3 Ways to Bridge Retirement Conversation Gaps
Here's how to make sure you truly understand your clients and their financial concerns, so you can give them the best possible advice.
It’s no surprise that Americans have significant concerns about their finances right now. Survey after survey confirms that the current environment has heightened anxiety over a variety of financial planning topics, from market volatility to whether or not people have enough money saved for retirement.
(Related: Americans Ponder Savings Protection, Expect Further Stock Drops: Allianz Life)
While some of the statistics may be eye-opening, they probably don’t affect the way we do our jobs or the regular conversations we’re having with our clients because we’ve already got those bases covered — right?
We make it a priority to discuss retirement risk factors and the different tactics available to mitigate those risks. We listen to our clients’ concerns and make sure we understand as much as possible about their specific financial situation in order to provide the best counsel.
But when we consult them about retirement risk topics, can we be certain they completely understand our advice? And perhaps even more important, when they share their concerns, are we truly hearing what they have to say?
According to the recent Retirement Risk Readiness Study from Allianz Life Insurance Company of North America, it’s likely there are some gaps in this dynamic that financial professionals need to address if we want to make stronger connections with our clients.
A few examples from the study are particularly illuminating:
- Nearly half (49%) of Americans say a stock market drop is the greatest threat to their retirement security… yet only about a quarter (27%) of those with a financial professional have discussed this concern.
- More than half (55%) of people who have yet to retire say they are worried they won’t have enough money saved for retirement… yet a mere 6% say making a formal plan with a financial professional is a top priority.
- Six in 10 people who have yet to retire say running out of money before they die is one of their biggest concerns …yet 27% of those with a financial professional say they have discussed these concerns and only 14% have discussed concerns about not having enough money to fully enjoy retirement.
- Nearly 60% of Americans say they worry the rising cost of living will prevent them from enjoying retirement …yet just two in 10 are having discussions with their financial professional about the impact of inflation and how it can prevent them from enjoying their retirement.
Clearly, something is being lost in translation when discussing these risk factors. So what can we do to reverse this trend and help ensure our messages get across more clearly?
1. Listen.
While we may think these conversations are happening with regularity and feel confident that we’re doing our due diligence in discussing retirement risk factors, it is possible we’re not completely hitting the mark.
This could come down to something as simple as making sure we spend as much time listening to our clients’ concerns as we do running through our own priorities.
While it is certainly important to address any topics we have on our checklist for every client meeting, we must ensure we take equal time to listen to what is on our clients’ minds and then connect the dots with any tactics we recommend. Improving our listening skills is an important first step in improving the process.
2. Be explicit about specific risks.
The issue here may be subtle, but reframing risk-based conversations to focus on specific retirement risks — including longevity risk, managing market volatility and inflation concerns — could make all the difference.
Instead of a broad discussion that only touches on the importance of managing risks, be sure to zero in on each risk specifically to ensure your client feels confident about the ways these risks are being addressed within the larger plan.
This approach may uncover gaps in understanding from your clients regarding how certain strategies are meant to mitigate specific risks. This is also an area where it may be helpful to discuss how adding guarantees to their portfolio can help manage risks.
3. Don’t fear difficult conversations.
Above all, the Retirement Risk Readiness study demonstrates that talking about some aspects of our finances might still be taboo — even between financial professionals and their clients.
In reality, that relationship should be just as close as one a doctor has with their patient, with the same level of comfort in discussing difficult topics. One way to address this is to ensure you have a purposeful discussion with your clients about their financial fears.
What keeps them up at night? What aspects of their financial plan are they most nervous about? Do they truly feel comfortable with all aspects of their financial plan?
We can’t assume that all client fears are the same, so we must dig into every topic — even the uncomfortable ones — to truly ensure we have all of the bases covered.
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