Hidden behind the March 2020 bear market is a new golden age of financial advice—the retirement income age. The client demographic that created the modern investment industry is moving en masse from accumulation to distribution—just as pundits have been forecasting for 30 years. It’s been a safe bet.

Years ago, the birth rate in the United States soared to 10,000 per day—an unprecedented level. The birth boom began in 1946, one year after the end of World War II and long before there was a Schwab or Vanguard (Fidelity was founded in 1946). While many advisors have helped their clients invest and plan for retirement during the retirement savings age (1982-2018), many more will need to refine their skills or face competition from new service models, new products and new entrants focused solely on retirement. We knew this day would come—the 2020 bear market is just the trigger.

The financial advice industry has seen this movie before. Following the stock market crash of October 1987, many clients questioned both the effectiveness and cost of buying stock tips with their broker. Top Wall Street brokerage firms already had introduced new investment programs providing high-net-worth investors with access to institutional investment managers following a tailored investment policy with the regular reporting of performance and the review of objectives. Moving along a parallel path, the nascent RIA business was starting to gain traction. Not unexpectedly, the new programs and the advisors who embraced managed account consulting became respected advisors at their firms. Other “stockbrokers” suffered by comparison and many left the industry. And now commissions are free.

Financial advice is not the only affected industry—maturing baby boomers have been a rolling thunder their entire lives. Born in the 1930s, the pediatric profession took off after World War II. So did a boom in elementary schools. Now there is untold demand for geriatricians, outnumbered nine to one by pediatricians.

So now there’s a new advisory paradigm in town. Retirement income advisors are hardly a new idea or a new business—what makes them increasingly relevant is the growing importance of the need. Of course, many top advisors have successfully straddled investment and financial advisor jobs and held on to help clients through their retirement. You’re the leaders. But all of us will have to deal with the looming domination of “retired” clients that have different objectives and a potentially greater complexity of needs depending on how well they saved, how well they planned and how well they age.

Service needs for the advisory practice will skyrocket. What clients can do for themselves will change. Self-directed clients may opt for more advice as they age, but will they be willing to pay for it? Loyal advice clients may be happy to pay, but will gradually lose their ability or die, transferring assets to heirs who may have no relationship with the advisors. Every trend we spot today will only accelerate.

But great moments are born of great opportunity, coach Herb Brooks told his gold-medal-winning hockey team in 1980, and the rise of retirement income advice has been created by the need for exceptional humans with certain qualities. Advisors, then, must be these things:

1. Environmental realists. The current medical and political turmoil is a rude reminder of how our most careful plans can be yanked out of our control. The RIA is a master of the moment, understanding the impact when anxiety creates our conditions. Client experience plays a huge role in determining the job at hand. At the start of the retirement savings age, 1982, the Dow Jones Industrial Average was just 875. I pick that year because both stock and bond markets began their historic run after Fed Chairman Paul Volcker slayed hyperinflation. The oldest boomer at that time was 36, the median age was 26, money market funds were disintermediating bank deposits, and IRAs and 401(k)s were becoming mainstream. So if you were “in it,” you were a winner. The first boomers made money in everything (except some wildly hyped tax shelters). And they enjoyed another boost at age 65 (around the year 2011) when 10-year Treasury yields were triple today’s rate and another bull market in equities was to make a threefold runup as well. Today’s new retirees have limited options, different perspectives—and fresh memories of 2000-2001 and 2008.

2. Emotional pragmatists. Empathy is the most valuable thing to an advisor, but knowing how to employ it takes work. More than any previous generation of advisors, retirement income advisors will be managing lofty client expectations and delivering unwelcome reality checks. Empathy can help package the message, but the message has to be delivered with confidence. When you impart bad news to a client, you also have to illuminate a thoughtful path forward, not just hold the client’s hands and wish it were better news. Think of the oncologist who must report the facts to cancer patients and, most important, describe the next steps. Many clients might be disappointed with the story you tell them. But you have the opportunity to do something new. In the same manner, managed account consulting grew as a business because of clients’ frustrations and losses buying stocks from stockbrokers. A new profession will also grow out of 2020’s market correction and the collapse of interest rates. I’m guessing these professionals won’t see their jobs as merely to be forcing a modern portfolio theory lecture on every client.

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