A pair of financial veterans say they have a better model than what most advisors are using now to help clients plan a comfortable retirement.

Advisors can use a "personal asset-liability model" to assess clients' expected revenue and expenses and develop a long-term investment plan, say Timothy Noonan and Matt Smith in their book, Someday Rich, a financial planning guide for the rich and potentially rich, published by Hoboken, N.J-based John Wiley & Sons this month. 

"Advisors need to have conversations with their clients about what they expect to be spending 10 to 15 years from now -- if they're going to have nest eggs that are self sustaining," Noonan said in a recent interview.
"The only credible way to do that is to answer the number one unresolved question in a client's mind: Have I got enough?" he continued. "Once that baseline truth is in view, other peripheral (financial) decisions can be more intelligently made around it."

The personal asset-liability model, says Noonan, includes two parts. First, an advisor needs to calculate an individual's funded status: a ratio of assets to liabilities. Second, an advisor needs to develop a feasible retirement investment plan based upon that ratio. If the client's funded status is less than one, the retirement plan is not feasible and needs adjustment, according to the book.

A financial advisor also needs to helps clients answer four core questions: "How much income do I have?" "How much money do I need to fund my desired lifestyle?" "Will my money last as long as I do?" and "Am I doing everything I can to ensure my financial security?"

An important step for advisors is to value a client's future liabilities, and the book offers different methods to do that, as well as how to create spending plans. 

"People's number one fear is running out of money, but do they even know how much money they'll need to get there? They don't," says Noonan.

Noonan says advisors should also discuss with clients the range of retirement income they think could enable them to live comfortably and how much longer they would be willing to work to reach that goal.   

"Most people aren't asking themselves the question, 'Would I really enjoy working for two additional years of service?' Most people are asking the question, 'Is it possible for me to hang in there?'"  

Advisors need to ask clients to envision two different lifestyles. "One that is the consequence of moving out of the workforce now, and one available after working a few more years," Noonan said. "The answer to that question will help a client determine how a given number of working years will impact upon their asset vs. liability relationship once they retire."      

-Jim McConville