If a client's plan to retire at 58 becomes unrealistic because of market conditions, we discuss what adjustments are necessary, such as living on less or working longer. It may not be a matter of making dramatic lifestyle changes. For example, a simulation may tell us that a client who owns three residences should sell one.
While postponing retirement or making lifestyle adjustments can be difficult choices for clients, if their plan is no longer on track, it's better to address the issues now. I find my HNW clients are willing to make adjustments and strategic changes in view of what has occurred in the markets. It's a new mindset but generally they are amenable to change because doing nothing involves greater uncertainty.
It's often what we don't know that can most hurt us and our clients. I believe strategic portfolio adjustments and risk profile reassessment are critical aspects of client service in the new economic climate, particularly for advisors serving HNWs. These standards must be supported by continuous client communication that promotes two-way conversations. Not only do we discover what our clients are thinking and give them the opportunity to express their concerns, but we also reinforce the foundations on which we have built our client relationships.
Timothy P. McGrath, CFP, is managing partner of Riverpoint Wealth Management, a Chicago-based consulting firm serving high net worth individuals and corporate executives. He can be reached at 312.239.1330 or [email protected].