5 more retirement truths your boomer clients need to know

2. Even in the deaccumulation phase, diversification is important.

Risk management is critical as boomer clients move out of the accumulation phase, but that doesn’t mean that their portfolio should be entirely risk-free. Gary Mattson coaches his clients in this truth, but only after he has checked all the boxes when it comes to income stability. “Once we have established the clients income needs and flow and demonstrate how they will never run out of money,” he notes, “then it is easier for our clients to understand how their investments would allow risk and position assets effectively for a diversified portfolio with correlated and non-correlated assets.” 

Richard Schneider has taken a similar approach as he incorporated retirement income planning into his practice: “[Retirement income planning] allows you to leverage money with very little risk. This gives the risk-averse client the ability to balance and offset riskier investments that they might otherwise avoid.”

3. A variety of income sources provide multidimensional security.

Stocks and CDs may rank low on boomers’ list of desirable investments, but they are nonetheless interested in a variety of financial products. James Tewalt, CFP, notes that the benefits of relying on multiple products are many: “Knowing they have income from several sources gives people assurance, keeps them from worry and enables them to live a less stress lifestyle.” 

Survey respondent Jeffrey Heasley agrees that more is often more when it comes to portfolio diversification: “Incorporate all types of investments, if suitable, to the allocation. [There should be] less focus on performance and more focus on income and inflation.”

4. It’s possible to be too conservative.

Resources must be watched closely in retirement, but boomers sometimes fall into the trap of holding on to money too tightly. Bill Lehnertz encourages his clients to cover all their bases, but also plan proactively for where they want their money to go. “The biggest shift is away from focusing on rate of return and focusing on recurring income streams. In addition, I very often find myself encouraging clients to give more or spend more.”

5. Product needs will change.

A good mantra to live by: Choose your products wisely. Robert DiNicola says he’s seen quite a difference since switching to a retirement income planning strategy. “The biggest difference [between retirement income planning and other advisor strategies] is the selection of plans and the content of the products that make up the strategy. I believe in various methods — flooring principles are a good start, then some other combinations of withdrawals and guarantees by using either or both fixed and variable annuities.”

Oscar Rodrigues says his focus on secure products earns substantial trust from clients: “I present safe money places and strategies to help clients reach their objectives using the least volatile products, like fixed indexed annuities and indexed universal life. Since I gave up my securities licenses my business increased because clients know their money will be in safer places (those are their own words). Besides, who needs the red tapes from BDs whose only interests are the profits a rep brings in?”