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Why Advisors Need to Be 'Like a Quarterback': Ken Dychtwald

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“Through all the horribleness, the pandemic has been a wake-up call to talk and reflect about legacy and end of life,” Ken Dychtwald, founder and CEO of Age Wave, tells ThinkAdvisor in an interview.

What do people consider their most important legacy? “Is it the stuff, or the values and life lessons?” the gerontologist wanted to know. He found the answer in a study conducted by Age Wave and Edward Jones in September.

Perhaps surprisingly, 43% of participants said leaving a legacy of life lessons and values is more important than a legacy of money or real estate — though, of course, those are significant as well.

The survey was the most recent follow-up to the two firms’ in-depth study of 9,000 people, “The Four Pillars of a New Retirement,” released in August 2020.

In the interview, Dychtwald points out that amid the pandemic, growth in people’s “turn[ing] toward financial advisors has been extraordinary.” 

“They want a guide,” he stresses. “People are saying, ‘Don’t just manage my investments or get me the right insurance policy. Pay attention to me and my life,” the psychologist and prolific bestselling author maintains. 

His most recent book is “What Retirees Want: A Holistic View of Life’s Third Age” (Wiley, 2020), co-written by Robert Morison. 

The 2021 follow-up retirement study also found that the “greatest financial worry” of people past age 50 is healthcare costs, and that “frightens” them. Advisors ought to be “more tuned in” to this area and other issues that particularly concern older clients.

When it comes to legacy, advisors can help by starting a conversation about it with clients and suggest ways to electronically record what they have to say about their values and the wisdom they’ve acquired.

Dychtwald, 71, who has served as a fellow of the World Economic Forum and was a featured speaker at two White House Conferences on Aging, founded the consultancy Age Wave (agewave.com) (@AgeWave) in 1986. 

Back then, he was predicting that the trend of increasing longevity would put baby boomers front and center demographically. 

Age Wave’s clients include Allianz, Bank of America, Charles Schwab and Merrill Lynch.

A further opportunity for advisors in the retirement space, Dychtwald now says, lies in “the evolution” of guaranteed income and lifetime income products.

“In the future, you’ll see a piece of a lot of people’s portfolios taken up with new evolved annuities,” which are “getting more reasonably priced and simpler to understand,” he says.

Annuity companies are “stepping up their marketing,” Dychtwald says.

ThinkAdvisor recently held a phone interview with the futurist, who was speaking from Orinda, California, where Age Wave is based.

He stressed: “During COVID, a lot of Americans realized that planning to be 80, 90 or 100 years old isn’t a do-it-yourself project. “They need a trusted advisor. They want their advisor to be a kind of quarterback,” he says.

Dychtwald is set to be the first guest of industry VIP, author and radio talk show host Ric Edelman on his new national program, “The Truth About Your Future,” which airs Jan. 1.

Here are highlights of our conversation: 

THINKADVISOR: What impact has the pandemic had on Americans’ perspective about their mortality?

KEN DYCHTWALD: We’re a very gerontophobic culture. We don’t like to talk openly about aging or dying.

But when the pandemic [hit], it was like the whole world had a near-death experience, and it made everyone stop and think.

About facing their mortality?

Through all the horribleness, the pandemic has been a wake-up call to talk and reflect about legacy and end of life: Is it the stuff [assets], or is it the values and life lessons that are more important?

Tell me what the update study done by Age Wave and Edward Jones, “The Four Pillars of a New Retirement,” found.

When we asked Americans, “What are the most important ingredients in your legacy,” 32% voted it was an inheritance they might leave for their loved ones — money or real estate.

But 43% felt that their legacy — they could vote for more than one — was life lessons and values, more important than money or real estate. 

They felt their legacy wasn’t just about money or property. It was what they learned in their lives and the memories of shared experiences with loved ones.

What does that mean to the financial services industry?

This is clearly an opportunity for financial advisors because [years ago] when the area of legacy was captured by financial planners, it was all about the money. But it’s not.

While that’s certainly important, it’s not nearly as important as people finding a way to pass on their values and life lessons.

How can advisors help?

People are looking for a trusted advisor. That’s another thing that happened during COVID: A lot of Americans realized that planning to be 80, 90 or 100 years old isn’t a do-it-yourself project: They need a trusted advisor.

