Want to Retain More Clients? Provide a Different Kind of Retirement Advice

Last week, an employee who was a year out from retirement called the Financial Finesse Financial Helpline seeking some guidance. He didn’t ask our planner about payout options in his 401(k), or how to file for Social Security. Instead, the employee explained that he didn’t really want to retire even though he could. He knew that when he did, he’d be losing the only social interactions he really had.  The people he’d been working with over the course of many years had become his friends, and leaving the company would mean losing the thing that had even more value to him than being able to retire comfortably.

Our caller’s concern about losing something in retirement that brought him emotional fulfillment is not a surprise.  In fact, that’s why there have been countless (and even more since the Great Recession) retirement coaching firms popping up all over. They focus on clients’ core values, and prepare people for more than just the financial aspects of retirement.  But there’s a need and a benefit for advisors to consider these values and provide more holistic retirement advice when dealing with their own clients’ retirement planning.

There are mixed views on whether providing holistic retirement planning advice is worth an advisor’s time and resources.  The volatility of our economy and new legislation dictating more responsibility for advisors in managing clients’ assets are giving those who believe it’s not worth it a shove in the other direction.  Soon, clients will seek out advisors based not only on their investment returns and performance, but also on how much guidance they provide their clients on the intangible values in retirement.  According to the Dow Jones Affluent Investor Study, two-thirds of study participants reported having created a retirement plan with their advisors. With a more well-rounded approach to retirement planning, advisors have the opportunity to capture the other one-third.  By getting on board with the new paradigm, advisors may have an

upper hand on the competition.  They’ll be offering what investors currently want and will eventually come to expect: retirement planning guidance that focuses on their overall picture and life goals. Because of this, these advisors will continue to attract and retain more clients while increasing their clients’ satisfaction in retirement.

The biggest issue right now for advisors is being able to retain clients.  With the recent market correction and Federal credit downgrade, holding onto investors after they’ve seen daunting losses in their portfolios can be time consuming and stressful, especially if they aren’t educated about market fluctuations and don’t understand their long-term goals.  According to Prince & Associates, Inc. (as cited by NABCAP), after the recession hit, over 80% of investors planned to move their money away from their advisor.  Traditionally, the industry has focused heavily on an advisor’s performance and investment returns to attract clients, showing potential clients their money is going to be in good hands. But there is opportunity and a benefit for adaptable advisors who will focus on a broader realm of factors that affect people in retirement such as our caller’s and others that hold emotional value.  

Why? Advisors who provide this broader guidance in retirement planning are more likely to retain clients when the market takes a turn for the worse.  

Clients will see more than just big losses in investment returns—they’ll see an advisor who is concerned about their overall satisfaction in retirement.  This will give the advisor a competitive edge over those who are still providing traditional planning advice that only, or most heavily, focuses on investment returns.  With consumers’ perception growing increasingly cynical, providing clients with valuable guidance that helps them achieve success in their finances and life goals is going to be a necessity to ensuring an advisor’s own success.  Advisors will eventually be expected to provide this type of guidance, and the ones who aren’t will be left behind.

So what should advisors be doing to ensure their clients are satisified in retirement, beyond their ability to do it financially?  In my next column, I’ll be providing some best practices advisors can use to offer more holistic retirement coaching without spending much more time or resources to do it.

Whether we are ready for it or not, one-dimensional planning is soon to be a thing of the past.  Financial professionals may see this shift either as a nuisance to be dealt with, or as an opportunity to grow their clients’ satisfaction in retirement. The fact still remains that advisors today are in a unique position to help people reach a rewarding lifetime dream at a time when those dreams seem even harder to obtain.

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