A study by employee management and software firm Qualtrics supports this notion. The research found that clients select, and maintain, advisory relationships first on the basis of trust (cited by 47% of clients) and then on the advisor’s track record (cited by 42%). Moreover, the research found that the investment track record was the biggest reason for clients feeling let down (cited by 22% of them) and ending the relationship. In other words, advisors must start finding ways to build stronger, deeper bonds that go beyond money.
Truth is, traditional retirement planning is broken and in need of repair because our industry remains hesitant to help people address the more personal aspects of life after retirement. As a result, many clients end up struggling to gain traction or find a smooth track to follow once they leave work.
An advisor’s overwhelming focus on a client’s financial situation, rather than their personal situation, can not only complicate and overwhelm clients, it’s also the least likely thing to make them the happiest in the long term. We all know people with plenty of money who would prefer to have more family, friends, health or time. So a fulfilling or meaningful retirement cannot and will not ever be defined in monetary terms.
It’s like pushing a grocery cart backward. It’s possible, but very uncomfortable and not very effective. As you may know, the front wheels of a cart are on a swivel while the rear wheels are fixed. This provides more stability and control of the cart. Reversing that order makes it much more difficult to follow a straight path.
It’s the same with traditional retirement planning, where we are putting the financial factors—or swivel wheels—ahead of the more fixed aspects like values and beliefs. A client’s financial life can go in many directions, whereas things personal to them stay in place and, when followed, help them make other decisions, like financial ones, more easily.
Now to be fair, I think there are a couple of factors that are legitimately holding back our profession. The first is the concept of utility. In its most basic form, it means asking what the added benefit is: Specifically, is there an added economic benefit to helping clients with their non-financial problems?
Long story short, financial professionals make money by either giving investment advice or selling financial products or services. We are trained to do this as efficiently as possible and with as many clients as possible. Therefore, it doesn’t appear to us that there is much utility or benefit to the bottom line of our practices if we offer services beyond the financial ones.
This is the prevailing belief, yet nothing could be further from the truth. Simply because the human elements of our business are what make us better and different. Robots can’t listen, process or provide the depth of personal knowledge and experience that most people have in our profession. Furthermore, people trust us, seek our advice and want to know who to turn to when things aren’t going right.
That doesn’t mean you have to be a therapist or have answers to every question or situation, but by making yourself available, having tools and resources to refer clients to, and the training to help them take concrete steps to address more personal issues, you will have all the components you need to build on the bond you have with them.
Which brings us to our second factor that holds many people back: The concrete tools and training they need to help clients in this area. The amazing thing is that they are out there. One of my favorites is the checklist I mentioned a few columns ago, in a story titled “Getting My Spouse Off The Couch” (Financial Advisor, July 2020). Tools like these don’t require you to reinvent your firm or pay thousands of dollars to rebrand it, but they do require you to get on board with the new narrative of retirement, which is all about the non-financial aspects.
Back to shopping carts one final time. You may be surprised to learn that an estimated two million shopping carts are stolen each year, translating into a per-store loss of $8,000 to $10,000 annually. No doubt we have all seen a shopping cart abandoned in an alleyway, swamp or wooded area. Left there, empty and on their own.
I feel it’s something we do to our clients if we don’t help them address the non-financial aspects of life after retirement. We rob them of making a smooth transition, and too often it’s because we don’t have the tools, training or resources to help them, and we leave them abandoned at the retirement finish line, hoping some other good Samaritan can return them to some sense of normalcy.
Robert Laura is a best-selling author, nationally syndicated columnist and president of Wealth & Wellness Group. He is a seasoned conference speaker, corporate trainer and pioneer in “The New Era Of Retirement” which focuses on the non-financial aspects of life after work. He can be reached at [email protected].