Boomers Need Help

It seems that every newspaper, magazine and television news program of late has covered the subject of baby boomers and retirement. Yet, despite the deluge of news and information available to the public, the general feeling in the retirement planning industry is that most boomers are still not equipped to deal with the realities of living a retired life. And not only are those approaching retirement not ready, but the generation that succeeds them is also blissfully unaware of the importance of starting retirement planning at an early age.

This is a huge challenge for financial planners and advisors, more often than not one that is extremely difficult to get around. Yet according to a recent McKinsey study, Cracking the Consumer Retirement Code, striking the right balance between what retirees and pre-retirees want, and what they can expect, is a burden that financial planners are going to have to deal with more than ever before. A better understanding of what retirement could be like is not likely to come from clients themselves, the study says. Those planners that manage to successfully step up the kind of outreach they provide to their clients will go a long way toward arming successive generations of individuals for a better retirement, while at the same time allowing advisors to secure for themselves a place as trusted and credible parties in the retirement planning industry.

“Although this transformation may be challenging for many players, those that take forward-looking action today will most likely be ensuring their own future prospects as well,” the study states.

In order to remain competitive in a world of unprepared retirees with lofty aspirations for the after-working life, any cutting-edge financial planner must above all capture customers at a much earlier age than is commonly thought feasible, the McKinsey study states. Planners must also systematically leverage the power of referrals and retool current product offerings and advice offerings in order to better meet the needs of clients.

Three Wise Women

In the following section, three financial planners weigh in on their approach to these goals and share the ways in which they work to prepare clients for retirement.

“Retirees and pre-retirees need to understand the trade-offs between giving up a little lifestyle today to have lifestyle in the future, but most consumers do not know where to get advice from,” says Marguerita Cheng, CFP, CRPC, of Ameriprise Financial Advisors in Bethesda, Maryland.

Cheng believes in capturing a loyal client base from an early age, and works with her clients to address many issues, through a step-by-step, thorough set of questions that address both the mental and financial/monetary preparation necessary for retirement, and get the client to understand that they are not “retiring from something, but rather retiring to something.”

Cheng believes people need to have a complete vision of where they want to go, a comprehensive plan that takes into account what they like to do and what they think they would like to do when retired. Planning for this includes, among others, keeping a monthly cash flow worksheet, which serves as a guide to how much money clients would need to do what they want to do in retirement.

“In this way, clients understand that we are working together to help them design their personal roadmap for retirement,” Cheng says. “Retirement income planning is extremely important and those financial planning firms that can work with their clients to help them create a retirement income strategy will be satisfying a growing need.”

The majority of people Holly Hunter, CFP, Founder of Portsmouth, New Hampshire-based Hunter Advisor LLC, works with are simply not aware of how much money they spend, or are under the assumption that they can drastically cut back in retirement without altering their lifestyle.