Often when some of the most radical changes occur right in front of your face, they are almost imperceptible at first.
That was certainly the case at last month’s Inside Retirement conference in Dallas, where the discussion centered on retirement as we know it increasingly becoming a 20th century institution. What takes its place is likely to be both exciting and frightening. Financial advisors will find themselves right in the middle of this phenomenon.
A dynamic, disruptive labor market and greater longevity are the two driving forces changing clients’ lives in ways we are just beginning to discern. Financial advisors, many of whom entered the business after working in another field, are hardly the only professionals switching careers and working longer.
Since the recession ended, the fastest-growing age group in the labor force is workers over 65 years old. With that demographic segment projected to nearly double by the middle of this century, the consequences are going to play out in ways that are hard to foresee.
Not everyone is going to find the shift seamless from a linear career and traditional retirement to the gig economy. At the retirement conference, oncologist-turned-financial advisor Dr. Ralph Broadwater and his partner Rick Adkins of The Arkansas Financial Group discussed both the financial and psychological challenges of sudden retirement facing his fellow physicians. When someone stops going to a hospital where they are treated as almost a deity every day, the change can be a rude shock.
Even though financial advisors’ clients enjoy a greater degree of financial independence than most Americans, many are likely to keep working because they want to and need to. If recent trends continue, the labor market is becoming more receptive to a wide swath of older workers than employment trends at Fortune 500 companies—where they are often targets for downsizing—would indicate. All evidence signals that the U.S. economy will run low on new workers by the end of the decade, so employers may have little choice.
Ric Edelman, CEO of Edelman Financial and Russ Hill, CEO of Halbert Hargrove, talked about these issues extensively in Dallas. Savings and protection patterns are likely to change.
Increased lifespans are prompting them to embrace late-stage career planning, an additional cost. But they expect clients will have more sources of income and will deplete their assets more slowly.
In sum, the improvement in quality of life is something we can look forward to, but getting there will be painful for many Americans.