Like it or not, the first wave of an anticipated 76 million baby boomers nearing retirement is headed your way. Are you and your financial planning practice ready for it? We’re not just talking about having sufficient staff or a large enough coffee pot. No, we’re asking you to consider whether you and your partners and employees are up to speed on issues specifically related to the aging investor population.
Older clients will need your guidance on real, everyday issues beyond asset allocation and investment choices. Financial planners will need to take a more holistic approach and understand the broader needs, motivations, and conflicts that seniors grapple with.
Planners will need a deeper knowledge of the everyday needs of the older clients that will constitute a larger percentage of their practices, and to which they will increasingly cater. In fact, by broadening their knowledge base on longevity, the complexities of healthcare, senior housing arrangements, and the unique emotional needs of older clients, planners will be equipped to better distinguish their financial practices from a sea of others.
To gauge how well prepared RIAs are to meet the needs of the growing number of baby boomers approaching retirement, AdvisorBenchmarking surveyed online 326 RIA firms in November 2007 about their current practices and future plans.
Planners responding to the survey acknowledged that baby boomers make up the largest percentage (48%) of their client base. Of those advisors with managed assets between $250 million and $500 million, 68% currently cater to a client base that is composed of a majority of boomers.
Previous AdvisorBenchmarking research has shown that advisors feel well equipped to handle the wealth retention and investment management side of the retirement equation. But when it comes to non-core financial issues, such as living arrangements for retirees and senior health care issues, advisors aren’t as savvy. Right now, 63% of planners lack any training in the specific needs of elderly clients.
Where does your practice stand? How do you start to get savvy?
Assess Your Knowledge
Do you and your staff need to enhance your knowledge about various senior issues? The truth is that if you cater only to institutional clients or have focused your practice on a much younger set of clients who are far from retirement, you may not need to educate yourself, but even younger clients may grapple with the more complex financial needs of their longer-living parents and grandparents. If you’re like many planners who serve a broad spectrum of clients with a bulging concentration nearing or already in retirement, then it may be time to enhance your knowledge.
Start with a candid self-assessment of your practice’s strengths and weaknesses. Don’t look to be critical, rather try to identify lapses and then find smart ways to fill those gaps in expertise or experience.
For instance, are you or one or more of your staff members well versed on the differences between Medicare and Medicaid coverage, long-term care issues, assisted living, or prepaid funerals? Do you or someone else at your firm understand the emotional challenges clients may face when dealing with failing health, chronic illnesses, the loss of a loved one, living alone for the very first time, or having to provide for their own parents while also hoping to give to their children and grandchildren? Do you and coworkers feel genuinely well equipped to deal with your clients’ physical, mental, spiritual, and financial challenges, or know where or when to refer them to others?
Build Your Bench
If you yearn to expand your horizons and learn more about these issues, then leverage that education to benefit your clients. Perhaps you don’t want to bone up on every aspect of senior living, but prefer to delve into just a few topics of particular interest. Your customized plan of better serving your clients may instead include hiring one or more planners who have specialized training in a variety of elder care and retiree issues. Or perhaps you can use an elder training program as an incentive for a steadfast employee who’s been asking to get more involved. Partnering with others who provide specialized senior services is also an option.
Either way, planners can see this as an opportunity to build a deeper bench of expertise and a more competent planning practice. It also adds credibility to the firm. That can be especially pertinent for those practices sporting even the most competent 20- and 30-something financial planners whose depth of understanding about seniors only traces back to Grandma and Grandpa, according to Neal Cutler, PhD, dean of the American Institute of Financial Gerontology and adjunct professor of the University of North Carolina at Greensboro’s gerontology program. “Everyone has stories to tell about their mother, but clients value your specific expertise more than an ice breaker to a conversation.”
Add Some Breadth
Only a small slice (9%) of advisors said that they have specialized certification or training–such as having earned the Certified Senior Advisor (CSA) or the Registered Financial Gerontologist (RFG) designation–in areas including physical, psychological, and social aspects of older clients’ lives.