What You Need to Know
- The pandemic has realigned many people’s priorities.
- Maybe your client enjoys what they do, or maybe they just don't know their options.
- Maybe they don't know they can afford it.
You can make a difference in people’s lives. These success stories, repeated anonymously, can be a great catalyst for getting referrals. Once I share this story, you might think about which current clients fit into the same situation.
I had a longtime client. I really liked her and the feeling was mutual. One day when we sat down for a portfolio review, she explained she really hated her job and gave me her reasons why. Looking over her portfolio (which I was very familiar with from preparing her review) I realized she lived modestly and had done a great job saving and investing over the years.
I explained: “If you can live within the following income parameters and we moved your money around, you can retire immediately. You never need to go back to that job again.” Two weeks later she quit! I think it was at that moment that her life began.
She was able to spend her time doing things she really enjoyed. No, she didn’t blow the budget by booking a world cruise. She loved working on community garden projects. Now she has the time.
What Your Peers Are Reading
You have retirement-age (or near retirement-age) clients. The pandemic has realigned many people’s priorities. There’s been talk of “The Great Resignation” as people reorder their priorities.
If you have older clients with fully funded retirement plans, why are they still working? Should you let them know they are at the point of financial independence, where working is a choice, not an obligation? Here are potential situations your clients might be in:
1. They don’t know they can afford to stop working.
We’ve had 10-plus years of good stock market performance. Perhaps your client is a saver, but they don’t pay much attention to their investment and retirement accounts. They are in better shape than they realize.
Strategy: Meet for regular reviews. Ask if anything has changed beforehand. Is their desired income level still the same? Conduct the Monte Carlo analysis showing how long their money would last. If they can realize, thanks to smart savings and investment decisions (thanks to you), they have reached financial independence, they should be thrilled.
2. They would like to stop, but don’t know their options.
Your client lives a good lifestyle and hasn’t paid much attention to retirement. They assume it’s off in the distant future, although they are in their nigh 50s or early 60s. They have paid enough into Social Security. They would like to stop working if they can.
Strategy: Do some “what if” scenarios. They own a vacation home and rental property. They have a huge wine collection. They own a large house with high taxes. What if they sold the big house and downsized to the vacation house? What if they lightened up on their wine collection, since they own more than they can consume in their lifetime? Give them a roadmap that could raise funds and a plan to reallocate assets toward retirement income. There will be tax consequences, but let them know retiring early is possible.
3. They own a business.
Their wealth is tied up in the business they started or inherited. They have grown children who are also involved in the business. The children might likely want to take on more responsibility but don’t want to be seen as pushing the parents out of the firm.