As an industry, we’ve done ourselves a big disservice by focusing so much on helping people reach a retirement “number”. More and more retirees, having hit that magic jackpot or been forced to retire shy of their goal, are wondering why they have to keep paying for advice. I’ve been talking to advisors and interviewing consumers, and it concerns me that advisors are too complacent while many retirees are discretely considering their options.
Think about this from the perspective of a 62-year-old retired couple with a $2M dollar portfolio. Here’s what may be running through their mind:
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We’ve hit retirement and have a plan—isn’t that the end game?
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We’re conservative—Vanguard could protect our money at a lower price.
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I’m not sure what we’ll talk about with our advisor from here.
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We’re paying about $20,000 in fees—we could use that to enjoy life more.
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We’ve got the time now to research and do more for ourselves.
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We’re moving, so the local relationship will be gone anyway.
My marketing experience tells me that this perception that retirement is more of a “set it and forget it” phase will only become more widespread. The advertising dollars that Vanguard, Schwab, Fidelity and others have is huge, and retirees are an attractive segment for them. I’ve been watching the Schwab campaign for Intelligent Portfolios; they’ve made a brilliant move by referring to their way as “modern wealth management.” Labeling is powerful—if they are modern wealth management, what are we?
If we want to change the game and make advisors even more important to clients’ post-retirement than they were in the planning phase, we need to change our language, debunk a few myths and introduce new capabilities. These are my five best ideas:
1. Redefine the planning stages to better reflect the reality of retirement. There’s the bridge to retirement, a few years ahead of time. The retirement year can have a lot of financial transitions like selling and buying homes. Then there’s the first five year phase—adapting to a fixed income, traveling while you can, and so on. I can imagine a four or five stage roadmap which would make clear the dynamic nature of the plan, and the need for advice along the way.