Retirement Cash Management Presents Advisor Opportunity
Many businesses that focus on the asset accumulation phase of clients retirement plans tend to neglect the second part of the equation: cash flow during active retirement, said Bob St. Jacques and Frank Sabatini at a joint presentation at a recent Ernst & Young seminar in New York.
St. Jacques, a senior advisor for legal firm Lang Michener, Toronto, and Sabatini, an actuary in the Hartford, Conn., Ernst & Young office, said this apparent lack of attention to cash flow management creates a business opportunity that is especially apt in the current demographic environment.
People who will retire in 10 years, ages 55-64, and those already retired, ages 65-74, are the ones with the most wealth, according to the Federal Reserve Board Survey of Consumer Finance, 1998, and the 2000 U.S. Census.
“Nows the time because now theyre all worrying,” Sabatini said. “We need to get our producers and advisors focusing on this segment of the marketplace.”
Businesses that want to develop this opportunity will be successful if they adopt a customer-centric approach, they said.
“We propose that its not good to tell people they will live an average age,” St. Jacques said. “We propose to tell people if they are lucky enough, they will need assets to sustain their lifestyle while living longer and not worry about the risk by building the right tools to help them do that.”
He said this is the wisest approach, but one that is seldom taken by the industry.
“During asset accumulation we talked to people about giving up a piece of their wealth to help us grow it for them–thats not how it works in retirement,” St. Jacques said. “A consumer wants the whole picture but the industry has not responded.