Ask successful advisors where they add the most value and most answers will revolve around financial outcomes – developing the right financial plan, improving returns through diversification, lowering taxes and managing risk. But a recent conversation with Pamela, a successful advisor who attracts clients via “Countdown to Retirement” workshops, raised the question of whether advisors need a broader definition of their purpose. Pamela helps clients rethink how they’ll spend their retirement. Indeed, her website is headed “Guiding clients to a successful retirement.”
“What business are you really in?”
The late Ted Levitt was a legendary professor of marketing at the Harvard Business School. In 1960 the Harvard Business Review published his article “Marketing Myopia”, among HBR’s top selling articles of all time. In it, Levitt explored why the once dominant railroad industry was blindsided by competition from automobiles in the 1920s and why Hollywood movie studios ignored competition from television in the 1950s. His conclusion: They defined their businesses too narrowly. Railroads didn’t understand that they were in the transportation industry and movie studios that they were in the entertainment industry.
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Levitt maintained that the most important question for any enterprise is “What business are you really in?” Over 50 years later, many top business schools still use “Marketing Myopia” in their marketing courses. As low-cost online portfolios become more readily available and financial advice gets increasingly commoditized, we must ask if financial advisors who define their business narrowly around financial matters are making the same mistake the railroad industry made in the 1920s and Hollywood made in the 1950s.
Becoming the go-to name in retirement planning
I met Pamela at a conference earlier this year. Based in a large city in the Midwest, she delivered 30 half-day workshops to employees of 20 companies in her community last year. Pamela described how she fell into her niche of delivering workshops to help singles and couples prepare for retirement, paid for by the companies where they work.
It began over 10 years ago with a conversation about retirement plans with a couple in their early 50s whom she’d worked with for some time. Like it is for many affluent clients, travel was high on their list and they had accumulated a list of destinations they planned to visit. Pamela asked whether they’d thought of ramping up their travel immediately rather than waiting for retirement and talked about some existing clients who’d waited until retirement to travel only to run into health issues. She and the clients spent half an hour talking about this, during which time Pamela shared observations about the travel that her clients found the most satisfying and offered to run some numbers on the impact of spending $10,000 annually on travel in the years leading up to retirement.
As they were wrapping up, the woman said to Pamela: “You realize that the more we spend on travel, the less we’ll have to invest with you?” Pamela’s response was that she measures success not by the assets that clients have with her but rather by their ability to achieve their goals and lead satisfying retirements without having undue worries about their finances. A week later, Pamela got a call from the HR director of the company that her client worked for, saying that her client had passed her name along and asking if she was interested in running a half-day workshop for clients retiring in the next couple of years and their spouses.
From that modest beginning Pamela has built a significant presence in the HR community in her city. Less than half the workshop is devoted to financial issues, with the majority of time spent tapping into the research on the factors that lead to a successful retirement. Pamela meets with any workshop participants interested in becoming clients after the workshop, making it clear that she charges all individual clients for development of an initial financial plan.
The facts on retiree satisfaction
Part of Pamela’s workshop focuses on financial issues, with a portion on strategies around Medicare and health-savings accounts, and she also talks about the research on safe withdrawal rates. She also discusses the growing consensus that that equity returns may be lower than in the past and the likelihood that a low interest rate environment will persist for some time. She also points out that stock investors may well have to get used to a high level of volatility.
But the bulk of her workshop concentrates on non-financial issues. Pamela starts by pointing to research that retirees are among the most satisfied segments of American society, as wellbeing and happiness peak as people age. There is a steady stream of articles highlighting research on this, such as the Wall Street Journal article “Why Retirees Are Happier than You May Think.” This article pointed to research in which 56% of retirees said they were very satisfied with retirement, 34% said they are on balance satisfied and only 9% said they are not at all satisfied. What’s striking is that the longer people have been retired, the happier they are.
And this isn’t because they’re rolling in money. An article in Money Magazine “Why Retirees with Low Savings Are Happy Anyway,” pointed out that even retirees with low incomes are surprisingly happy. A key point in this article was that, “For most retirees, having the time to do what they want is far more satisfying than having money to live well.”
