Stand out from other advisors by preparing clients to retire

There are myriad ways to prepare clients for a fulfilling retirement. Clients accumulate assets for many years in the hope of retiring and living comfortably, but that’s only part of it. While clients may think everyone is happy and excited about retirement, it also can be one of the biggest stressors in their lives because their self-worth is tied to what they do for a living. Explain this to clients as you guide them through the process.

Retirement income

In retirement, clients need to be prepared for a stock market correction every day. I like to use phrases that establish expectations and help set up the discussion, such as, “Over a typical 10-year period based on investment returns, you’re going to love us twice, hate us twice and be indifferent to us six times. What this means is that over a 10-year period, the market typically goes up dramatically twice (the years you love us), goes down dramatically twice (the years you hate us), and six of the 10 times you get an average return, and that’s when you think we are doing an OK job.”

Create a client strategy to deal with typically widely varying investment results.

Phases of retirement  

The first two years of retirement are usually the two most expensive years because they are usually used for pent-up demands that will be satisfied during this two-year period. Eventually, they will settle into a retirement lifestyle. The retirement stages are typically:

The go-go years: These are their most active years.
The slow-go years: Clients are still happy, but they are starting to slow down.
The no-go years: These are the years of extensive medical issues and limited mobility.

It is important to have this discussion to make sure your clients understand that retirement is a journey and not a destination.

The industry does a disservice to new retirees as we (the industry) are assuming that clients need a stable income adjusted for inflation through their retirement years. If we run the analysis, assuming a steady net spendable income (after tax and after inflation) through their retirement years, we are not allowing them to spend more money in their early go-go years when they are healthier and have more energy. Or, we are making them work longer than they need to.

Client process   

The phrase I use with prospective clients is, “You retire once, and I help people retire every day, so I’ve seen the good and the bad both emotionally and financially about retirement.” As you take your clients through the retirement process, you want to start educating them. Here are the major financial risks your clients will face in retirement:

  • Longevity risk
  • Inflation risk
  • Market volatility
  • Withdrawal rate risk
  • Mental capacity and estate planning risks
  • Health risks

You also need to spend time during the first meeting learning about the soft issues that concern them about retirement. It is important to stress that the concerns and confusion they have about retirement are normal and should be expected. We explore with our clients some of the emotional risks of retirement:

  • Loss of identity
  • Boredom
  • No longer feeling of value
  • A developing trend is “gray divorce.” There is now a spike in divorce around retirement.

In helping your clients prepare for retirement, it requires much more than running an illustration on how much income they can generate in retirement.   

Clay Gillespie is a 22-year MDRT member from Vancouver, British Columbia, Canada. He’s a Top of the Table member and a member of the MDRT Executive Committee. This was excerpted from his 2023 MDRT Annual Meeting presentation Are you ready for your clients to retire?

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