It seems that there is an endless debate over the role advisors should play on the soft-side, Emotional Quotient (EQ) portion of retirement planning and the hard side, Intelligence Quotient (IQ) stuff that relates to dollars and cents. 

Over time, I have uncovered several critical connections that can help resolve advisors’ uncertainty about the extent of their responsibilities, positioning them for success in both areas. Delving into the everyday lives of new and soon-to-be retirees reveals an amazing array of complexities and dynamics that play out in retirement. 

By searching for the reasons behind a request for an additional distribution, an unexpected change in portfolio holdings or a move to another firm, advisors can better serve clients by connecting the dots between EQ and IQ.

Two typical client-advisor interactions that illustrate the intricate connection are the request for an increased withdrawal and the sudden call to discuss a portfolio. On the surface, money may seem to be the issue, but money in any amount is no solution if there are deeper issues influencing their actions. Money is the tool we are all trained to reach for first when something needs fixing, but it’s a bad habit and dangerous strategy for retired clients.

Boredom Is A Multi-Billion Dollar Feeling
The financial impact that boredom has on a person’s retirement savings can’t be quantified, but it’s often the cause of frequent dips into an IRA or 401(k). When a client’s calendar isn’t full and the to-do list has become his nemesis, home remodeling shows, a stroll through the local mall, or even excessive time peeping into other people’s perceived lives on Facebook can lead some retirees to believe that “stuff” will resolve their feelings of boredom or lack of activity, and that’s when the portfolio drain begins.

Flip on the TV or walk into any retail environment, and within minutes you’ll be seduced by the immediate need for certain merchandise. Ironically, it’s not goods people want; it’s the parties, family interaction, smiles, and laughs subtlety promised by advertising agencies. They pitch an emotion or experience (sometimes more than the product), and that’s what people will deplete their savings to attain, particularly if they’re lonely, sad, or not feeling valued in some fashion.

It’s not uncommon for the boredom factor to account for an increase in a retiree’s annual withdrawal by over 100 percent; in some cases, doubling their established annual withdrawal. That means when $12,000 is supposed dribble out of the account over the course of a year, $24,000 flies out the door long before the year is over. While it may not be drawn down at those levels over consecutive years, averaging the cost of boredom-related purchases over a five or 10-year span can move a client’s withdrawal rates from safe to unsettling. It’s a losing game that both advisors and clients need to recognize can’t be won with money. The root cause is not being addressed, which is the basic need to feel happy, connected, safe and relevant. 

Advisors can use simple, conversational questions to uncover what’s behind an unanticipated request for funds.  Naturally, there are good reasons for a home makeover, a vacation or other purchases. Asking the following questions, though, can provide an advisor with insight, and may suggest solutions that can salvage dollars and cents.

• What have you done lately that’s fun, new or exciting?

• Any impending plans to visit family or friends?

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