Investment firms, brokerage firms and insurance companies have deteriorated in their capabilities to provide retirement services, while independent financial advisers and banks have improved, according to results of a McKinsey & Co. survey of individual investors.
The majority of respondents — 69% — said independent financial advisers are "capable" in providing retirement services, up by four percentage points from McKinsey's 2004 survey. Investment firms were seen as capable by 67% of respondents, down 17 points from the year before; brokerage firms, 61%, down 21 points; and insurance companies, 48%, down 12 points. Banks were cited as capable by 57%, up 4 percentage points.
"Brokerages tended to receive low marks from consumers on their ability to deliver objective advice that was not influenced by their compensation structure," according to a report on the survey. The "independent financial adviser channel has now overtaken both brokerages and investment companies … due largely to its perceived lack of the aforementioned conflicts and advice shortcomings," the report said.
Also, the report said the survey found the "anxiety levels around the financial risks in retirement are rising rapidly." The threat of inflation and rising taxes was cited by 61% of respondents, and poor investment returns by 60%. That's a reversal of the previous survey in 2004, when the responses were 53% and 57%, respectively.
In this year's survey, other concerns were insufficient guaranteed income, cited by 53% of respondents, up from 28% in the previous survey; rising health expenses, 49%, up from 44%; interest rate changes, 49%, up from 36%; outliving savings, 46%, up from 35%; cuts to Social Security benefits, 44%, up from 15%; and insufficient diversification, 42%, up from 31%.
McKinsey surveyed 3,000 people 40 to 75 years old.