Financial advisors need to get real with their clients about retirement and longevity.
Clients can always turn to advisors for help with numbers when it comes to retirement and other financial goals, says Mike Lynch, vice president of strategic markets for Radnor, Pa.-based Hartford Funds. But numbers are an abstraction, he adds. Advisors should be asking financial behavior and lifestyle questions to help clients create realistic, actionable goals and plans.
Retirement planning too often takes on a one-dimensional feel as it tends to focus on savings and investing needs, Lynch says. While these are important topics, advisors need to help their clients create a vision of the future they are planning for.
“There aren’t the same pools of resources available to advisors for these other topics as there are on the financial side of things,” Lynch says. “Most advisors can predict what you need to save and help you get to where you need to be, financially speaking. But longevity planning needs to take into account non-financial issues.”
Lynch says this can be accomplished by asking deeper questions to help clients think about the future.
Using research from the Hartford Funds’ partnership with MIT AgeLab, Lynch offers three questions for retirement planning that advisors can use to help expose their clients’ feelings about crucial longevity issues.
“These are effective because they’re very simple, unassuming questions that allow the client to open up and have a conversation,” Lynch says. “Retirement isn’t a calculation, it’s a conversation. While advisors are very good at listening, they’re not always sure about how to initiate these kinds of conversations.”
Question No. 1: “Who will change my light bulbs?”
Advanced age is often accompanied by advancing health problems and declining mobility, Lynch says, but most people plan on aging within their home as they enter retirement. Clients will have to consider whether they will be the ones to climb on a ladder to change difficult-to-reach light bulbs as they enter their 70s, 80s and 90s.
Clients need to be prompted to think about how they will handle simple maintenance tasks to consider how they will manage the upkeep of their homes if they are unable to do so independently.