So the growth in the number of people who turned toward financial advisors was extraordinary.

Specifically, how can advisors serve clients when it comes to the nonfinancial aspect of their legacy?

People are saying: “Don’t just manage my investments or get me the right insurance policy. Pay attention to me and my life.”

In our study, we asked, “Do you want your advisor to be a financial planner, partner, friend, mentor, guide?”

More on this topic

The No. 1 response was guide. They want their advisor to have a sense of what’s ahead in their lives and to get them thinking, talking and planning so they can have secure and satisfying longevity. 

They want their advisors to be a kind of quarterback. 

What does that encompass?

Going beyond just the financial. But it doesn’t mean they want them to be a psychotherapist or life coach.

They want their advisors to let them know the sorts of discussions they ought to be having or what articles or books they should read or TED Talks they ought to watch to prepare them.

As a practical matter, how do clients capture for posterity those values and life lessons they want to pass along? 

Two questions that you suggest asking are: “What is the smartest decision you’ve ever made?” and “What is the biggest mistake you’ve ever made?”

There are so many devices you can use to record, such as an iPad or using video.

I think there will be a growing craving to do this. As boomers get a little closer to their own end of life, it will become more commonplace — whether it’s writing a memoir or being interviewed by children or grandchildren — to record their legacy and what they hold to be really important.

In what other areas can financial advisors expand their role?

Much of the industry has been built around helping people plan for retirement savings, investments, some insurance, managing debt and so forth.

However, we now have over 70 million people who are retired — and, to a large extent, the financial industry hasn’t been organized around what they’re grappling with.

It’s a different thing preparing to retire and then dealing with the costs.  

What has become clear to me is that the average person — principally the middle half of the population — doesn’t understand finances.

Please elaborate.

They’re accustomed to getting a paycheck each month. But then you send them off into retirement-land where they’re no longer getting a paycheck.

How do they manage their finances to make sure they’ll have resources to last them till their [final] days? 

The average couple [in retirement] requires $450,000 till the end of life.

Where do financial advisors enter the picture?

We’re living in an era where decreasing numbers of people have guaranteed pensions. So it’s on each of us to put together the financial wherewithal to live comfortably in our later years.

Therefore, people are really looking for a trusted advisor.

I can think of no other time in my life when the forces that are in play, such as living longer, are leaning in the direction of the financial advisory community to really step up and not just be about stocks and bonds and how you’re doing compared to the Dow and Nasdaq — but to really listen to people and their needs. 

It’s not just about getting a good portfolio and having good returns.

How should advisors prepare?

It’s up to the financial advisory community to be more tuned in, more holistic, and read the books and articles and get the training in order [for example] to learn about health care [costs].

Our study found that for people over 50, their greatest financial worry was health and long-term care costs, more than the economy, inflation and market volatility. 

If a financial advisor never brings up a discussion about health care costs, they’re out of touch with what clients are frightened of. It’s irresponsible for those who claim to be financial advisors — not brokers or insurance agents — to [fail to] engage in discussions with clients and their family members about things like long-term care, survivorship and leaving a legacy.

No one should claim to be a financial advisor to help people into retirement without thinking through these potential hurdles, like who’ll care for a widow when her husband passes away.

Obviously, these issues are critical to initiate discussions about, right?

This is about the things that people worry about and how, as an excellent advisor, you can show them what their future might be and, hopefully, encourage them to do the right thing so they can have a wonderful “third age,” as I call it. 

Is the area of retirement income going through a time of change?

I’m watching the world of investments trying to stake its claim in the retirement zone, but the world of annuities and insurance is moving swiftly as well.

What you’re seeing is the evolution of guaranteed income and lifetime income products. They’re getting more reasonably priced and simpler to understand — and [companies] are stepping up their marketing.

So do you foresee greater interest in people buying annuities? 

In the future, there’ll be a place in many people’s portfolios for some type of guaranteed or lifetime income products so that those in the middle half of the population can know they’ll have a paycheck for life.

There’s so much fear and worry. We’re going to need solutions that are worry-free. You’ll see an evolution in the market in that direction. 

You’ll see a piece of a lot of people’s portfolios taken up with new evolved annuities.