What do a woman who volunteered with the Peace Corps in Africa, a teacher from Spanish Harlem who took up Samurai sword fighting, and a former IT manager who earned a medical degree at age 76 have in common? They are all part of a group that David Monday calls “second-half champions.”
And they are all baby boomers.
Over the coming decade, nearly 10,000 boomers per day will be turning 65 and retiring. According to David Monday, most advisors don’t understand the implications of those numbers for their practices.
Monday, based in St. Louis, is the chief client officer at Wells Fargo Advisors. He spoke to the Wealthcare Advisory Board, of which I am a member, on February 22 in Las Vegas.
Many boomers have personal goals for their retirement that are anything but sedentary, Monday said. The examples above may be extreme, he said, but advisors need to prepare for seniors today who will embrace a far more vigorous lifestyle than their predecessors.
At the same time, however, boomers will enter retirement with more modest portfolios than the Greatest Generation, Monday said, and without the guaranteed lifetime income of defined benefit plans.
And they will live longer. For a husband and wife at age 60 today, odds are that one will live to age 92, based on current life expectancies. With anticipated advances in gerontology, living beyond age 100 will be increasingly common. The average age at which one stops working (in some cases involuntarily) is now 58, so advisors need to anticipate retirements of considerably more than 30 years.
“It's a big deal,” Monday said. “The biggest deal we have ever had.”
With so many assets now or soon to be in the hands of retired boomers, Monday offered a five-part plan for serving this clientele.
Step 1 – Help maintain control
At every stage of life, Monday said, people have a mission. The main mission of a teenager is to “fire” his or her parents, and then “hire them back,” essentially, as consultants. When someone reaches roughly 70, on the other hand, Monday said their primary mission becomes to maintain control.
Elderly clients lose their physical strength, their health may fail, their friends are dying or starting to move away, and people stop asking them for their opinion. Seniors react to the combination of those losses by seeking greater control over their own lives.
Housing is the question where control issues are most obvious. The decision to move one’s parents out of their home and into assisted living or other alternatives can be overwhelming – for both parents and children. Advisors can help seniors prepare for this by ensuring that they have a well-crafted plan that lets them stay in control of this decision – to an appropriate degree.
Monday credits David Solie’s book, How to Say it to Seniors, for articulating the importance of helping seniors maintain control over their lives.
Step 2 – Slow down
The vast majority of seniors maintain full mental acuity, with one important caveat – their decision-making slows down. Monday offered some advice for accommodating this change.
He described an advisor who he said was the best he had ever seen at working with seniors. When this advisor had a client who was nervous or uncertain about his or her finances or about something the advisor was presenting, he would start the conversation by saying, “Today, we are going to make some recommendations. But I don’t want you to make any decision, because you should never make decisions until you have had plenty of time to think it over.“
“In the next week,” he would say, “I want you to write down any question you have and then we will get together again and I will answer them. If something isn’t just quite right, we’ll change what we are doing.”
In the moment when the advisor told the client that she should think things over, Monday said the tension disappeared. “She was ready to listen, interact with us, and it became a great client relationship.”
“You've got to be flexible,” Monday said. “You can cement the relationship and have them become a center of influence and referrals for you by just doing this one major thing – sit there and listen and engage.”
On this point, Monday also advised scheduling longer appointments with older clients.
Step 3 – Be realistic
Monday said advisors can gain an important advantage over their competition simply by being realistic.
Monday believes that the best advice he can offer to many would-be retirees who do not have sufficient savings is to have a part-time job. Don’t be afraid to give that advice, he said. That will contradict – and stand out from – the message from competitors, who will tell their clients to retire, simply because that is what the client came to them hoping to hear.
A surprisingly high percentage of retired people say they would like to work part-time, Monday said. Some may say that because they want to work and others because they need the money.
The value that advisors can offer is helping clients find the right part-time position and becoming a “connector” in their community. Advisors can establish themselves by matching retirees seeking part-time work with companies that need the skill and expertise they offer. Those positions might be in industry, as substitute teachers, or even at a company like Lowe’s – which hires seniors who like to share their knowledge and expertise with customers. This is a win-win for everyone, Monday said.
Step 4 – Be helpful
The concept being a “connector” can be taken a step further, Monday said. Advisors should develop programs and special events geared to seniors.
“There is no sense in ever letting the month of December pass without dong a Medicare open enrollment workshop,” he said. He said that some studies show that about half the people make the wrong choice on Medicare Advantage. Advisors should bring in experts on such subjects and eventually develop an expertise themselves.
It doesn’t always have to be informative, he said. Sometimes an event can be purely social, but the overall goal should be to position your practice as a “gathering place” for seniors, to serve their emotional and intellectual needs.
Step 5 – Develop new centers of influence
“If senior housing is not affecting your clients,” Monday said, “it is affecting their parents.” Advisors who recognize this will become experts on the different housing arrangements seniors may have in their community, which is not as difficult as it may sound, he said.
Monday recommended introducing yourself to staff people in various assisted living programs, who may become a source of referrals.
For senior clients, lawyers and accountants will be replaced as referral sources by those who work in assisted care, senior living and in healthcare. These will be the professionals who run into seniors who are struggling with financial issues.
Positioning your practice
Advisors long ago learned the importance of focusing on boomers, since those 55 and older control 60% of personal financial assets, as key demographic segment. Now they need to adapt their practice as this cohort moves out of the workforce.
The numbers are compelling. Some advisors have found that over 25% of their assets are now in the hands of people 80 and older. Many are still saving and adding to their retirement.
Targeting seniors is unlikely to prove successful unless it becomes the core of one’s practice. Monday recommended that advisors adopt a mission statement that says they help seniors become one of the second-half champions he has profiled.
“Today's retiree isn't your grandmother,” Monday said. The baby boomers will be the first generation to be given a “do-over” – a chance to live the second half of their lives with energy and enthusiasm and to make meaningful contributions to society. The advisors who understand and embrace this trend are the advisors who will excel.
Read more articles by Robert Huebscher
