From the February 2007 issue of Wealth Manager Web • Subscribe!

The Guru of Retirement

"I got my doctorate in psychology, not economics," Ken Dychtwald says, "and I think the reason I get so much media attention is because I'm focused on the client, a living, breathing human being with hopes and worries about what's ahead."

Well, that may certainly be one reason why this futurist, psychologist, gerontologist, author and public speaker has been featured in Business Week (July, 2004) and Fortune's 2005 Retirement Guide---to name just two publications. More likely, however, it's due to Dychtwald's ability to deliver his message that the longevity revolution has arrived and is sweeping all preconceived notions of retirement out the door.

Whether he's chatting up one person (this reporter) in the green room at the Washington, D.C., Convention Center, or--on the adjacent stage--addressing a crowd of close to 2,000 advisors at Schwab's Impact 2006 general session, Dychtwald's broad knowledge of his subject and his grasp of statistics--coupled with a well-spoken, fast-on-his-feet delivery--add up to what can only be described as charisma. And it doesn't hurt that he is tall, attractive and well-dressed.

But we're not talking "movie star" here. This is Ken Dychtwald, the retirement guru (Business Week) of the Baby Boomer generation and "Pitchman for the Gray Revolution (Fortune)." For a couple of decades, Dychtwald--a one-time hippie who is a boomer himself at 57--delivered his message as a consultant to corporate America, influencing innovations like easy-to-open containers for arthritis pain relievers.

Lately, however, Dychtwald has turned his attention to the financial services industry, the men and women who are charged with guiding boomers into this new retirement frontier. And his main message to advisors is that the time has come to "Reinvent yourselves!"

Old paradigms don't fade away, Dychtwald warns. They simply become obsolete.

Not long ago, financial services was a product-oriented business and those who engaged in it were thought of as salespeople. Now the industry is attempting to make a dramatic shift to client focus rather than on product. "It's no longer 'What can I sell you?'" he says, "but 'Who are you?'"

The nature of wealthy people has shifted as well, he points out. "The current elder generation of high-net-worth men and women are not risk takers; the people who are coming up--the boomers--want to be active. They always liked to break the rules. So being an expert on yesterday's high-net-worth [retirees] does not guarantee your success," he says.

And they will be HNW, he notes: "The more affluent tend to live longer because they can buy themselves better healthcare. For those people, life expectancy will no longer be 75 to 80; living to 90 or 100 will be commonplace."

"The longevity revolution wasn't about Ponce de Leon," Dychtwald adds. "It's about antibiotics! On the first day of the 20th century, life expectancy was 47. People didn't age; they died because their bodies wore out. On the last day of the century it was 77. In this era, with 450 pharmaceutical compounds in development, with therapeutic cloning, the possibility of stem cell research, you might live to be 90 or 100 or more," he says.

What does this mean for advisors? Baby boomer business portends a boom time for wealth managers who prepare to meet the challenge.

"The largest generation in history is about to have a pretty substantial wakeup call," says Dychtwald, pointing to research that 70 percent of the close to 80 million boomers don't even have a financial advisor, "and those that do," he adds, "have three! They don't know whom to trust. They're frustrated with the customer service they're getting, and they demand customized financial strategy."

To earn a share of this generation's "extraordinary amount of money in motion," Dychtwald says wealth managers need to focus on three areas:

First, you need to understand all financial products on the market, for both wealth management and distribution. Living longer means [clients] need a comfortable, secure lifetime income. You need expertise on products and the ability to explain them, Dychtwald emphasizes. Clients and the times have changed. "The days of 'You handle it,' are gone," he adds. "These clients want to be collaborators."

Second, you need to provide customer service not just to the client, but by developing a relationship to the entire family. Do they have elder-care concerns? Today, boomers have more parents than children. Where are the kids, and what is their relationship to mom and dad? The future is six generations, and you have to meet with the kids and the grandkids.

