3. We must include financial wellness, longevity and healthcare planning.
Healthcare is the biggest concern and the biggest variable expense in retirement, but it’s not easy to discuss with clients. Our study group on the topic first worked to define the objective: What exactly is financial wellness? What planning should be done for longevity and healthcare? How would we make it easier for both clients and their advisors?
4. We must have family financial management—planning for three generations (or more!)
A great advisor once told me, “Retirement is a family affair.” You have to be able to aggregate information and account data, optimize for taxes and be able to transfer money for people of different ages. There is a blueprint here for how to do it right. So the Next Chapter team is working on a set of industry standards for “the family conversation”—the key elements of multi-generational, multi-account management. We need to know what we are solving for, and tell the clients!
5. We need centralized service and client experience—to prioritize investments across human and digital capabilities.
We need to align our abilities as human advisors with the functions of digital offerings. But what should the machines do and what should the humans do? Figuring that out requires new ways of evaluating.
Machines are better at keeping tabs on dates, following up and holding information. But human managers will have to handle the interplay between people and machines. (Consider how IRA rollovers are handled.) Stay tuned.
6. We need better integration and innovation in retirement income and protection products.
Security is paramount to most retirees, and the industry has the opportunity to head off the anxiety of clients that was heightened by the pandemic. The Alliance for Lifetime Income did a survey that showed nine of 10 investors want protected income. But capital markets and interest rates create headwinds for traditional guarantees.
What’s next? Let’s begin with the end in mind. Let’s design scoring tools that would be agnostic to planning software and products. Such tools should take into account annuities and protected income sources like Social Security as mainstream parts of portfolios. Sometimes we do that, but not always. We should make these analyses standard fare across the industry like we did with managed accounts.
While there wasn’t a game-changing solution in any of the six areas we covered, never underestimate the impact of small gains multiplied across an entire industry.
Remember, we have the most valuable clients in history, in quantities we can barely comprehend, asking simple questions and expecting simple answers, and advisors want to provide the solutions they need. It’s up to industry leadership to make that client/advisor relationship as frictionless and productive as possible. And the path is clear. Or to the disruptors will go the spoils.
Steve Gresham is CEO of the Execution Project LLC, a consulting firm helping advisors and their companies reinvent “retirement.” He leads Next Chapter, an industry working team, and is also a senior education advisor to the Alliance for Lifetime Income. He is the author of The New Advisor for Life. See more at theexecutionproject.com.