My colleague in the think tank Next Chapter, Frank McAleer of Raymond James, has a way of making the complex simple. I asked him to define “financial wellness.” He immediately answered, “Peace of mind!” He didn’t spin a Rubik’s cube of conditions, calculations or hedges about market performance. Instead, he doubled down on simplicity, “Clients want to know they are OK so they can sleep at night. The details are our job.”

If peace of mind means satisfying people’s anxieties and concerns, many advisors seem to expect clients to speak up. A recent survey of clients by the Alliance for Lifetime Income confirms that there’s still a gap between what advisors think clients want to talk about and real client concerns. “Investments” is usually the topic advisors always pick, and that’s not where the clients are. In a related question, nine out of 10 client respondents said they were interested in guaranteed income. Sounds like a “peace of mind” moment.

Let’s pile on insights from our friends at Allianz and their “2021 Retirement Risk Readiness Survey.” This study talks about what keeps clients up at night. The top client concerns are again healthcare costs (named by 71% of those in the survey) and the costs of living in retirement (named by 67%), numbers that are both up from 2020. But there’s a new bronze medalist among client worries: the impact of a market downturn (named by 66% of respondents, a 22% increase). The 12-and-a-half-year-old bull market is a big worry, especially among newly retired clients. No peace of mind here.

But the disconnect in priorities among advisors and clients is still the most important takeaway from both the Alliance and Allianz client surveys. While clients say they are more willing to talk about their concerns, for the most part they have not. And while advisors say they are plugged in, they too have mostly skirted the subjects of outliving money in retirement, healthcare and the potential for a market correction. Crazy.

Start The Conversation
The impasse is partly caused by the complexity of the topics. The worry clients have about outliving their money requires multivariate equations. And how can you know about “outliving” anything if you don’t know how long you’re going to live?

Every planning conversation is chock-full of variables that can break even the most careful plan. How much have you saved? How long will you live? How healthy will you be? Those are the big questions, and they are accompanied by all kinds of other issues—and preferences and choices—that further complicate the picture. Do clients want to travel? Do they need a new roof? A new car? Two cars? Do their four daughters expect financial help for their weddings? Does a client’s 90-year-old mother want to stay in her home even though she has used up her cash? Will she require a continuous care retirement facility?

All of these questions usually return the answer, “Well, it depends …”

Actuarial tables don’t typically take into account new roofs or care facilities. So the savvy advisors working with pre-retirees have learned to probe and ask about the clients’ preferences, conditions and capabilities. People’s unprecedented longevity has complicated each analysis, adding more variables than can be easily integrated into a plan. It’s a tough job playing devil’s advocate for hopeful couples anticipating their retirement dreams. But it’s a very important job and is probably the highest value provided by financial advisors.

And the good news is that clients want to have the conversation. Can they trust you to be concerned?

All clients and families have some hot button issues. If you did nothing else in your practice but call people and ask them the same survey questions I’ve asked here, you’d get some solid opportunities with each client to further solidify your relationship and start alleviating their concerns. These might be difficult topics for clients, but it’s on us to make the first move. Certainly, there are a growing number of competitors willing to step in if we don’t.

Start Counting … And Balancing
These client concerns are daunting in part because they involve things that are hard to quantify. So start there. Talk with the clients and begin calculating the costs.

Those of us involved in Next Chapter see a growing appreciation of the retirement balance sheet. The historic bull market in stocks and bonds has swelled assets, providing some level of comfort to retirees, but it has in no way kept costs from increasing in other critical areas. Residential real estate is now the nation’s biggest asset class. Your clients’ family home may fetch a higher price. But good luck to them in finding a new one—perhaps at any price. Meanwhile, healthcare costs and insurance rates are rising along with the cost of your favorite steak. So you must help clients begin lining up expenses against the assets that could fund them. You may also give them some confidence by helping them see that they can make a lot of potential trade-offs. It’s too complicated to guess about outliving savings, so you can get them used to balancing assets against liabilities and watch how opportunities for compromise begin to emerge.

The Liquidity Crunch: A Retirement Surprise
“There’s a growing need for clients to have a liquidity plan in place,” says Whit Magruder, co-head of Goldman Sachs Private Bank Select, or GS Select, which offers securities-based lines of credit to the intermediary market. Magruder says, “Advisors who can provide clients opportunistic access to liquidity that allows them to act quickly in a range of common scenarios—ranging from lifestyle purchases, expected (or unexpected) life events or business investments—will be able to differentiate their practices and ultimately deliver that peace of mind to their clients.”

This is a wake-up call for both advisors and their clients. Without the support of regular income, new retirees in particular can be forced to liquidate assets to cover big bills. The timing might not be right. And what about those taxes?

It all comes back to the No. 1 concern—health. The balance sheet view is solid analysis, but don’t forget the “why” of what we do: peace of mind. And nothing disrupts peace of mind more than health.

Listen to Frank McAleer: He says that advisors should provide vital financial planning services related to matching assets and income to future expenses and sources of guaranteed income. But in addition, he says, “advisors are helping their clients navigate the complicated and inevitable issues to be faced around family caregiving, critical medical diagnoses, Medicare coverage, scam/theft protection and organized legacy planning.

“The results of this approach are twofold. Our clients are receiving the empathetic planning they so desire from their advisor while our advisors are realizing higher levels of AUM via consolidation as they become the center point advisor to their clients’ families.”

Drop the microphone.           

Steve Gresham is CEO of the Execution Project, which is focused on reimagining “retirement.” He’s also the managing partner of Next Chapter, an initiative whose partners include Financial Advisor magazine and the Money Management Institute. And he is a senior educational advisor to the Alliance for Lifetime Income. See more at www.theexecutionproject.com.