Have you noticed you are getting more questions from your clients about rollovers and Social Security?

According to a Pew Research Center study, four times as many baby boomers retired between February and September of 2020 than did during the same period in 2019. That’s 1.1 million baby boomers who retired last year. Only 250,000 boomers retired the year before. To further underscore this shift, a McKinsey study tells us there was a 350% increase in “money in motion” last year.

The long-awaited baby boom retirement wave is now officially underway. How you answer these clients’ questions as they prepare for it, namely on Social Security filing and rollovers, will determine where they get their advice and where they consolidate their money.

Don’t Be The Same
Studies show that investors consolidate assets as they get closer to retirement, primarily for administrative reasons. And as someone who hangs out with this cohort, I know they are unsure of whom to turn to or where. All the advice and products look the same and are delivered in a language most don’t understand.

But they are quite clear they cannot make any mistakes. This is it—no more paychecks. So you would be wise to think of how you answer their initial questions on rollovers and Social Security. This is an audition, since they are making the most important financial decisions that will impact the rest of their lives. The key for you as an advisor is to demonstrate real and lasting value.

The Dollar Benefit Of Smart Social Security Filing
The first audition question we hear from the 90,000 advisors we work with is about Social Security. When and how should one file? Because the government provides an 8% increase per year in benefits to people once they reach full retirement age, which currently lies between 66 and 67 years old, depending on one's date of birth. Those who have the means are almost always better off waiting to start taking Social Security benefits.

Our advisors report that once they show the dollar benefit of waiting and how to file in different scenarios, their clients feel relief and some certainty about what to do. And then they ask what to do next.

Why Should They Give It All To You?
The next audition question is typically, “What should I do with my rollover?” But if there were a thought bubble over their heads, they are really asking, “Why should I give my rollover to you rather than all the other people I’m talking to?”

Those advisors who can quantify the financial benefits of a smart Social Security filing strategy—and who can do the same by combining taxable assets with rollovers—tend to win the asset consolidation game. The combination of a rollover with taxable assets can improve asset location and financial outcomes by as much as 33%, according to an Ernst & Young study.

Their Nest Egg In Dollars
Clients are no longer going to turn money over to you just because you say you offer superior service or investment acumen. You can help them achieve better financial results without more risk if you can use these conversations about Social Security benefits and rollovers as a lever. And you can use current technology to show them how much larger their nest egg will be with tax and cost savings.

The rollover is the spark that will lead to the clients consolidating their assets with you. Most people come to advisors with a hodgepodge of retirement accounts and investments they acquired over time. In the aggregate, these are held at various places. There is little rhyme or reason in the places they’ve kept their assets or how they’ve allocated them.

So a rollover can be the spark that leads to what they want to do anyway—consolidate all their money under an advisor’s care for greater cost, risk, efficiency and administrative simplicity.

This sounds elementary, and many advisors say, “We already do this. What are you talking about?” Not quite. Morgan Stanley boasts over $2.5 trillion in managed assets. Their clients hold an additional $2 trillion elsewhere. With a sample size that large, it is fair to say that most advisors could achieve more wallet share.

To do that, they need the incoming throng of boomer retirees to buy in, and they need to demonstrate that the rollover process is as easy as it is profitable.

Quantifying Financial Value
It cannot be done “by hand.” Take it from my colleague Paul Samuelson, whose late father—a Nobel prize-winning economist and advisor to five presidents—could not chart a long-term retirement plan without costly missteps.

Why? Because retirement income is complicated. It requires a coordinated approach to tax-smart asset location and the way assets are allocated when clients are accumulating. It requires an optimal sequence of withdrawals from Social Security, annuities, investment accounts and other income sources during retirement. All this can be maximized and quantified to produce improved outcomes for both the investor and the advisor.

As baby boomers retire in droves and “money in motion” continues to accelerate, the industry’s biggest platforms are building digital means to capture client rollovers, answer Social Security questions and suggest intelligent withdrawal sequences. And these platforms will show how much more money the investor—and the advisor—would have by consolidating assets in one place.

These innovations cannot come soon enough. Guiding investors responsibly through retirement will be the work of our lifetime.       

Jack Sharry is co-chair of the Money Management Institute’s Digital Advice Community, sits on the Next Chapter Advisory Council, is host of the “WealthTech on Deck” podcast, and is the executive vice president of LifeYield. Learn more at www.LifeYield.com.