No one defines and explains the forces at work in society and business today with more candor or insight than Ken Dychtwald, Ph.D. More than 30 years ago, in his best-selling book, Age Wave, he predicted baby boomers, longer life expectancy, and declining fertility would change the economy and challenge centuries-old notions about aging.

That day has arrived. Lately, Dychtwald has collaborated with Edward Jones and The Harris Poll on extensive research into “the new retirement.”

I recently talked with Dychtwald about the industry’s shortcomings and opportunities. I’ve selected some highlights. You can listen to our entire conversation on my podcast, WealthTech on Deck.   

Five Forces Shaping Retirement Today
• Longevity—For most of history, few people lived long enough to retire. Today the fastest-growing population segment is those over the age of 80. “More and more people are beginning to realize “Whoa, wait a minute. I might live longer than I ever expected,” Dychtwald said. “How much money am I going to need? What am I going to do? Who am I going to be?”

•  Baby Boom—“Boomers are a spunky bunch,” Dychtwald said. “They want to go back to school. They want to, if they're widowed or divorced, fall in love again. They want to reinvent themselves. And get this: 72% said they want to work in retirement.”  

•  Long-Term Care—“The average American can expect to spend around 12 to 15 years in a state of failing health, which is really expensive,” he said, noting total out-of-pocket and long-term care costs of the average couple in retirement are $456,000.

•  Do-It-Yourself Retirement—Growing up, boomers learned that a company pension, personal savings and Social Security were the three-legged stool of retirement. No more. Yet, “most of us are not trained or skilled or have the kind of wherewithal to know how to manage our money over a long life.”

•  Covid-19—“We all had kind of a near-death experience,” Dychtwald said of the pandemic. That led many to realize: “I need some financial advice. But even bigger was people realizing that what matters most in life is not amassing enormous amounts of wealth, but rather having the resources to enjoy your time with your family and your friends and doing the things that feel purposeful to you.”

What Are The Lessons In This For Financial Advisors?
Learn and become comfortable with the four pillars of the new retirement: 

• Family—Learn about clients’ families, whom they might need—or want—to support in the future. Do they have a child with special needs? A relative or friend who needs financial help?

• Purpose—People think about what will be in their eulogies. What was the meaning of their life, not just until they retired, but right on through retirement? Have you asked clients about their life’s purpose?

• Health— Covid-19 sensitized everyone to the value of health. Without it, money has little meaning. Are you prepared to help them navigate health care?

• Finances—People are worried about running out of money and becoming a burden on their families. They want you to be their guide. 

Next, understand that each of these four pillars is important and interconnected. Referring to participants in the Edward Jones research, Dychtwald said retirees told them:

“I wish I would have had a financial advisor I could have talked to about my purpose and where I might live, what the boundaries ought to be between my gifting to my family, and what I needed to know about the cost of health care.”

What’s The Message For The Industry?
Two overriding priorities, in my mind: Make the user experience of financial services simpler and connect the dots of people’s financial lives. Or, in Dychtwald’s words, “Cut the crap.”

“I think we have to explain things in a way that people can understand so they don't feel foolish or stupid,” he said. “And they don't hold you in some exalted position; they don't want to do that anymore.”

He agrees the comprehensive advice platforms Edward Jones and other leaders are assembling, piece by piece, need to take into account the totality of a client’s life.  

“Having technology that can be put to use to meet people's needs better, but also can be easily understood and explained and user friendly, is going to be the task of the next few years,” Dychtwald agreed.

In Parting, A Cri De Couer
Reflecting on nearly 40 years as a consultant to financial firms, Dychtwald said: “I feel the financial industry has largely lost its heartbeat. It's become very focused on numbers, and success, and wealth. And that's good. That matters. But …

“If you can help a person plan properly for their later years, they're going to have some dignity. They're going to be able to have some fun playing with their kids and grandkids. If you help people make the right decisions, they won't feel foolish, stupid or regretful when they're older. So, you're in the business of saving people's lives. And there may not be any more important work than that.”

Jack Sharry co-chairs MMI's Digital Advice Community, is on the Next Chapter Executive Leadership Advisory Board and co-chairs Next Chapter Leadership in Action. He hosts the WealthTech on Deck podcast and is executive vice president at LifeYield.