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Gold in the Gray

Early in his career, Randy Scritchfield took the route familiar to many advisors – helping young adults protect their financial future. Over the years, he attended his clients’ weddings, sent them baby gifts, helped them establish college saving accounts, and saw their children graduate and establish careers and families of their own.

Now, 25 years later, instead of advising clients on the risk of dying too young, he is more likely to discuss the risk of living too long.

Scritchfield’s practice, Montgomery Financial Group, Damascus, Md., has evolved into a full-service retirement services practice. He said he believes retirement advice will be needed more than ever over the next decades – not only because of the numbers of people in that age group but also because of the changing and more complex products that will help those retirees fund their post-employment years. 

“New pharmaceuticals did not replace the need for a physician,” he said. “And advisors will be needed more than ever as retirement products keep changing.”

The retirement marketplace represents a growing opportunity for advisors. 


LIMRA estimates that the value of assets held by those age 55 and above will double to nearly $22 trillion by 2020. When you combine that statistic with the numbers of people who need advice and the longer period of time that retirees will spend in their post-employment lives, opportunity exists for advisors who can distinguish themselves as experts in retirement planning. And that opportunity has been noticed by industry trade organizations.

In October, LIMRA established the LIMRA LOMA Secure Retirement Institute (SRI), which focuses on advancing research and education in the industry to help improve retirement readiness and promote retirement security. 

The establishment of the LIMRA SRI “helps the industry address the retirement challenges that workers in the U.S. are facing,” said Alison Salka, corporate vice president and director of the LIMRA SRI research team. “It really reflects the recognition of the importance of retirement to our country and to the industry as a whole.” 

Two main factors are driving the increasing importance of retirement planning, Salka said. One is the large segment of the population that is either at or near retirement age. The other is the change in the way retirement is funded – and that change stems from longer life expectancy combined with a shift away from defined benefit plans such as traditional pensions.

“There is a huge group that is on the cusp of retirement, and their retirement will be very different than retirement was in the past,” she said. “People will need to create their own retirement. They will need to develop their own source of retirement income. People are either not prepared for this or they are not confident in their knowledge of how to do this. This creates a need and an opportunity in the industry.”

With LIMRA SRI research showing that about half of all financial assets in the U.S. are held by those in the 55-75 age group, and with a large percentage of the population preparing to roll over funds held in defined contribution plans, “there is huge growth potential in this market and a great need for advisors to be well-positioned to take advantage of this,” Salka said.

LIMRA SRI research has shown a growing number of advisors changing their practice to offer retirement planning, Salka said. 

“Our research shows that in the past, only about one-third of advisors offered Social Security claiming strategies as part of their retirement planning business. Now we are helping them grow it as part of their business,” Salka said. “Our research is showing that consumers are most concerned about Medicare and about health care costs in retirement. They also are interested in preserving their nest egg. Now, advisors are more likely to think about longevity risk planning to address those and other issues.”

Consumers who are facing retirement are also facing a great deal of risks, “some they’re not even aware of,” Salka said. 

As retirement planners, advisors must view their role as “reality adjusters,” Salka said. “People retire and pull their funds out of their retirement account, and often they think that they have all this money to travel or do the things they have put off. It’s the advisor’s job to start from where the consumer is and guide them into the reality that their funds must last for 20 or 30 years, and then work with them to preserve those funds.”

For those who want to refocus their practice toward specializing in retirement planning, Salka advised to “get a good understanding of the consumer and their needs. Look at your practice and identify where the gaps are. Many advisors who are refocusing on retirement planning are looking at adding new products or services to their practice, expanding their networking with attorneys and other professionals, educating themselves on Social Security issues, looking at holistic planning through partnering with others.”

Salka said she observes that life carriers also are refocusing their marketing efforts toward members of the public who are in the prime retirement planning years. “This is a natural fit because it involves managing risk and protecting income,” she said. 

Growing Along With Your Clients

Many advisors are seeing retirement planning as the future of the financial services industry. But some are taking a step further than the usual financial aspects.

