How to be a retirement planner

Retirement planning has been shaping up to be one of the more interesting specialty areas in the financial services business, especially as boomers have started to hit their retirement years. Now, compound the sheer number of people needing assistance with the variety of financial challenges facing them, and you have one of the most dynamic markets a good producer could hope for. Without a doubt, this is one of the areas where people are desperate for solid financial guidance and advice.

The three participants in this month’s roundtable have deep experience in offering such guidance, and they’re here to share their advice.

For part two of this roundtable, see: Annuities and Social Security: What retirees need to know

Q. How did you come to focus so much of your business on the retirement planning area, and what advice would you give to an agent who is looking to expand his or her market to include retirement planning as a specialty?

Paul S. Carpenter, CPA, CFP. Carpenter Financial Services: I am focusing more attention on the retirement market simply because of the increased demand from my generation, who are the baby boomers. Retirement has come front and center, and there is new urgency to plan. Retirement planning has been a focus of my practice since the start. Most boomers up to now have been in the accumulation stage of retirement planning, and they are starting to realize that the distribution phase is critical. I explain it to my clients this way: “Your growing phase is ending, and you are now embarking on your spending phase.” The spending phase is where we are subject to the most risk because too many variables are unknown.

The advice I would give to an agent trying to expand into retirement planning is to make sure you have the education and expertise to give advice that will stand the test of time. This is not an area for the untrained; it is a specialty. It is critical to have a good solid understanding of tax law as well as expertise in wealth management. Poor tax execution can surely sink a plan, so it is important for the plan to cover the net, not just the gross, income needed.

Curtis V. Cloke, CLTC, LUTCF, financial advisor and retirement income expert, trainer and speaker: In my early days as an advisor, I mostly helped my clients achieve goals restricted to their accumulation years. This included providing them with a lot of life insurance to help them protect their families and businesses, as well as helping them plan to cover their kids’ education expenses. I also did a fair amount of estate planning. I came to focus more on retirement planning as it gradually became more important to my clients.

I found that, by listening carefully to their goals and expectations for retirement, I could begin to craft the plan that was right for them. Where my expertise came into play was in identifying and verbalizing the risks that posed the greatest threats to their retirement. Only then was it appropriate to begin a discussion about the financial strategies and products that would best suit them.

That is my biggest piece of advice to agents interested in expanding into the retirement planning specialty: learn to listen. I believe 75 percent of success in this industry is based on your ability to connect emotionally with a client. Only 25 percent is the technical persuasiveness of your financial strategies. If you can listen to your clients and help them understand what it is they are most worried about in their retirement and how best to protect them from those risks, you can be successful in this business.

Randy L. Scritchfield, CFP, LUTCF, president of Montgomery Financial Group in Damascus, Md.: Specializing in retirement planning occurred primarily and most naturally as a function of my existing market. Being a baby boomer myself, as my clients aged, their needs changed, and I changed with them. For many clients, early in our relationship, I attended their weddings, sent them baby gifts, and shortly thereafter, established college funding accounts. Their children have now graduated from college, and I am helping them decide where and how to retire.

My advice to a new agent looking to specialize in this would be to truly do so — specialize. One should not have a list of specialties, but rather just one. In a survey of Top of the Table members as to how they made Top of the Table, one of the primary reasons stated is to specialize.

For my clients who are both preparing for and in retirement, I am a resource for many products and services but not necessarily delivering them myself. For example, I work with a long-term care specialist who handles that for my clients, given that it is such a specialty unto itself.

Q. Are your clients and prospects truly aware of how much money they realistically will need for a secure retirement? And if not, what techniques do you use to motivate them to plan appropriately?

Carpenter: We look at a plan knowing there is no such thing as 100 percent accuracy. Life is complicated and expenses come from deep left field sometimes, so we work with clients to prepare accurate post retirement budgets for both necessities and luxuries. We try and nail down accurate plans to take care of the necessities while using excess funds to cover the luxuries. We also try to create what-if scenarios with funds set aside for liquidity needs, as well as covering future inflation risks. As for motivation, poverty is a great motivator, so clients generally understand they must keep spending within limits or risk the consequences.

See also: 4 retirement income risks — and how to avoid them

Cloke: The average person I advise is not well educated on the amount of resources it will take to provide the desired level of income relative to their desired level of risk. This can, at times, lead to a bit of sticker shock. Once again, education and honesty are the keys to moving beyond those moments.

I use a baseline approach to help illustrate the person’s present situation compared to the solution scenario, which is net of all the effects of strategies I employ. I make sure to highlight benefits they are receiving, such as security of income, maximum return on investments and achievement of legacy goals. My clients are reasonable people. Once confronted with results of a well-executed analysis, they adjust their expectations accordingly.