Our clients work hard for their money, and advisors must work hard to make it matter later in life. Some people simply fall behind retirement savings goals as discussed in last week’s article, but others completely lack retirement plans, or create harmful planning gaps by neglecting health or recreational desires. Because of this, we must help them create comprehensive plans that transcend simply paying bills and cover all the needs of a future retiree.
Without a comprehensive plan, clients can end up with non-complementary and ineffective investments in their retirement portfolio. After all, many Americans believe “something is better than nothing” and it’s alluring to buy into trending IPOs or purchase insurance policies without fully understanding them. This kind of slapdash investing can send clients down a dangerous path that leaves them unable to provide for themselves in retirement or unable to retire at all. They may think there’s plenty of time to change course if necessary, but failing to plan is planning to fail.
The knowledge we can provide is like a map and compass. The map shows all of the options clients have before them, and the compass points them in the right direction. When working with clients who have made chaotic investment decisions, teach them the basics of using that map and compass and how you use them yourself. This will help them understand when you explain more beneficial investment strategies and help them break the cycle of disorganization. Once you are on the same page, work together to determine where they need to go, how to get there and how to handle the inevitable detours and obstacles.
Fleshed out retirement plans are good first steps, so long as they cover all the facets of retirement, including one’s own health. One of Confucius’ sayings goes, “when we are young, we spend our health to gain our wealth; when we are old, we spend our wealth to regain our health.” We can break out of that paradigm and create wealth by maintaining health. Discussing and including ideas to maintain a healthy diet, exercise regimen and to manage stress in an overall retirement plan means that money will go further in old age.
Of course, financial advisors are not exercise coaches or nutritionists. Instead of trying to teach clients how to take care of themselves, walk them through the financial consequences of not doing so. It’s much harder to achieve a full, secure retirement when facing increased costs from doctors and hospitals, heightened insurance premiums and a higher likelihood of long-term care needs. These possibilities don’t just impact people once they retire – healthcare costs often start rising in middle age, and clients who don’t consistently mind their health may find themselves unable to meet savings goals over time. Choices made today impact the choices available tomorrow and it’s important for clients to consider more than just the known costs of retirement.
Beyond meeting basic financial and physical needs, retirement planning should also explore how to find meaning and significance in the latter years of life. Incorporate client’s recreational goals into their plan and set savings benchmarks that will prevent having to prioritize survival. That way, you can help preserve their financial abilities to enjoy retirement and invest time in the activities that matter to them, even when they’re no longer earning income.
Retirement planning is about making crucial choices between doing what we want and doing what we should. Help your clients do what they should now, so they can do what they want in their golden years.
Apelles Poh Hong Pang, MFP, CFP, is the principal trainer of Eagle’s Wings Training and Consultancy. He has been a member of MDRT for 25 years, with 10 years of Top of the Table membership. He has written two books and was awarded the inaugural Singapore Financial Adviser Representative of the Year in 2004 in recognition for his excellence and contribution in the field of financial planning practice. Apelles is also a motivational speaker, and has spoken throughout the Asia-Pacific region. In 2016, he was a platform speaker in the MDRT Annual Meeting in Vancouver, Canada. He lives in Singapore.