Working with a retirement planner can be a challenging process for many clients. After all, this is a relationship that requires a lot of trust on both parts, and a great deal of financial candor from the customer. Scott Hanson, a certified financial planner with Hanson McClain Advisors in Sacramento, shares his thoughts on how a retirement planner can best explain their role, foster mutual trust, and make the relationship work to best advantage. As Hanson notes, the greatest benefits you may provide as a retirement planner are the financial mistakes you help a client avoid.

Scott Hanson

Q: How would you advise that a first meeting should go between a retirement planner and a potential customer, and what should be covered in that conversation? 

Hanson: The first meeting is all about establishing a relationship. Does the customer believe the advisor to be honest, competent, trustworthy and likeable? Does the advisor believe the customer to be forthcoming and honest? The meeting will contain discussions that are both quantitative, such as assets, liabilities, etc.; but also qualitative, such as financial goals, objectives, risks, concerns, etc.

The only areas that a financial planner should not get involved in are interpersonal issues within a family. Otherwise a good financial planner really needs to understand the client – understand them emotionally; what drives them; what makes them tick; what types of risk policies they have. The better a financial planner can get to know their client the better advising they can do for them.

Q: How should a retirement planner best describe their role and outline their duties to a new or potential customer?

Hanson: A retirement planner should be one that helps a customer accomplish his or her objectives. The retirement planners duties include determining appropriate savings levels, how to best allocate investments, which savings vehicles to use, etc.  In addition, a retirement planner should set expectations such as how often they will meet, what their role is, etc.

A quality financial planner will address any areas that pertain to a person’s financial life, whether it happens to do with their retirement plan, work, or savings that they have. They will also take into consideration any other investments the individual might own, including real estate. They will address debt situations, such as does it make sense for the person to pay off a mortgage; or, are there other consumer debts out there such as auto loans that need to be taken into consideration? They should also take into consideration risk reduction, liability insurance, umbrella policies – anything that would impact a person’s financial life.

Q: How should a retirement planner best explain to a potential customer the advantage of having their services?

Hanson: A good retirement planner should be able to communicate to a customer:

  1. What it is they provide (retirement projections, etc.)
  2. Why this will help an individual
  3. What the ultimate benefit to the customer is

Explain to the customer (or potential customer) that one of the greatest advantages an individual can have working with the financial planner is that there are areas of their financial life that they are no doubt unaware of. In other words, they don’t know the questions to ask.

Sure, a customer can go online and get any information they want; information that is available to all. But it’s not just information the customer needs. Sometimes it’s knowledge, and wisdom, and advice. Explain to the customer that they will benefit from working with you by not just getting information on the options for their 401(k) or the options for their retirement; but how all these things work together; plus some good advice on what steps the person can take to best prepare for retirement.

Q: What can a retirement planner say to a customer that will help make the job of working with them as easy as possible?

Hanson: I think the financial planner should start by stressing the need of the customer to provide accurate information and to fully disclose everything in their financial life. Sometimes people have made mistakes with their finances that they don’t want to share with somebody else. We all make mistakes with our finances. We have things that we are embarrassed about or ashamed of. When an individual chooses not to relay some of that information to an advisor they’re not setting themselves up in the best position possible for that financial advisor relationship. The more transparent they can be with the advisor, the better job the advisor can do for them.

Q: How deep into a person’s financial history should a retirement planner go?

Hanson: In today’s environment, I think it is important for the advisor to at least have a good understanding of how a client has reacted in the last several years given what has happened in the economy. There are a lot of tools out there designed to judge someone’s risk looking at what a person has done, how they have actually reacted. I think you can learn a lot about an individual.

Q: What are the “need to know” things that a retirement planner should convey to a potential customer?

Hanson: Two items:

  1. How much should be saved on a regular basis.
  2. How much can be spent.

Just like in healthcare, for a person to be thin, the real focus is on moving more and eating less.  In retirement planning, it’s about saving more and spending less. 

Q: What are the misconceptions that consumers have about retirement planning that retirement planners should be aware of?

Hanson: A lot of consumers believe that retirement planning is something that should be done just prior to retirement. In fact, I’ve talked with many folks in their 30s or 40s, and even 50s, that don’t believe they need to do retirement planning because their retirement is years away. The reality is, the longer a person has before retirement, the more help a retirement planner can be.

Q: What are the aspects of financial planning that a retirement planner needs to have personal expertise; and what areas can they refer clients to for help elsewhere?

Hanson: A good retirement planner is a qualified financial advisor, such as a Certified Financial Planner, who has experience in retirement planning.  A retirement planner doesn’t need to be an expert in tax or estate planning, but he or she needs to know enough so they can spot problems and opportunities.

Q: What professional training should a financial planner have had in order to most effectively work with customers?

Hanson: The most widely recognized and accepted credential in the field is the Certified Financial Planner designation. Its rigorous course work, where not only does an individual have to pass a number of courses, and pass a confidential two-day exam, but there is certain work experience they must have and also a code of ethics. There are some other credentials out there that might be a little specific regarding retirement planning, and there are credentials for people who are responsible, for example, for installing retirement plans, who act as advisors to retirement plans. As far as individual financial planners, I think the CFP is a must.

Q: How often should a retirement planner be meeting with or advising their customers to best serve them?

Hanson: An annual meeting is typically advised for quality retirement planning.

Q: What should be the goal of the relationship between the customer and the retirement planner?

Hanson: The best relationships are built upon trust, and the relationship needs to be such that the financial advisor trusts the client, the individual, to provide accurate information and honest answers to the questions. And the individual needs to be able to trust that the financial advisor is putting their best interests ahead of them. Any certified financial planner abides by a code of ethics which dictates that they must put the client’s interests first.

Q: What actions should a retirement planner take to help best establish that relationship of trust with a customer?

Hanson: Don’t rush a customer.  Trust is built up over time, and the best thing a retirement planner can do is to help a customer pick a realistic retirement date and come up with a game plan to reach that retirement goal.  It’s only after truly helping an individual with the planning process that a retirement planner should recommend specific investment products.

Q: What is your parting advice to retirement planners on how they can best help their customers achieve their retirement goals?

Hanson: I think where a financial advisor can add a lot of value is in keeping people from making mistakes. If someone has a good relationship with a financial advisor – someone they trust that they can call before they do something – I think there is great value there. We add more value in helping people avoid making mistakes than we do in helping them make money. And as your customers get closer to retirement, they don’t have the time left to make up for those mistakes.