The clients themselves may also have opinions about certain strategies and investments, depending on their appetite for risk. But the clients are likely to be both visual and emotional (while their advisors are more likely to be analytical, abstract thinkers). So, for example, when advisors ask clients to “stay the course” during a stock market correction, they’re responding with analytical answers to an emotional reaction (fear). That’s bad bedside manners for the retirement doctor.
The family conversation. If the financial conversation is the “what” of retirement planning and the investment talk is about the “how,” then the family conversation is the “why.” It’s also the “who.”
The retirement journey is really a family affair. The most common retiree family today is a couple with at least one aging parent and adult children and they’re facing demands from both cohorts (thus becoming a Sandwich Generation.)
That means their families are affected by their retirement too, and family dynamics become the ultimate wild card. Will aging parents require financial support and time for caregiving? Will an adult child or sibling ask for help? Can retirees handle (or would they say no to) a child’s tuition for a master’s degree, help with a wedding (or a divorce) or a parent’s request for eldercare? Seventy-nine percent of parents are the “bank” for their adult children ages 18 to 34, and the typical support is two times the amount saved annually by those parents for their own retirement.
One trust company CEO I know puts it this way: “It used to be difficult to get our clients to include their adult children in financial discussions, including legacy planning. Covid is clearly one of the influences of change, and now about 60% of our clients are involving those family members.”
There are things we need to do better when it comes to family.
We first need a commitment to effectively engage in the family conversation. Too many spouses are uninvolved in the discussion, too many adult children ignored or not offered a service model more suitable for their digital lives (even though it’s super low maintenance for the advisor).
Yet this is where most advisors bow out. “Human” topics aren’t in their comfort zone. They prefer the mathematics of portfolio analysis. They like the efficiency and simplicity of dealing with the “primary head of household.”
Blow that image out of your mind. Today’s family is three generations—or more—and have a boatload of unresolved dynamics about healthcare and other key life decisions. A couple heading toward retirement is entering new territory for their relationship, and they’ll have to make decisions about their transition—living, healthcare costs, driving and transportation. Who else will help them navigate the changes? Their accountants?
Reality Checks
Ric Edelman says millions of new retirees in pursuit of “quality of life” face serious reality checks ahead. “Whether or not they have an economic need to work, they will have a desire to contribute to American society, keeping busy to remain stimulated, be a member of the community,” he says, as they discover “watching TV and eating bonbons all day is no way to spend the last 40 years of your life.”
The point of all this discussion is not to debate—again—the advantages or flaws of specific elements of retirement planning. Most of the industry enjoys those abstract, analytical jousts. The point—or the question—is to determine our “why.” Are we solving for the needs of our top clients? For our total book of clients? For all the participants of a retirement plan? Do we have a responsibility to improve the results for all consumers? If so, how and when? If not, why not? And—ultimately—if not us, then who?
Steve Gresham is CEO and founder of The Execution Project, LLC and managing partner of Next Chapter. He was formerly head of the Private Client Group at Fidelity Investments. He also serves as senior educational advisor to the Alliance for Lifetime Income and is the author of The New Advisor for Life.