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

According to a Pew Research study, four times as many baby boomers retired between February and September of 2020 than 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 their first two questions as they prepare for retirement, namely on Social Security filing and rollovers, will determine where they will get their advice and where they consolidate their money.

All The Advice And Products Look The Same And Are Delivered In A Language Many Don’t Understand
Studies show 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 who or where to turn. 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. You would be wise to think of how you answer their initial questions on rollovers and Social Security as an audition as they make the most important financial decisions that will impact the rest of their lives. The key is to demonstrate real and lasting value.

Once They See The Dollar Benefit Of Smart Social Security Filing, They Ask What To Do Next
The first audition question we hear from the 90,000 advisors we work with is on Social Security—when and how should I file? Because the government provides an 8% increase per year in benefits between the ages of 62 and 70, investors who have the means are almost always better off waiting to start Social Security benefits.

Our advisors report that once they show the dollar benefit of waiting and how to file given different spousal scenarios, the investor feels relief and some certainty about what to do. And then they ask what to do next.

‘Why Should I Give My Rollover To You Rather Than All The Other People I’m Talking To?’
The next audition question is typically, “what should I do with my rollover?” The thought bubble overhead—“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 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 EY study.

They See How Much Bigger Their Nest Egg Will Be In Dollars Due To Tax And Cost Savings
The idea you can win on superior service, investment acumen and because you care are no longer sufficient reasons why they will turn their money over to you.

Conversations about Social Security benefits and rollovers are levers investors and advisors can control to achieve better financial results without more risk. And current technology can show how much larger their nest egg will be due to tax and cost savings.

The Rollover Is The Spark That Leads To Consolidation
Most people come to advisors with a hodgepodge of retirement accounts and investments they acquired over time. In the aggregate, they are held at various places with little rhyme or reason to the portfolio regarding asset location and allocation.

The most recent rollover is the spark that leads to what they want to do anyway—consolidate all their money under an advisor’s care for greater cost, risk and 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 most advisors could achieve more wallet share. To do so, they need buy-in from the incoming throng of Boomer retirees, and they need to demonstrate the rollover process is as easy as it is profitable.

As Baby Boomers Retire In Droves, Quantifying Financial Value Is The Differentiator
And it cannot be done “by hand.” Take it from my colleague Paul Samuelson, whose late father—a Nobel-winning economist and advisor to five presidents—could not chart a long-term retirement plan without costly missteps.

Why? Because it is complicated when retirement income is considered, something we will explore next month as we examine a coordinated approach to tax-smart asset location and allocation during accumulation; and the 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 on-ramps to capture client rollovers, answer Social Security questions, and suggest intelligent withdrawal sequences. Most importantly, these platforms 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 lifetimes.

Jack Sharry is co-chair of MMI's Digital Advice Community, on The Next Chapter Advisory Council, host of the WealthTech on Deck podcast, and executive vice president of LifeYield. Learn more at www.LifeYield.com.