How to Deal With Clients’ Not-So-Great Retirement Expectations

I have a dear client who is now 65. Her husband had passed away 12 years ago. At the age of 60, she was being let go from her job of 30 years, and she was beginning to lose her sight. Her world had come undone. She had $500,000 of assets, which was not enough to support the life she was hoping to create. How do I do my job of providing honest advice to her and still help her transition into the next stage of life?

I spent several hours with her to get an understanding of what she needed in order to get some sense of emotional and physical stability back in her life. Her big goal was not to rent any more. To her, owning something would help her set some new roots, but the numbers did not support this goal. We worked on developing a plan that was to evolve in stages. We agreed that she could buy a condo now, but would probably have to sell it in seven to 10 years. We came up with a plan that was not the one of her dreams, but was a nice compromise and allowed her to move forward.

Work with your clients to help them understand their different choices and come up with a plan that will get them somewhere, one step at a time. We really don’t know what lies ahead, how long we have or how healthy we will be, so be creative and help your clients get as much joy out of the journey as they can.

Finally, a little twist: How do you deal with clients who can achieve their retirement dreams but don’t believe the numbers? Their retirement plan indicates they are all set, yet they still have more than the normal amount of trepidation about their financial future.

I tell my clients all the time that I am 50% psychiatrist and 50% financial planner because we do have to deal with the emotions as much as, if not more than, the pure numbers.

One approach is to get to the root of the problem. This is not easy, but it can be very rewarding for you and your clients. Prompt them to tell you what it was like growing up and how they truly feel about money. For some, no matter how much money they have, their core values tell them they really are not worth that much. This is the psychiatrist angle, and it often does pay dividends if you listen well. It could be that no matter what the numbers indicate, they will never feel comfortable. That is fine if you mutually recognize this. It will help to frame many of the conversations you have with them and how you deal with them in the future.

Another approach is to deal head on with the experience we all have had with the market’s total return over the past 14 years. I faced this with a client of mine in a recent review. He has accumulated $3.7 million in investable assets, and his retirement roadmap indicated his retirement would be successful even if we assumed only a 5% return on his assets for the next 30 years. I have no control over returns, but I am comfortable that there is a good probability we could achieve that over the very long term. However, all he sees is the flat performance and does not believe that will ever change.

Here it is instructive to bring perspective to the clients. First, share with them your knowledge of how markets perform and the cycles we go through. Second, remind them this is why they hired you. We meet with our clients regularly to change assumptions and goals; if updating is necessary, it will be done. Prompted either by them when their objectives change or by us if we need to make an adjustment, we are there to guide them with the construction of the plan. By telling them we are along for the ride and that the plan is a living document, it can bring a sense of proper perspective and comfort to the client.

My role with my client is to make sure I can come up with solutions that are appropriate for them. Sometimes that will mean we have heart-to-heart talks so that we can better understand them. If we do that and actively listen to our clients, then we can deliver genuine planning advice that we are proud of.