I recently delivered a presentation on how to be a Retirement Advisor to a seasoned group of private client advisors from a large RIA. All the individuals in the room had a laundry list of financial credentials that spoke to their technical knowledge and professionalism in retirement planning, estate planning and income strategies.
However, what wasn’t initially clear to the group was that advanced credentials on the financial aspects of retirement need to be synchronized with regular discussions around the important life issues that clients will face. As a Retirement Advisor, the onus is on you to have a general understanding of both financial and non-financial aspects of retirement, the landscape of retirement and know where to find additional resources for your clients.
All of this leads me to the five areas advisors may fail to properly address or provide adequate coaching on with their retiring clients:

  1. Treating retirement as a financial issue when you help the client build a plan. I see this with advisors who have advanced credentials and help clients with “the numbers.” What is often missing is context — in other words, what are the life issues that will drive the retirement plan and what does the client not understand about aging and life issues?

    What you can do: Take a “life first” approach and consider the life areas that make up a client’s retirement picture. Help them understand their needs, concerns, aspirations and possibilities first before you create a financial plan. This approach should include a discussion of life transitions (expected or not).

  2. Not addressing the “tough” topics. No one likes to bring up touchy or upsetting issues, but as a Retirement Advisor and coach you must. Your client is going to die at some point, and retirement is the time when a client makes the decision to live the life they want until the time when they can no longer do so. Issues such as bereavement, disability, caregiving, dementia and assisted living need to be on the table.

    What you can do: In your planning session, conduct a “fire drill.” Say to the client that you are going to take 15 minutes to go through some of the more unpleasant things that may happen in life and develop a plan to address those scenarios. Remember, holistic planning includes both the comfortable and uncomfortable.

  3. Doing an income plan but not a spending plan. Many advisors focus on creating cash flow for clients and converting assets to income. You still need to do that, but proper income planning always starts with a spending plan first. What do your clients expect to spend each month and how will that change over time? What things do they spend money on today that they may not tomorrow?

    What you can do: Take your clients through a budget session, focusing on the first three years of retirement and then rolling over each year into another three-year spending plan. While you need a long-term financial plan to make sure they don’t run out of money, your clients should look at a much shorter period for their spending budget, as too much can change at this point in life!

  4. Not focusing on planning for life’s transitions. A Retirement Advisor is as much a transition planner as anything else. You are helping your clients through the “ages and stages of life” — births, deaths, career transitions, etc.

    What you can do: Discuss with your clients the most common life transitions they will face. Bring in experts to talk about life and aging issues and become an educator on aging issues.

  5. Underestimating the cost of healthcare. If there is anything that will throw off the best-laid plans for retirement it will likely be healthcare and the cost of out-of-pocket expenses, caregiving and assisted living.

    What you can do: Research the cost of care in your community for various healthcare issues and be prepared to share these with your clients as part of the discussion. Talk to your clients about family history so you can help them plan for the costs that may be assigned to them in the future. Hold seminars and provide articles to clients to keep the cost of future healthcare front and center.

Remember, a Retirement Advisor is a coach — someone who provides holistic guidance and knows how to coordinate with other experts as the needs arise. Technical expertise and credentials are great, but avoid the common pitfalls discussed here by taking the approach that the financial planning issues can only be addressed in tandem with the real-life concerns your clients have leading up to and through retirement.