I have a confession to make; I’m in recovery. Retirement recovery. I will not use that word with clients again. Let me explain. I was teaching a batch of fresh-faced, twentysomethings talking about planning for their retirement. One kid looked up from his smart phone long enough to retort, “Retirement! I’m just worried about getting a job!”
Not to be deterred, I went on, “What do you think the clients that you’ll be working with are worried about?” Again, pulling himself away from that fascinating text from his girlfriend, he said, “I hope they’re worried about how they spend the rest of their lives, what makes them feel happy and fulfilled, and enjoying each day that they stay above ground.”
Hmmm. “Doesn’t that take money?” I went on. “Yeah, but nobody really retires,” he pointed out. “My grandma retired five years ago, but she’s so busy now, we hardly see her anymore. She was an accountant, but now she designs flower arrangements for the local florist.” He got me there.
I’ve been thinking about this for some time and finally had some conversations with other advisors who confessed that they too did not feel comfortable with using retirement as an overriding concept in planning with their clients. Michael Searcy from Searcy Financial Services explained that he has always led his clients to a goal of “financial independence.” “My clients aren’t looking at retirement in the conventional sense. They still plan to work, even if it’s not what they are doing today.”
Other advisors suggested they used “financial freedom,” “next phase” or “the enjoyment phase,” to discuss long-term planning options. My favorite term, though, is the one provided to me by my teaching assistant, Michael Walsh, “The firm I worked with for three years focused mostly on doctors. We never talked about retirement; we referred to it as ‘walkaway freedom.’ Our clients wanted to know if they get fed up with their partner’s patients, with impossible changing legislation or just plain tired, that they could walk away and still keep their lifestyle.”
Of course, it’s really not the term “retirement” that frustrates me; it is the fact that we planners use it so matter-of-factly to describe what everyone ultimately wants from planning. We talk about having intermediate goals like college funding or paying for weddings, but we usually discuss the ultimate goal as having a comfortable retirement. Maybe clients just can’t relate to that concept. How many times have you suggested to a client that you discuss when they plan to retire and they fire back, “I’m never going to retire”?
I have a good planner friend who shared his experience with me. He had a client who was pretty secure with his assets and facing retirement, so at 52 he suggested that he might want to retire. My friend discussed the strategy with him and he agreed. His company had a party for him. His wife had a party for him. He took his wife on a cruise to celebrate his retirement. A week after the cruise, he was back in the planner’s office. “Now what do I do?” he asked.
I’ve been reading Dan Pink’s new book, To Sell is Human, for the fourth time. Each time I read it, another jewel pops out, and this time, in light of my struggle with retirement, I found something truly interesting. Pink maintains that having clarity is one of the keys to motivating people to decisions. He describes clarity as “the capacity to help others see their situations in fresh and more revealing ways and to identify problems they didn’t realize they had.”
“Yeah, yeah,” I thought reading that. “I bring clarity to my clients’ lives; it’s what I do best.” But then Pink offers more. Using an example of a study where people were hypothetically given $1,000 and given choices for using it, he explains the difficulty people have in weighing present needs against future ones. Some of the choices were using the money for “me now” and some were for “me later.” The “me later” group proved to save more. Furthermore, Pink proposes that people feel a disconnect between their present and future selves. Because of that disconnect, they are not so motivated to save for their retirement because they simply cannot relate to a “retired self.” The more I thought about this concept, the more ideas I got about how we can be more valuable to our clients.
Think about this. It’s not easy to imagine what the future will be like, or what you will want or need. I remember 20 years ago when I was writing a book on long-term care, I told my husband that I had no intention of purchasing something that I was never going to need. Today it seems much more likely that I’ll want it. The key is to find ways that will make your client’s “future you” more concrete. I envision one day that our planning software will contain virtual reality sequences so our clients can experience that future reality in a more meaningful way.
My friend and the president of MoneyGuidePro, Bob Curtis, told me that he often hands people a blank paper and a pack of crayons. “Draw what your retirement looks like,” he suggests. “It’s a powerful experience,” he adds, “because people begin to visualize the reality of their retirement years.”
I changed that exercise to say to clients, “draw your future you.” The results were startling. Absent the descriptive word “retirement,” clients will take you to goals like inventing a new product, starting a new business or embarking on a teaching career. We put the parameters around our clients’ future goals by defining them with a single word: retirement. Most boomer clients cannot relate to that descriptive word. Clients are clearly not nearly as motivated as they would be if you found a secret passion or a lifetime dream.
Chris Tan from Providend, in Singapore, told me, “Today in Singapore it is very fashionable to work five years, then take a one-year sabbatical. I don’t know how this got started, but this is a goal now that most everyone will work toward. We couldn’t possibly use the word ‘retirement’ because it does not resonate with anyone. I always begin my conversations with clients by saying, “I can help you plan for that sabbatical you want to take. If we start now, you can do it in five years.”
I believe that the planner’s focus on retirement as the singular long-term goal started when we realized that boomers, at least, will need specialized help in creating income streams from their retirement assets, or, as I like to say, “the peanut butter and jelly won’t last until the end of the sandwich.” We began searching for income stream strategies and ultimately this transformed into a specialty of retirement income planning.
Dennis Gallant of GDC Research and Howard Schneider of Practical Perspectives have released a guidebook for advisors called Serving Retirement Income Clients. This guidebook (www.gdcresearch.com) directs advisors in how to morph their practices to specialize in aging boomers. Dennis maintains that most advisors have expertise in the income strategies, but very little in transforming their practices to processes and services that can really add value to their relationships with clients facing their next phase. His guidebook includes suggestions for processes and systems that can raise efficiency and give you more time to spend face-to-face with your clients.
So I am beginning to see that there is a distinct difference between creating arbitrary retirement income strategies with your clients and actually discovering that retirement is really a goal for them. Having that discussion to discover what will ultimately motivate your client to action is far different than creating meaningful income streams from various retirement vehicles.
You might want to rethink how you approach your dialogue with clients concerning their future self and future goals. Bridging those current and future selves with meaningful communication is the best tool we’ve got to ensure our client’s successful, um, whatever.
Deena Katz is associate professor in the personal financial planning department at Texas Tech University, a partner in Evensky & Katz in Coral Gables, Fla., and the author of several books on planning and practice management.