And how about meeting the needs of female clients? There are 15 million single women over the age of 50, Dychtwald points out. By the year 2010, he adds, women will control 60 percent of the country's wealth. Due to their even greater life expectancy, many will be widows of male clients. And many will be highly educated, financially engaged and often in positions of influence--women with power and money! The financial services industry is 80 percent to 85 percent male. "We're about to see the industry become feminized." he says.

Finally, as an effective wealth manager, you need to be a financial expert and a psychologist. You have to become a life coach. At the end of the day, people want to understand what's ahead. "Boomers' greatest fear is not dying, not funding retirement, but unpredictability about health," Dychtwald says. The linear model of aging, where you tack longevity on to the tail end of the lifeplan, is no more. More than half of the latest generation of retirees is finding retirement less than satisfactory, he adds. People are reflecting on what kind of retirement they want. Many who were highly compensated in their work are thinking of working six-months-on, six-months-off. A corporate CEO might want to sit on corporate boards.

In fact, according to Dychtwald, the new definition of retirement is re-invention of the self, whether it's time to find that dream job, start a new business, go back to school or join the Peace Corps. "It's a time to satisfy that gnawing feeling inside of trying to make the transition from success to significance." But whatever it is, Dychtwald says, "you're the guide. Clients look to you to chart the course--not accumulation, but de-accumulation."

Four Phases of Retirement

The year was 1960, and in Sun City, just outside of Phoenix, Ariz., the Del Webb Corporation was introducing its first community for active adults over the age of 55. Surprisingly, 100,000 people showed up at the company's initial presentation.

But as Ken Dychtwald sees it, there was nothing surprising about the turnout. "By the time the 60s came along, life was improving, people were living longer, and that created a retirement class." In fact, the Sun City presentation serves as a convenient landmark to the onset of what Dychtwald identifies as the third phase of retirement.

The first phase covered the thousands of years up until the early 20th century when there simply was no retirement. People worked for three major reasons: To earn a livelihood, for a sense of self-worth, and because work brought people together--socialization.

The second era arrived around the 1930s and is believed by most people to have been set in motion by Social Security. Dychtwald begs to differ. The industrial revolution was moving into full throttle, he explains, and in the "roaring 20s" it became clear that young men worked better than older men. As we moved from the farm to the factory, he continues, there was a movement to rid the workplace of "old geezers."

The real trigger occurred during the Great Depression, when unemployment hit 25 percent. FDR was faced with an interesting challenge: He needed to make room for young people in the workplace while giving the older generation some financial security. Retirement, after all, was nothing more than a break from work. With a life expectancy of 63 at the time Social Security was signed into law, there was nothing glamorous about it. In fact, it was brief, and few lived to enjoy it.

And then came phase three. Del Webb's audience was converting from rocking chairs and shuffleboard to cruises and exotic travel. By the 70s, retirees--with encouragement from The American Association for Retired Persons--had begun to enjoy 'retirement' as a time of play, a release from work. AARP, subsequently open to anyone 50 or over, regardless of work status, pictured a golden age of retirement, paid for with someone else's gold.

Today, however, as we enter the fourth phase of retirement--the phase that must accommodate some 78 million aging baby boomers--the picture turns murky. Many current retirees soon discovered that retirement was not fun, but boring, says Dychtwald. And with increased longevity, fewer and fewer senior citizens feel they can afford to retire, an even more depressing prospect. "The longevity revolution will change all changes. Adulthood is being transformed; retirement is being radically transformed."

Such findings led to "It's Time to Retire Retirement," an award-winning article in the March, 2004 Harvard Business Review co-authored by Dychtwald, as well as a current project, a new book titled Retire Retirement, Rekindle Careers and Retain Talent: Making the Most of Demographic Changes in the Workforce.

In this phase, Dychtwald says, people will continue to work, but with a new life/work balance. It's a phase, he says, that will be driven by aspiration--the desire to have more engagement--and desperation--born of the burden of financing such an enormous population.--NM

Nancy R. Mandell ( is the managing editor of Wealth Manager.

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