Some financial professionals put a priority on stress-testing a client’s retirement plan, making sure it will hold up to inflation, taxes, health care costs and other expenses down the road.
Sometimes, though, it’s just as important to stress-test the client.
When you hear the top concerns retirees name it seems to be that they’ll run out of money, you may picture a struggling couple who’ll be relying mostly on Social Security and maybe a little income from a pension or a meager 401(k).
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But it’s often the NUMBER ONE concern. That means even the people who seem the most prepared can get panicky at the thought of giving up their paychecks.
Why is that?
I think at least in part it’s because the transition to retirement isn’t strictly about finances and having enough money in your portfolio. There’s also an emotional aspect that often gets overlooked in the planning process because some people are too busy tracking the stock market, contributing to a 401(k) or wondering which tax strategy or Social Security-claiming strategy is the right one.
Even people with $1 million or more in their portfolios – who may be well set for retirement financially – can start getting cold feet as the big day nears to put the working world behind them and head into the next chapter of their lives.
Suddenly, they might start feeling uneasy about their financial future, even though the numbers may look good and their plan is sound. Let’s face it. The theory of retirement – when it’s still several years in the future – is one thing. But the reality when it’s rapidly coming up on you is something else.
You can start to question whether those investment and income strategies that were so carefully crafted over the years are really going to sustain your lifestyle the way your career always has.
Yes, I’ve seen this sort of thing happen with my firm’s clients, and when it does I think it’s important to inform them about how we stress-test our plans and constantly monitor them for updates. We can demonstrate to them how our team of seasoned analysts and planners work to help keep their financial strategy on track with their retirement goals.
With any luck, if we give them plenty of time and understanding, we want to help them prepare for their upcoming retirement and have them once again eagerly anticipating the day when all their planning, saving and investing will have paid off and they can just enjoy the rest of their lives.
As you can see, there’s a lot more to being a financial adviser then just managing someone’s assets and sending them distribution checks. Relationship management ranks just as high on the list because, at least in my experience, it’s what clients truly want – especially in retirement.
We try to be objective at the conference table, and often suggest clients keep their emotions out of their financial strategy to help avoid making bad decisions based solely on emotions. But sometimes we have to change it up and act as though we’re sitting at the dinner table instead of the conference table, to have heart-to-heart conversations that let our clients know we care.
Planning for retirement can be a scary time – not just because it’s the final countdown to making sure the numbers work, but because of all the changes that are coming and the need to let go of old habits. Dealing with this emotional time in a way that helps keep a client on the path toward financial confidence is what sets advisers apart.
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and RightBridge Financial Group are not affiliated companies. Investing involves risk including the potential loss of principal. Any references to protection benefits or lifetime income, etc. generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. AW06172999
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