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MDRT INSIGHTS

Client Service As A Cornerstone Of Retirement Planning

Client service is the most vital component of retirement planning. Communication in particular is a helpful tool to bridge knowledge gaps and help clients feel included and invested in their financial futures.

Advisors can help their clients understand all that goes into their retirement plan to protect them against the main variables and risks they are likely to face — from life expectancy to inflation, total income needed, stock market risk and health care costs. A deeper understanding on both sides creates a more solid plan and stable relationship.

 

Communicate With Prospects In Their Own Language

Pay close attention to how clients and prospects communicate in order to build confidence and streamline the planning process. The way clients talk about their financial plans and goals, and the questions they ask during meetings, can provide helpful insight into their mindsets and create an opportunity for open discussion and education for a stronger relationship.

For example, I know clients are ready to seriously discuss retirement planning when their timeline changes from “in a few years” to “in 2025.” The immediacy and concrete deadlines indicate their frames of mind and can help you guide conversations.

Similarly, it’s important to provide the key details clients care most about and will understand during the planning process. In my experience, clients are more interested in their monthly income as a way to understand what lifestyle they’ll be able to support through the rest of their lives, instead of having an account of their total funds.

 

Optimize Retirement Income Strategy To Align With Phases

Retirement planning must also include an understanding of how clients’ lifestyles will change throughout the course of their retirement. There are three general phases that relate to clients’ spending patterns — “Go-Go,” “Slow-Go” and “No-Go.”

In the Go-Go phase, clients are extremely active and excited about retirement. This phase — particularly the first few years — is the most expensive part of retirement as most clients view it as a vacation. The pent-up desires and demands they were unable to fulfill as working professionals are now their main priority.

As retirees grow accustomed to their freedom and lifestyle, they enter the less-hectic Slow-Go phase after a few years. Spending is more conservative as they favor leisure projects over travel and other high-intensity activities.

Retirees enter the No-Go phase when health or energy declines and they can no longer take part in the activities they did previously. In some cases, long-term care can make the final years of retirement very costly as well.

A well-structured retirement income strategy that is supported by the right products will alleviate any concerns and enable appropriate spending while clients can enjoy their pursuits. In my practice, I’ve seen that clients do not need to increase their income every year by the rate of inflation in order to maintain their lifestyle in retirement outside of the high-spend phase.

In most cases, we find that retirees usually increase their income only every three or four years. In fact, many of our clients start to slow down later in retirement — typically around age 80 — and spend less money as they become less active.

If your clients seem to fit this spending pattern, it might be wise for them to either start with a higher initial withdrawal level, retire earlier or save less to ensure they are able to spend all the funds they worked hard to save.

 

Help Clients Mentally Prepare For The Transition

The change from working professional to retiree has more than just a financial impact for clients. To ensure a successful transition, include conversations about what to expect from a mental aspect and in their family dynamic. Clients may be surprised at how closely their personal identity and professional status are linked. Relationships with friends, family members and co-workers will inevitably shift, and clients should be prepared to find a new balance.

A more holistic approach to retirement planning that includes elements beyond income requirements and investments truly sets up clients for a successful and enjoyable retirement. Advisors who deeply understand and specialize in retirement planning are well-suited to carry their clients through the entire planning and transition process. Clients are able to retire with understanding and peace of mind as they enjoy the long-anticipated fruits of their labor.

 

Clay Gillespie, CFP, CIM, is a 16-year MDRT member with one Court of the Table and 13 Top of the Table honors. He is a financial advisor, portfolio manager and managing director of RGF Integrated Wealth Management. Clay may be contacted at [email protected]

Clay Gillespie, CFP, is a nine-year MDRT member with one Court of the Table and six Top of the Table honors. He is managing director of Rogers Group Financial in Vancouver, B.C., Canada. This article was reprinted with permission from the Million Dollar RoundTable. [email protected].


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