Limited Advice Disappoints Near Retirees

My Comments: The title itself is a little disappointing to me. What exactly are “near-retirees”?

I spent almost all my working time these days promoting the idea that a successful retirement, however you want to define that, is a function of time, effort and discipline. Oh sure, you might win the lottery but the odds of that happening range from slim to none.

The language of money is a foreign language to most people. Coming to terms with the dynamics of retirement requires a skill that few people have, and many in the advice business are not really qualified. Yes, they have the requisite licensing which mostly means that they can sell you something or perform professional services for you.

So let’s assume you consider yourself a NEAR-RETIREE. How many years do you have to go? Is it all about having more money? Has anyone ever asked you HOW MUCH IS ENOUGH? Have you already figured out how long you might live, where you want to live, is it important to maintain your current standard of living? Have you made any plans if one of you eventually becomes sick and needs extensive assistance?

The bank where you do business may have someone on staff who is properly licensed to talk with you about your retirement money. How old are they? Years ago when I was much younger I was properly licensed but I had no clue how to talk about retirement. For me it was years into the future and I had no idea what it actually meant. It wasn’t an accident I had no elderly clients. Not because I didn’t try, but because they didn’t have confidence that I actually knew what I was talking about, and they were right.

Nck Davis brings to the table some interesting thoughts here. My online courses attempt to bring my 45 years of experience to the discussion, and I do it without trying to sell you any of the stuff the guys at the bank do. Those days are over for me so I spend my time trying to help others achieve a level of success that’s hard to achieve.

By Nick Davis \ 8 JAN 2008 \

Near-retirees often complain they have new and different questions for their advisors than when they were in their 30s and 40s. These questions range from which accounts to withdraw from first to questions about how they might best purchase cars during retirement. Retirement is a different phase of life, and it should be recognized as such. People have new questions, and they are discovering that answers are scarce.

Often the advisor they’ve been with for many years will not be able to answer these new questions for one reason or another. We’re going to visit what those questions are and why they aren’t being answered. Retirees are learning that last season’s financial advisor may not be best for the new season of retirement spending.

As a financial planner, I hear this often. The conversation often starts with a declaration of love and loyalty to an advisor. However, they then pull a list from their handbag with a stack of serious questions. Here are some examples of those questions:

Is there a special order of withdrawal from my accounts that would be better than another?

When is the best time to claim my Social Security benefits?

Should I have a certain amount of cash in my savings account for retirement?

Could I do anything to become more tax efficient during retirement?

Should I buy a smaller house?

How can I protect my savings from an extended health care crisis?

I ask: What are you missing from your current advisor that brought you here today?

“I feel like I am not getting answers to these questions” is the usual response. Or “I was told that I would be fine for retirement, but I just don’t think they really looked into it as much as they should.”

Why is this so common?

The answer could be a few things. Advisors are not all the same; it’s a generic and overused term that can be used to describe someone as minimally trained as a sales broker or someone as qualified as a Certified Financial Planner®. There is a big difference between the two. Even very qualified professionals who focus on the first phase of financial life might not be well suited to help you prepare for the retirement phase of the financial life cycle.

Another reason could be just plain laziness. After all, if business as usual has worked for that firm’s entire career, why change and offer more? Why fix what’s (apparently) not broken?

One last reason might be liability. It’s easier to oversee a large group of advisors if the business limits the advice they can give. In a world so confusing and vast, it’s typical that financial groups focus on repetition of a limited template of financial planning. Giving large groups of employees free reign over giving answers might be a liability hazard for that company. When near-retirees present these challenging questions to the advisor, the feedback is often “we don’t do that.”

Either way, people still need these answers, and many are not getting them.

What is the solution?

Many advisors and firms have had it easy by only offering advice around growing money inside investments. For a while, Americans’ largest need has been just that: saving for retirement. Retirement savers are the demographic of people who have traditionally made up the largest portion of the financial advice world in recent past. Because of the large number of baby boomers retiring in recent years, this has begun to shift. Advisors unwilling or unable to answer retirement questions should either change their business model so they can begin providing these new answers or let their clients go.

There are many great firms that do not have these issues and have adequately trained advisors. It seems that society is revealing a genuine and pressing need for a new type of advice and advisors who answer these new questions. Shouldn’t it be normal to answer questions that relate to the spending of money and not only the saving of it?

First, advisors could take responsibility and not shrug off the need for clients to have detailed help by recommending they speak to the proper professional. I’m not promoting the idea of inappropriate advice. Advisors not properly licensed for tax or legal advice should obviously not be giving that sort of information.

However, this has often been a cop out. Near-retirees often hear “we don’t do that; you’ll have to talk to your CPA.” I get it. It’s OK and proper to say that. But shouldn’t it be the financial professional’s job to make the introduction to the CPA or attorney or Medicare professional? Maybe even take it one step further and let the other professional know the specific question that their client is even asking? This would be a great way for financial planning to evolve! Imagine advisors as a general guide leading these new retirees to the correct people and services and even telling the professional exactly what help they need! The professional then works with the advisor as a sort of team. With so many baby boomers retiring daily, this would indeed be a much-welcomed shift.