When Juli McNeely’s father hired her to work in his insurance business back in 1996, she was assigned to advise the children and grandchildren of his existing clients. She quickly realized that those second- and third-generation clients needed retirement planning services in addition to insurance. This realization led her practice into the future as she led her clients on their retirement journeys.

“I’ve been kind of growing up along with my clients,” she said. “They are glad they’re working with someone my age and that I’m going to be there for them as they move into retirement.”

Retirement planning makes up about 70-80 percent of the business for her practice, McNeely Financial Services in Spencer, Wisconsin. McNeely’s clientele is made up mainly of what she called “middle to upper income and middle to upper ages – baby boomers who are preparing for [retirement] and those who are already there.”

In the beginning of her career, McNeely worked with her clients to help them accumulate wealth. Now that those clients are moving toward a new phase of their financial lives, McNeely is moving along with them, working with them on what she called “late accumulation,” as well as wealth distribution.

 “The baby boomers are such a huge part of the population. They need the assistance of planners for retirement and for passing a legacy on to their children,” she said. “Generation X has accumulated less, but they still need help to get started toward retirement.” 

McNeely’s experience of moving into the retirement planning marketplace is part of a trend that will shape the future of the financial advisor, according to industry groups.

Earlier this year, two such groups – the National Association of Insurance and Financial Advisors (NAIFA) and the GAMA Foundation for Education and Research – released the results of a research project that attempts to answer the question: Where will advisors find business opportunities at the turn of the next decade? “Lifestyle management for the retiree market” is how NAIFA and GAMA describe one of the main growth areas identified in their joint study, “Advisor 2020: The Forces and Opportunities Shaping the Financial Services Advisor of the Future.”

Yhat Is “Lifestyle Management”?

The retirement advisor of the future will provide more than just investment products and services, Advisor 2020 predicts. The advisor of the future will need to manage their clients’ living environments and financial assets. Financial management is spilling over into health and property management for senior clients.

McNeely, who is NAIFA’s president-elect, is enthusiastically in agreement with these findings, and she is seeing them play out in her own practice.

“I’m seeing the day when clients rely on their financial advisor for advice on everything from travel to modifying their homes,” she said. “I see it happening where we as advisors will be the ones who will make our clients’ retirement as happy as possible.” Because retirement planners often incorporate professionals such as attorneys and accountants into the retirement planning process, McNeely said, she does not think it’s a stretch to see the financial advisory practice expand into other facets of retirement.

“I have been looking into incorporating lifestyle management into my practice,” she said. “One big question is: How do you charge a fee for that? And I would have to hire someone to do lifestyle management for our clients.”

McNeely said that one major lifestyle management need for clients is in the area of home modifications for those who need to refit their houses to accommodate the physical changes that accompany aging. A retirement advisor/lifestyle manager could maintain a network of contractors who specialize in home modification and could refer clients to experts in that network. Home modifications are a major factor enabling clients to remain independent in their own homes longer and postpone or prevent the need to move into a care facility.

The idea of a financial advisor becoming a travel agent may sound a bit far-fetched, but McNeely said that senior travel is another area that could be big in the lifestyle management practice. “About 50 to 60 percent of my clients say that travel is what they most want to do in retirement,” she said. “But many of them haven’t traveled much in their lives and they don’t know where to start to plan a major trip. We could connect them with tour providers – cruise lines that cater to seniors, for example.”

Not every senior client will retire from the workforce completely. Many will transition to an “encore career,” turning a hobby into a business, doing consulting work in their current career field or exploring a career path that they never had a chance to try when they were younger. This also provides an opening for advisors to provide transition planning for their clients. Clients who are opening their own businesses often will need an income “bridge” and start-up capital. 

Another lifestyle management area is home health care. “Advisors can assist by connecting clients with social services or care services,” McNeely said. “We can provide wellness coaching for the spouse or family member who is serving as a caregiver.”

Many senior clients are concerned with leaving a legacy to their children. But more crucial than leaving money to the kids is letting them know basic information, such as whether the parents have a will and life insurance, what their parents’ final wishes are, and where the children can access important paperwork or the key to the safe deposit box.