Four categories of retirees
A research report on retirement in Canada by the Angus Reid Institute divided retirees into four segments: Lovin’ It, Comfortable, Strugglers and Unhealthy. Overall, the survey findings showed that the retirement experience is vastly different for different groups of people, but largely fulfilling for most — notwithstanding quite widespread financial anxiety.
This research report also dug into the drivers of retirement satisfaction. Respondents identified these as the things that make retirement meaningful, aside from health and having sufficient money:
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Quality time with familyis a key source of meaning and vitality for most retirees (54%).
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Travel was chosen by 50%.
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Rest and relaxation should not be under-estimated: 45% said this is key for them.
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Participating in leisure activities as something that adds meaning (43%).
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Socializing with friends was highlighted by 39%.
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Volunteering was selected as a source of meaning in retirement by 25%.
Rethinking the bucket list
The 2001 movie The Bucket List popularized the idea of people building up a list of things to do and see before they die. As they plan for retirement, many retirees develop their own bucket list, often involving travel.
A recent Merrill Lynch research report on leisure in retirement titled “Beyond the Bucket List” delved into this phenomenon. But there are downsides to fixating on a bucket list in retirement. Here’s what geriatric psychiatrist Mark Agronin had to say in a Wall Street Journal titled “It’s Time to Rethink the Bucket-List Retirement”:
As a therapist, I’ve talked to numerous seniors as both patients and colleagues. Rather than feeling exhilarated by a life of bucket-list adventures, they often end up feeling depressed and disconnected.
As they travel the world to soak up experiences, too many seniors inevitably lose track of what really matters – their connections to family, friends and community. They feel like strangers in their own homes. Eventually, the bucket list becomes something of an addiction: The high from an adventure doesn’t last, so seniors find themselves piling on experiences to keep the thrills coming, further alienating them from real life back home.
There’s a way out of this trap. Retirees should think about using all of the advantages that make a bucket list possible, such as wealth and vigor, to build something much deeper and more meaningful. Instead of taking a dream vacation to chase fleeting thrills, they should use their time to create something more lasting instead – whether that means building bonds with family or their community or reimagining travel adventures as an opportunity to share experiences and wisdom with grandchildren.
The silent killer among retirees
A considerable amount of time in Pamela’s workshops is focused on getting pre-retirees to think about how they’ll maintain social interactions and stay engaged in retirement, beginning with current hobbies and interests. A USA Today article, “The Silent Killer Among Retirees,” discussed the contrast between what pre-retirees think they’ll miss most about working (income was the first item listed, at 34%) with the reality when actual retirees are asked the same question. While income is still up there, 65% of retirees said that what they missed most was related to engagement – “social connections,” “having purpose” and “mental stimulation.”
When I asked her how she introduces the exercises around how people will stay engaged in retirement, Pamela said it is short and sweet: “You’ll only retire once. I help clients retire every day. My goal is to ensure that everyone I work with has the happiest possible retirement. And from talking to clients who are retired, here’s what I’ve learned about what makes that happy retirement happen.”
Chances are that you won’t carve out a niche delivering workplace seminars as Pamela has. But that doesn’t mean that you can’t broaden your value by initiating those conversations with clients planning for retirement. After all, while money is important, it’s the things beyond money that drive the happiest outcomes for your retired clients.
Below are links to more articles on building a practice focused on retirement planning:
Making Your Practice a Magnet for Seniors
Why "Healthspan" Trumps "Lifespan" for Clients
Three Articles to Help Clients to Happy Retirements
Three Time Bombs that Threaten Retirement Plans
How to Help Your Middle-Class Clients Retire
An Essential Client Conversation: Will I be able to pay for my hip replacement at age 85??
Motivating Older Clients
Five Steps to Succeed in the Retirement Market
A Unique Way to Help Clients Close the Retirement Gap
How Conservative Investing Threatens Retirement
Seven Implications for the Coming Retirement Revolution
When Alzheimer’s Strikes: Five Ways to Respond
Important New Research Talking to Seniors about Risk and Market Volatility
The Retirement Readiness Checklist
Dan Richards conducts programs to help advisors gain and retain clients and is an award winning faculty member in the MBA program at the University of Toronto. To see more of his written commentaries, go to www.danrichards.com.
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