While retirement savings is a leading concern for a majority ofAmericans, more immediate financial priorities is one barrierpreventing insurance companies and their intermediaries fromreaching prospects with retirement-related advice, products andservices, according to a recent survey by Deloitte's Center forFinancial Services.

Deloitte's survey of nearly 4,500 consumers from a wide rangeof age and income groups revealed five barriers creating adisconnect between financial institutions and consumers when itcomes to retirement planning. We laid out these barriers inour previous blog, including ineffective communications, lackof product awareness, mistrust, and a “do it myself” mentality, inaddition to conflicting priorities.

Indeed, while saving for retirement was by far the most highlyranked financial goal — even among respondents who are years awayfrom retiring — the most common reason for not being able to savefor retirement is that other financial concerns get in the way,including paying off a mortgage, student loans and other debt, orsaving for a child's education.

As one respondent said, “Right now I have more pressing ways toallocate my money.” This was particularly the case among theyounger respondents.

The second most important financial priority, especially amongolder respondents, is saving money to pay health care costs. Thisis not surprising, considering that 70 percent of those surveyedsaid they expect their medical expenses to increase duringretirement. A smaller but not insignificant number of respondentslisted a related concern — long-term care expenses — as a top-twopriority as well.

Concern over medical costs not only undermines retirementsecurity but also appears to discourage the retirement planningprocess itself. One-third of respondents within five years ofretirement surveyed by Deloitte said that no matter how well theyprepare, they are concerned that healthcare and/or long-term careexpenses could overwhelm their retirement savings and income goals.That percentage of doubters increases to 40 percent for those morethan five years from retirement.

As a result of multiple, often conflicting financial concerns,the majority of individuals tend to deal with their financialpriorities in a disjointed fashion. Indeed, only one in five ofthose surveyed by Deloitte say they address retirement savings andincome needs as interconnected with other priorities.

This myopic focus on the most immediate financial prioritiesprevents many from seeing the bigger picture, and discourages themfrom considering and accounting for longer-term needs such asretirement.

In addition, a large segment of respondents is pessimistic abouttheir ability to address long-term retirement needs even if theytried. This cynicism is clearly evident in the fact that manyrespondents believe (a) they don't expect to earn enough of areturn on their investments to provide sufficient retirementincome, and (b) no matter how much they save, health care costswill ultimately overwhelm their nest egg.

This lack of confidence in their ability to make a differencewith retirement planning could be one prime reason why so manypeople don't bother trying to put together a retirement savings andincome plan in the first place, and therefore see no reason to seekout professional help to do so. After all, in the view of suchindividuals, what would be the point?

To begin to overcome the 'conflicting priority' barrier,financial services providers should consider offering more holisticapproaches and solutions. It likely does little good to pitchretirement products alone to someone who is more concerned for themoment with mortgage or other debt issues.

Conflicting priorities could be addressed as part of acomprehensive financial plan that at least gets the prospectstarted on retirement preparation, even if the initial efforts arerelatively modest. By addressing the bigger picture while takingother priorities into account, consumers will likely gain moreconfidence that they can in fact start accounting for retirementneeds earlier on, making adjustments as they advance in the lifecycle.

Part of the challenge in overcoming this barrier may be theproduct-centric organizational structure that is quite common inmany financial services companies. For instance, institutionalbusinesses (such as employee benefit services) might be separatefrom consumer-focused retail operations, or insurance separate frominvestments. Or distribution might not be well integrated with theproduct development function.

Also, current incentive structures may not encouragecollaboration across business lines to offer the holistic solutionsthat many consumers need. In order to provide such services and besuccessful at it, certain structural changes in operating modelsmight be required.

A financial institution may not be able to directly address allof a consumer's financial needs under one umbrella. But broadeningthe discussion beyond retirement savings and income considerations,and helping consumers to think through their often conflictingconcerns could transform a financial institution from a productprovider into a financial facilitator and enabler, which may helpthem capture a greater share of the retirement piggy bank in thelong run.

Establishing marketing partnerships with other providers, suchas health- or long-term care insurers, is one way to possiblyexpand the dialogue and deal more holistically with clients onretirement.

In the next installment of this series, we'll examine howfinancial institutions might overcome the second barrierdiscouraging or preventing many people from planning forretirement—the failure by the industry to effectively communicatewith consumers on retirement issues, particularly via theworkplace.

In the meantime, a full report on the survey results and theirimplications—“Meetingthe Retirement Challenge: New Approaches and Solutions for theFinancial Services Industry”—can be accessed with this link.