How retirement coaching can add value to your practice

The unstoppable pace of technology innovation and market competition could put you out of business unless you take steps now to add value far above and beyond traditional investment management.

Today, advisers face unprecedented competition on three fronts:
1. Robo-advisers are exerting downward pressure on fees, commoditizing basic investment management, and scoring high marks with millennials.
2. Vanguard’s Personal Advisor Services is offering investment management and access to a financial adviser for just 30bps and a modest $50,000 account minimum.
3. Technology companies like Uber and Netflix and tools like our smart phones are dramatically elevating consumers’ expectations about service and the need for speed.

Successful advisers who have built their businesses by charging 1% or more for managing money rightly worry about their future.

So the question is, how can advisers add value for clients beyond money management or traditional financial planning?

Building trusted relationships and providing financial planning have been mainstays for advisers looking to deliver more for clients. Today those are simply table stakes.

In my recent podcast interview with Alan Spector and Keith Lawrence, authors of “Your Retirement Quest: 10 Secrets for Creating and Living a Fulfilling Retirement,” we discussed some of the myths, misconceptions, and troubling pitfalls of retirement today. We also talked about how advisers can raise tough questions and help their clients address important issues, work through them, and find greater fulfillment.

(Related read: Don’t shrug off health care conversations with clients)

THE RETIREMENT CRISIS

Over the past decade, a trend has been unfolding that presents a unique opportunity for advisers to add incredible value in their clients’ lives.

Most Americans have heard of the retirement crisis from a financial planning perspective. However, another type of retirement crisis is emerging, as roughly 10,000 baby boomers turn 65 every day. Mr. Spector and Mr. Lawrence witnessed this phenomenon in their own careers at Procter & Gamble.

During a 36-year career in the human resources department, Mr. Lawrence observed something unusual. “About a decade ago, I started seeing folks retire, then six months later they would be wandering the P&G hallways in the middle of the day. I would ask what they were doing here and they’d say they were bored, lonely, or that their wife wanted them out of the house.”

He became curious and concerned about these retirees. “There was a large contingent of folks who would visit and sit in the cafeteria to have coffee with their former coworkers. I couldn’t understand why. But now I know, workers today are unprepared to face the transition that retirement brings.”

We have all seen clients who fail at retirement — and that’s the opportunity for advisers. Advisers who become experts at retirement coaching can help their clients successfully navigate this potentially treacherous period of life.

Mr. Lawrence explains, “We believe that retirement is the biggest transition people will ever make in their lives, and it’s greatly underestimated. While many pre-retirees are looking forward to a Carnival Cruise, they’re hit with the reality that sometimes retirement can be boring and lonely.”

In reality, retirement often gives a false hope. Just as preparing for retirement from a financial perspective takes a lot of work, so too does planning for the emotional transition.

HOW ADVISERS CAN HELP

There are unique phases that retirees go through and strategies we can use to help our clients prepare and find happiness in retirement.

The first stage is anticipation, during which the premise of not going to work is thrilling. Retirement then brings the honeymoon stage, where sleeping in and newfound freedom come with a sense of euphoria. The third stage is disenchantment, where retirees, and sometimes their families, begin to ask, “Is this all there is?” Lastly, successful retirees find the fulfillment stage, with a renewed sense of purpose.

By understanding each of the unique stages, advisers can identify which stage their clients may be experiencing and offer appropriate guidance.

One of the first steps of retirement coaching is to facilitate conversations to help clients plan for what their life will look like during retirement. By encouraging these conversations, advisers develop deeper relationships with clients they’ve known for years, and find greater understanding of their goals and dreams.

While advisers may assume couples are having these conversations on their own, they are often surprised to find that many do not discuss the details of how they’d like to retire. Mr. Lawrence knows from experience that a large percentage of clients will not have had these conversations, “In our very first workshop, one participant introduced himself and announced that he was retiring in six months. His wife slapped him and said, ‘The hell you are. We haven’t talked about that.’ We see this all the time.”

Here are a few crucial questions Mr. Lawrence and Mr. Spector have found helpful for advisers to use to facilitate conversations with client couples:

-What is the honest assessment of the state of our relationship?
-What will our daily routine and our chores be when we’re both at home?
-What is on my bucket list? What is on your bucket list? What is on our bucket list?
-What’s our lifestyle going to look like?
-Are we going to have breakfast and lunch together?
-Will either of us work in retirement?
-Where will we live?
-How often will we travel?
-How often will we see family?

Take a look at the full list of questions. By helping your clients answer them honestly and work through any disagreements, you can go a long way toward helping them succeed in their retirement years.

While we’re taught to believe that retirement should be easy and come naturally to us, often that’s not the case.

Mr. Lawrence and Mr. Spector encourage a concept called “practicing retirement.” Just like you wouldn’t recommend a client go out and buy a new boat without first trying sailing a few times to see if they really enjoy it, practicing retirement encourages clients to bring elements of retirement into their daily lives to give retirement a test drive.

Implementing retirement coaching into your services is one way you can differentiate yourself as someone who cares not only about your clients’ financial success, but also about their health and well-being.

If you’re intrigued about the potential of adding a retirement coaching component to your practice, you can access five free tools on retirement coaching developed by Mr. Spector and Mr. Lawrence.

Steve Sanduski is president of Belay Advisor. Follow him on Twitter @SteveSanduski.