From the October 2009 Issue of Senior Market Advisor Magazine

An agent told me a story of a retired client who formerly had an investment portfolio worth a little over $4 million, from which he was withdrawing $200,000 a year. By March 2009 that $4 million was worth only $1.2 million.

The agent proposed annuity solutions that would get the retirement income close to $90,000, guaranteed, but the client kept going back to his old advisor, who was telling the client not to buy the annuities and to simply wait. The agent was frustrated. “Even if that other advisor manages to return 10 percent a year, the client still runs out of money in a decade.”

The safer solution

The agent couldn’t understand why the client wouldn’t accept the safer solution he offered, and why the client kept going back to the advisor who caused the loss.

The reason for the client’s behavior was that his retirement plans had suddenly died and he was grieving. The client had lost $2.8 million and was witnessing the death of his retirement.

His $200,000-a-year lifestyle will need to be drastically curtailed. Homes and cars may need to be sold, gifts to children and charities curtailed, and worst of all, the sense of security once felt is gone forever. The client is in the grieving process and that grieving needs to be acknowledged by the agent. The client is in denial, which is why he continues to listen to his old advisor.

Accepting reality
The new agent, on the other hand, can help the client by urging him to accept reality and end the denial. “Unless you plan on dying in the next seven years, you need to reduce your lifestyle to meet an annual income of $90,000,” the agent told him.

The agent also can be there to say it’s not the client’s fault. “You were betrayed and you have every right to feel angry.” And the agent can help the client to deal with the new reality: “Although this income is less than you were used to, we can ensure it will not go away.”

There are many people who, if shown the reality of their situation and ways to cope with the new reality, will be receptive to new solutions.

Your role?

The agent’s role is not to provide grief counseling in any shape or form but to recognize that the client may be grieving. The agent can help by showing the client the reality that must be faced and then offering a “least bad” solution in this new reality.