Why RIAs Are Going to Lose in Retirement-Income Planning

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Does the scenario below sound likely? If so, you are among the thousands of RIAs who are likely to lose significant assets over the next decade.

Gretchen is a 68-year-old widow seeking a new financial advisor. After a brief phone call, she is about to meet Matt, a 54-year-old sole practitioner RIA, for the first time. Seven months ago, Gretchen’s husband of 42 years, Paul, passed away after a two-year battle with cancer. Recently, Gretchen decided to sever the relationship with her previous financial advisor, Steve. Over 18 years, Gretchen perceived that Steve’s focus was consistently centered on Paul. Because Paul appeared satisfied with Steve’s performance, Gretchen made no attempt to dislodge the relationship.

But she never liked the way Steve made her feel.

In their numerous meetings, Gretchen would come away feeling that Steve’s focus and dialogue were overwhelmingly aimed at Paul. Steve came to each meeting with plenty of paper and a computer showing numerous tables, charts, graphs, and statements. Gretchen would find herself nodding as Steve spoke, while at the same time thinking that he never demonstrated any interest in her as an individual or her concerns.

More than once, Gretchen said to herself, “He knows about our money, but he knows nothing about me.”

Gretchen is determined that her next relationship with a financial advisor will be different. As she takes a seat in Matt’s small conference room, Matt says:

Gretchen, thank you for the opportunity to meet in person. I was sorry to learn of your husband’s passing. Tell me, how are your children handling things?

Before replying, Gretchen is surprised, but pleasantly so, that Matt’s first question doesn’t address her finances.

Well, it’s been difficult for all three kids, especially for my youngest, Katie. We had Katie later than our two boys. She has just graduated from Bucknell, but she’s still finding it hard. Thank you for asking about them, Matt.