwide Financial.
The first five-year segment is tapped for income immediately, spending down the investment over a five-year period until it is completely liquidated. Future segments are afforded the potential to grow untouched until the time they are tapped for income in subsequent five-year periods.
To help implement the RetireSense strategy Nationwide has developed an exclusive, web-based application for advisors called the R-IncomeAnalyzer.
The R-IncomeAnalyzer performs several key calculations, including:
- Amounts to be invested in each Life Segment
- Asset allocation options
- Product and protection feature options
- A measure of probability of success using historical simulation
R-IncomeAnalyzer also produces a customized client report that outlines investment goals for each investment to help clients and advisors monitor annual progress.
The RetireSense income planning process is also fully supported by senior income planning consultants in the field and the Income Planning Desk in Nationwide’s home office. This group provides plan design and implementation assistance, helping advisors with client cases.
Carter said Nationwide provides RetireSense as a value-added service to financial professionals at no cost.
“We provide income strategies, implementation tools and value-added support services to help advisors provide the retirement income solutions their clients are depending on them for, from a provider they can trust,” said Carter. “We can be as involved in that process as the advisor would like us to be. It’s completely up to the advisor, with the understanding that we’re here if they need us.”
Investment strategies do not guarantee or protect against a loss in a declining market. Investment strategies offering the potential for higher rates of return also involve a higher degree of risk to principal.
RetireSense is a retirement income strategy developed by Nationwide Financial. The strategy is customized for the client through the use of the R-IncomeAnalyzer, a proprietary investment analysis tool that runs simulations, calculates the amount of money suggested for each investment and performs a statistical analysis that presents the likelihood of meeting specific income needs in retirement if certain types of suggested investments are made. This analysis is designed to enhance the investor’s evaluation and understanding of how the RetireSense strategy generates retirement income as well as the potential risks and returns associated with investment choices. The information generated by the Analyzer regarding the likelihood of various investment outcomes is hypothetical in nature, does not reflect actual investment results and is not a guarantee of future results.
Nationwide, based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by A.M. Best. The company provides a full range of personalized insurance and financial services, including auto insurance, motorcycle, boat, homeowners, life insurance, farm, commercial insurance, administrative services, annuities, mortgages, mutual funds, pensions, long-term savings plans and health and productivity services. For more information, visit http://www.nationwide.com.
Nationwide, the Nationwide framemark, RetireSense and On Your Side are registered service marks of Nationwide Mutual Insurance Company. R-IncomeAnalyzer is a service mark of Nationwide Life Insurance Company.
© 2009, Nationwide Financial Services, Inc. All rights reserved.
1 “Examining Best Practices in Constructing Retirement Income Portfolios,” GDC Research & Practical Perspectives, April 2009
2 Center for Retirement Research at Boston College, National Retirement Risk Index, March 2009