There has never been a better time to be in the business of advice, retirement and technology. I know this firsthand.

Technology has enriched my ability to connect over the pandemic with the thinkers, strategists and doers in financial services and retirement planning. And technology is revolutionizing these industries, too. In my conversations and on my WealthTech on Deck podcast, what I hear points lately to three trends:
1. “Retirement” has changed forever, spurring more creativity and better support in serving clients, participants, advisors and firms.

2. The biggest threat to retirement incomes today is taxes. Minimizing taxes and generating tax alpha is job No. 1.

3. Firms are investing heavily in comprehensive advice platforms that are becoming better coordinated and personalized. The goals: greater practice efficiency, consistency of advice and improved financial results for all.

1. Retirement Has Changed Forever
Baby boomers have a knack for breaking the rules; retirement is the latest example. We increased the retirement age—many now work into their 70s and 80s—although a record number of “early retirements” happened during the pandemic. Now, with the multiple threats of inflation, market volatility and higher taxes, many feel compelled to “unretire.”

People made lots of mistakes with these zig-zag course corrections. It reminds us of the importance of human advice in discouraging investors from being reactive.  

Younger generations have seen the best and the worst of times and are changing their financial goals. Jacque Reardon of Franklin Templeton shared in a recent episode of my podcast that workers responding to the company’s “Voice of the American Worker” study overwhelmingly said, “financial independence”—not “traditional retirement”—was their goal.

Jason Fichtner, the former No. 2 at the Social Security Administration and now chief economist at the Bipartisan Policy Center, noted that few can depend on not falling off the “wobbly three-legged stool” of that Social Security benefits, employer pensions, and personal savings that used to provide security in old age. 

Today’s retirees can’t rely on pensions and are looking at a much longer life expectancy. Many learned the hard way that day trading and do-it-yourself investing don’t work long-term.

Intelligent investors work with advisors to plan, budget, save and invest for the future. And as life expectancy grows, we need every lever at our disposal to optimize decumulation for clients when it’s time for them to retire, semi-retire, or embrace whatever “financial independence” means to them.

2. Taxes: The Enemy Of A Secure Retirement
Every leader I talk to identifies taxes as the No. 1 concern, especially when markets are challenging and inflation (“the cruelest tax”) is rampant. Taxes are the most significant drain on retiree assets.

Our habit has been to address tax issues with products—SMAs, UMAs, ETFs, direct indexing, deferred annuities, investment-only variable annuities, and more. These are all worthy products. But to produce the best outcomes, we need to guide clients in coordinating risk and tax liabilities across multiple accounts and products so they can build bigger nest eggs and have more retirement income.

Vital to this effort are innovations such as multi-account UMAs, household-level planning, portfolio and decumulation planning and implementation, and the practices that work in concert to achieve tax alpha.

The most potent of the latter is asset location. Vanguard, Morningstar, Envestnet, PNC, and EY studies all point to significantly improved outcomes when asset location is part of the portfolio management process.

3. Advice Platforms Will Become Retirement Command Centers
Hyper-personalization is a buzzword I hear a lot. Let’s move beyond the hype, deliver real and measurable value to investors, and give advisors tools to improve investor outcomes.

The move to comprehensive financial advice platforms is accelerating. These platforms combine technology and human skills—starting with listening—to respond to clients’ unique situations.

Some appeal to certain professions—Forme Financial, for example, for physicians—or to client segments, like JP Morgan’s WealthPlan. MoneyGuide Pro’s MyBlocks is evolving to include thoughtful planning and implementation over time.

Pre-retirees’ minds are swirling with worries: where to live, how to make money last, what to leave to the children, and what to do as health wanes. To allay those concerns, advisors must consider all household accounts and assets, save costs, manage risk coherently, and minimize taxes. And they need to be able to anticipate and answer questions their clients have, such as:
• When is the best time to take Social Security benefits?

• When and how to do Roth conversions?

• How to manage required minimum distributions (RMDs)?

• Which accounts to draw from, down to the tax lot level, to create income?

Every firm is building its platform and experience and looking for a competitive advantage to help advisors be more efficient and effective.

I was worried that we’d led investors up a mountain with financial planning and the serial purchase of products. I feared we’d leave them stranded at the summit when it was time to turn assets into income. So, I’m heartened by these accelerating trends and our potential for transforming the lives of investors and businesses of financial advisors.

Jack Sharry is co-chair of MMI's Digital Advice Community, a member of the Next Chapter Executive Leadership Advisory Board and co-chair of Next Chapter Leadership in Action. He hosts the WealthTech on Deck podcast, is the author of the book Authentic and Ethical Persuasion, and is executive vice president of LifeYield.