Financial advisors who are not aligning themselves with retirement coaches are missing a valuable connection to their clients’ “life after work,” according to two authors who specialize in retirement.
“Increasingly, there are some financial planners and financial planning firms, particularly small boutique firms, that are aligning themselves with retirement coaches and life coaches,” said Richard Eisenberg, a writer on personal finance and retirement, as he presented “Retirement & Encore Trends” at this week’s Retirement Coaches Association virtual conference. “I’m happy to see it. I just wish we were seeing more of it.”
This kind of alliance, he and his co-presenter author Kerry Hannon said, could help financial advisors in the following ways as the use of retirement coaches grows in popularity:
• Introducing long-time clients who are close to or just starting retirement to a retirement coach can help those clients craft the retirement of their dreams and increase client satisfaction and word-of-mouth referrals.
• Many retirement coaches are having to play “financial manager” with their own clients, who may not have used a financial advisor prior to retirement despite significant assets. These coaches could bring in a trusted professional to assess whether the client has accumulated what they need and identify gaps.
• Retirement coaches can help clients repurpose skills they already have for meaningful, paying work once they’ve left their employer. That income may mean a client puts off tapping assets under management, or taps those assets less vigorously.
This last point, especially, should be of interest to advisors, Eisenberg said.
“In many cases, I’m finding, financial advisors are still all about accumulating assets for their clients, and while that’s a great thing, as you all know it’s only a small part of what retirement’s about. And people need help with the rest of retirement planning—how are they going to spend their time, how can they give back, where will they find meaning and purpose, and maybe even taking money out of their retirement assets,” he said. “That’s decumulation, which is something a lot of financial advisors don’t want to talk about because they’re often paid by the size of the assets that they have under management. And when money goes out that means less money for them.”
Hannon agreed, saying that while work becomes less important over time for a retiree, there is an initial stage in which putting off spending retirement savings can be very beneficial.
“Not everybody needs to continue the income,” she said. “But it sure can be helpful if you’re not dipping into those retirement accounts or starting your social security the minute you retire.”
Among the top trends for retirees that should be of interest to financial advisors are retirees using a declaration of retirement to reconfigure the work-life balance. In this “unretirement,” as Eisenberg calls it, retirees may even continue working for their former employer, just doing it less and even in a different place now that remote work has been legitimized.
“We used to have to beg to be able to work from home and have that kind of flexibility. It was a special perk. But here you go, they figured it out—people can be productive. Performance is good,” Hannon added. “It can also be beneficial because a lot of people retire earlier than they might have wanted to because of a health issue. If you can eliminate that commute and avoid going into an office that’s not ergonomically set up for you, then, my gosh, it opens up the opportunities for work.”
Entrepreneurship in retirement is also a rising trend, most often in the form of micro-businesses, she said, adding this is another area where a financial advisor can be really helpful to the coach and client in figuring out whether the retiree has enough capital to launch the business and give it a chance to turn a profit.
Ideally, Eisenberg concluded, the financial advisor, retiree and retirement coach would be meeting together in-person or through a video call.
“But if that’s not possible then the client should be able to tell the retirement coach, ‘This is what my financial advisor said about where I am, here’s what I can and cannot afford to do, and these are my plans for taking social security or bringing in income for retirement,’” he said.
“The more clients can marry [the retirement coach and the financial advisor], the happier they’re going to be.”