Advising the Mid-Market

5: Convert resources into income

6: Maintain and update the plan

The process considers multiple aspects of retirement, such as the client’s engagement in the community and health, along with financial questions. For risk exposures, the identified risks include longevity, inflation, health care, and investing.

One result of following this process is that clients can distinguish between their essential (non-discretionary) retirement expenses and their discretionary expenses.

Essential expenses are best covered with predictable incomes: Social Security, pensions, income annuities, etc. Income from managed sources–investment accounts, employment, etc.–can then be used to cover discretionary expenses as needed.

The mid-market requires a more defensive approach to retirement income management, Seibert says. Consequently, advisors serving these clients need to go beyond managing assets and systematic withdrawals. That can require consideration of options such as spending less, creating additional retirement income, using home equity, and other choices.

Although this approach may seem complex, a well-defined approach simplifies the process. “For many clients, especially in the middle market, it doesn’t need to be overly complicated,” says Seibert. “You can come up with relatively easy-to-follow solutions by applying our process.”