This choice might be at odds with many people’s counsel, but it served a better outcome. Because after that, my father never had to look at the market again. He didn’t have to do anything but cash the checks and let my mother, who was named as a second life, cash them after he died. She still cashes them, to this day, at age 88. So my parents’ definition of “financial wellness” was not having to worry about the markets, their income level, their healthcare financing or aging someplace other than their home.
The other approach, looking at a risk matrix offering a percentage likelihood of success in the markets, is great for analytical clients whose peace of mind is satisfied by data. But I don’t believe more than a fraction of our clients actually like doing it this way.
3. The Client Is A Whole Household
Most advisors engage only with the males in their client households. They haven’t become effective in supporting an entire family—the aging parents, wives, adult children or any other less financially confident members. This is a critical problem in client families centered around a baby boomer couple. This demographic—sandwiched between kids and parents—will drive more than 80% of advice industry profits through at least 2030. An advisor’s success with this group depends on retaining existing clients and consolidating the family’s assets currently held with competitors. After all, the competitors are also mounting similar efforts to take those assets away.
When I worked at Fidelity, we wanted to know who our clients’ other family members were, and we created simple communications to include them, simplified for less financially savvy people. Our target was a baby boomer wife and mother, and that required us to think about everything from the colors of the marketing materials to the CRM data to the way we coached associates to talk to them. Peace of mind is different for different age groups and levels of financial literacy.
4. Make Service Models for Everyone
Now that you have remembered to include everybody, you have to create service models for everybody, models with different communications, pricing and product options. Remember, one client might garner peace of mind from a paper account statement that shows up every month. Somebody else might want a mobile app that offers immediate, transparent information. Wealthy families are increasingly expecting advisory firms and plan sponsors to offer a choice of service models—including in-plan advice and fiduciary wealth management (which means things like trusts)—and the things wealthy people want will eventually be coveted by those down market in the mass affluent sphere as well, then by those with even less. Separate service models allow advisors to more easily focus on these unique cohorts.
5. Adoption Is Innovation
If you’re going to anticipate people’s needs—whether it’s an aging parent needing help or a child with a big college loan—you’re going to need empathy. And it’s a management problem for advisory firms to make sure empathetic advisors are in place.
The success of the bull market, meanwhile, has likely made many firms unwilling to change the way they’re currently doing business. That’s a problem. Because their failure to engage creates a real risk for those firms with less share of client wallet (something we saw in 2009 at Fidelity). The advisors themselves are often too busy to start the conversations, which means their firms will need to help them by doing some kind of lead generation and direct-to-consumer outreach on their behalf.
Think of the consumer’s view. If they need an owner’s manual to understand a product, they might not want it. Financial firms that want to engage more clients in a more comprehensive way will increasingly have to start the conversation. They can’t simply build “wellness” and hope people clamor for it.
The State Of Mind To Create Peace Of Mind
The bad news for advisors and financial services companies is that “wellness” is not a widget they can attach to their existing offering. It won’t be added with lots of riders and extra benefits. That’s been tried. The products that companies introduce often turn out to be complex, not always available, or not consistently priced. How can such problems make clients feel at ease?
Technology will have to play a role in wellness too. Client service people can only do so much. It’s a lot of work to track the needs of families, and you don’t want to be the advisor who missed a Medicare election, a life event or the 21st birthday of a beneficiary.
The solution is a combination of proactive systems that use the data, simple tools that can be accessed by consumers, along with old school training, coaching and learning by all the human associates for how they can best succeed in helping clients develop that peace of mind. Though the inevitable issues are tough to confront, there is a calm achieved by being ready, and it will benefit both your clients and you.
Steve Gresham is on a mission to improve longevity and “retirement.” He leads an industry initiative, Next Chapter, and is CEO of the Execution Project LLC, a consulting firm. He is also senior educational advisor to the Alliance for Lifetime Income. Formerly head of Fidelity’s Private Client Group, he is the author of five books about wealth management, including The New Advisor for Life. He also served for eight years on the faculty of Brown University, where he lectured on the impact of an aging population.