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Retirement Planning > Retirement Investing

Top Retirement Advisors Address 'The Softer Side'

By Ed McCarthy, CFP, RICP

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“I don’t want to run out of money.” And?

While some clients’ greatest retirement concern may be a lack of cash, there are other things on their mind, too, which is prompting advisors to widen their focus –and their services.

A study from Practical Research and GDC Research shows that many advisors are moving beyond the income-replacement challenge with their clients. Based on 100-plus in-depth interviews with financial advisors and representatives, home office staff, product providers, and others involved in building platforms that serve retirement-focused advisors, the key findings include:

– A broadening scope of support, with core services extending beyond asset management, risk protection, retirement-income creation and wealth transfer to also include challenges such as health care, elder care and family issues.

– A consideration of both financial and emotional aspects of retirement, as advisors deliver support that serves a range of client concerns that arise when transitioning and living in retirement.

– A growing emphasis on longevity planning, as advisors plan for a wide expanse of financial and personal issues that emerge for clients living extended periods of time post-retirement.

– A practice model oriented to independent, fee-based team practices, with more experienced RIAs and independent broker-dealers taking the lead in serving this marketplace.

– A planning-centric approach to helping clients in retirement, oriented to building relationships based on an integrated process rather than on specific products or solutions.

– The development of a cross-section of relationship management skills including empathy, listening, and communication, which are combined with deep technical expertise developed through experience and training.

Advisors increasingly see themselves as being a provider of support, either formally or informally, in emerging areas such as health care, elder care, personal development, and inter-generational concerns. This is in addition to providing support in more traditional areas, such as investments, insurance, and estate planning. Many of the best practice advisors embrace this expanded role, being driven by the belief that extended support forms the basis for building profitable, long term relationships.

“Advice delivery has become paramount — it’s become a prerequisite to retirement-income delivery,” says Dennis Gallant, president of GDC Research and co-author of the study. “You need to look not just at providing income streams, which is critical, but the differentiator is talking about the ancillary services involved in dealing with retirees.

“It’s the softer side — helping clients envision retirement,” explains Gallant. “We’re talking about things beyond retirement income: elder care, career advice. Advisors are helping clients articulate these issues — they’re not necessarily providing solutions for all of them. It’s very clear that the clients are looking for more comprehensive advice.”

While advisors are broadening the scope of support they provide to clients, they typically do so through extended networks of professional relationships and not by adding internal staff or expertise. Relying on third-party expertise provides flexibility and scalability, but limits exposure and expense. Nonetheless, advisors are finding that they must expand their knowledge base as they guide clients through the unique challenges associated with retirement today.

Readers interested in learning more about the study can contact Gallant at [email protected].

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