or decades, the financial services business has been criticized for its laser-like focus on managing clients’ assets while paying lip service to their spending and liability issues. It’s only natural for financial companies to follow the money, but the financial advice business has managed, with some success, to offer a more holistic value proposition.

According to several younger advisors I’ve canvassed in the last month, they aren’t too worried about the threat from robo-advisors because robos are making the exact same mistake brokers and some RIAs have made in the past. Many of them offer some rudimentary cash flow and debt management programs, but their efforts squarely zero in on asset management. 

Young Americans’ biggest asset is almost always their ability to go to work and earn a living, often called human capital. It doesn’t easily fit into an asset allocation model, but on a global level, some economists estimate human capital is worth a lot more than all the financial assets on the planet aggregated.

Financial advisors have an eagle nest’s view of the life-cycle theory of savings and consumption, and they are watching more individuals in their 60s and 70s try to extract ever more value from their human capital than prior generations. Advisors typically work with an affluent subset of the population that has more late-in-life employment options than most Americans. But the job statistics show that the fastest growing age group in the workforce today is people over 55. 

Several months ago I spoke with Gregg Fisher of Gerstein Fisher, who at 45 years old is about to celebrate his 25th year as a financial advisor. Today, he has more than a few clients in their 90s, and many worked at least part time into their 70s. 

If one doesn’t have to dip into retirement until his or her 80s, the difference is dramatic. Fisher’s biggest regret is that he didn’t persuade these clients to spend a little more.

Among the universe of advisory clients, there is a large subset of retirees who encounter serious spending problems. As Lou Stanasolovich of Legend Financial Advisors puts it, “Do people who work spend more on Saturday and Sunday than they do during the week?” 

The implications for retirees are obvious. While I’ve heard some very smart folks like Rob Arnott and Bill Bengen say annuities and managed payout funds are a reasonable solution for controlling spending in retirement, I’ve rarely heard marketers of these vehicles discuss the issue in these terms. To learn more about the issues your colleagues are facing in the retirement arena, take a look at our retirement survey on page 32.

Evan Simonoff

Email me at esimonoff@fa-mag.com with your opinion.