“This is where an advisor can provide an important service to the entire family,” McNeely said. “We are good at initiating a dialogue on subjects that sometimes are uncomfortable. I often ask clients if they are comfortable talking about their financial situation with their children. I will sit in while clients talk with their children so that they know what their parents’ basic financial situation is and help the parents transfer the information the children will need, such as where’s the will and where’s the life insurance.”

How Would You Get Paid?

To answer McNeely’s question, Advisor 2020 envisions that advisors would charge fees to help households manage all facets of a retirement that may extend for 30 years. 

NAIFA defines “lifestyle management” as “the art and science of managing retirement as opposed to managing assets.” 

“Lifestyle management will become an essential, and perhaps a central, tool in financial management as life expectancies increase and the country’s population of seniors grows,” according to Advisor 2020. It is part of what NAIFA calls “the new retirement culture” driven by longer lifespans and the baby boomers’ desire to reshape the retirement landscape. 


In transitioning from “financial advisor” to “lifestyle manager,” the core functions of your practice could include helping clients:

  • Invest in home renovations that would enable them to “age in place.”
  • Decide when it is necessary to move out of their home and into assisted living.Undertake an encore career.
  • Travel or consider retiring overseas.
  • Navigate the governmental and health insurance bureaucracies in order to receive all the benefits for which they are eligible.
  • Provide bookkeeping services when the “managing” spouse of a household dies or becomes cognitively impaired.

Lifestyle management’s goal is to mitigate risk instead of to finance risk. Because the greatest risks of aging are health-related, a lifestyle manager would need to be more aware of client health issues than financial advisors are today. Lifestyle managers would need to refer clients to professionals ranging from physical therapists to nutritionists to grief counselors.

Providing financial management services for the elderly can be very attractive when you consider the following:

  • One in seven Americans over the age of 70 develops dementia, according to a 2007 National Institute on Aging (NIA) study.
  • Nearly 10 million Americans provide free care to dementia patients, both relatives and nonrelatives, according to NIA.
  • Dementia sufferers incur enormous economic losses as a result of not being able to manage their finances.

In addition, one in four Americans over the age of 70 is unable to drive because of medical conditions. This loss of mobility can lead to major lifestyle changes, such as needing to relocate or needing to find services that can be delivered at home. Helping older clients anticipate and address these lifestyle changes will become an important business, according to Advisor 2020.

Because an increasing number of seniors live more than 100 miles from their adult children, helping a client move closer to an adult child could be another way in which a lifestyle manager could provide services such as transferring financial, tax and medical records.

But aren’t “lifestyle management services” already being performed by people who call themselves life coaches or aging-in-place specialists? Yes, said Advisor 2020, but lifestyle management is more complex an issue than coaches and specialists handle. Managing the decumulation of assets is the key to successful lifestyle management, according to Advisor 2020. The advice of these other specialists will be meaningless if your client cannot afford to implement it. Lifestyle management, and how it should be practiced, must be driven by the financial resources that your client has available.


Making the Move

Scritchfield has been incorporating some lifestyle planning in his retirement planning practice, but said that it has been “in a minor sort of way.” 

“I tell my clients that retirement is a lifestyle decision rather than just a financial decision,” he said. “I tell them that you shouldn’t necessarily retire if you really don’t want to. Some people really want to keep working, and I talk with them about maybe going after more flexibility in their present job, maybe a career change or maybe a change in hours.” 

One change he has made in his practice was the decision to add a life insurance agent to his firm six months ago. “He does strictly life insurance, while I focus on the planning end of things,” he said. Scritchfield also works with a long-term care insurance specialist, attorneys and accountants. “I am a resource for many products and services, but not necessarily delivering them myself,” he said.

For advisors who are thinking about making the move into retirement planning, Scritchfield urges them to jump in with both feet or don’t jump in at all.

“If you’re at the right point in your practice where you want to specialize in retirement planning, don’t dabble in it, specialize in it.” 

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Follow her on Twitter @INNsusan. Contact her at [email protected].

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