Recently, I hosted a roundtable lunch for several financial advisors who have built a niche by working with seniors. Even with the growing proportion of assets held in households of people aged 65 plus, not every advisor will be interested in making this demographic an area of focus.
Dealing with seniors can be demanding and emotionally taxing. But for those advisors who are interested in working with seniors, the discussion made it clear that building a reputation as a go-to advisor for seniors in your community takes much more than adjusting your office setup. Success in this niche means changing the focus of your conversations, rethinking the areas in which you build expertise and altering the nature of your client communications.
Here are some of the key takeaways from my conversations:
– Find senior clients’ hot buttons
In our conversations about seniors, a recurrent theme was that age is not a predictor of behaviour or financial needs. As one advisor, Kathy, put it: “I’ve learned not to prejudge clients based on their age. I have 65-year-olds who are as cautious and risk-averse as 85-year-olds, and 85-year-olds who are as adventurous and open to new experiences as clients who are 30 years younger. Just as is the case with pre-retirees, the key with seniors is to find the unique hot buttons that drive them and orient everything we do around those hot buttons.”
Kathy added that in dealing with her older clients, she employs a three-stage retirement model developed by Michael Stein in his book, The Prosperous Retirement: Guide to the New Reality. Those stages are: “go go”; “slow go”; and “no go.”
Kathy has seen tremendous variation in the actual ages at which her clients move from one phase to the next.
– Build the right relationships
Nancy, another advisor at the lunch who focuses on seniors, described how she has developed the expertise and skill set to be a resource for clients in each of Stein’s three phases. Nancy also talked about the relationships she has developed in being able to help her senior clients at each stage.
Every advisor around the table identified travel as a huge hot button for active retirees in the “go go” phase. Nancy has developed a relationship with a travel agent with experience in organizing trips for active seniors. Twice a year, she hosts talks and film sessions aimed specifically at more adventurous clients. Nancy has had success in getting her clients to invite friends and, after people have attended two or three times, asking these friends whether they’d like to discuss their situation becomes easier. The key to a good turnout: hold these events during the day, when it’s light out; ensure there’s lots of free parking; and offer food.
In Nancy’s experience, retirees in the “slow go” phase, barring any health issues, still want to travel but are less venturesome. For those clients, Nancy hosts entirely different travel presentations put on by a travel firm that specializes in cruises and package tours for seniors.
As well, the “slow go” phase is a stage in which clients often look at downsizing their homes. Nancy has developed reciprocal referral relationships with a couple of real estate agents who specialize in condos that appeal to an older clientele. And if clients need help in the downsizing process, Nancy refers them to a woman who has set up a small business that focuses on assisting seniors who are downsizing and need help in decluttering their homes.
There was universal agreement among the advisors around the table that “no go,” the final phase, can be the most challenging phase of all. This is when failing physical health and dementia can enter the equation and adult children come into the picture, sometimes with their own agendas. This stage also is the point at which clients no longer can live independently. For those cases, Nancy has identified a woman who has particular expertise in working with seniors and their families to select the right assisted-care option.
– Tap the top financial concern
Peter, another advisor at the lunch who focuses on seniors, talked about the one thing from which he gets the biggest response among his older clients: a simple, 12-month cash-flow forecast.
“Most of my retired clients don’t have much interest in talking about retirement income plans and withdrawal rates,” Peter says. “They want to be confident that they won’t run out of money. And the way they measure that is by going through the forecast of cash in and out that I prepare for each client for the year ahead.”
Peter also described an autumn morning workshop for snowbirds that he holds, with speakers discussing the direction of the Canadian dollar’s exchange rate, cross-border tax and estate issues, and home security. These events also are a big draw for people in his clients’ network who winter south of the border.
Given today’s low interest rates, many advisors talked about the challenges of generating the cash that aging clients need to sustain their lifestyles without taking more risk than those clients are comfortable with.
Another common observation was the fixation among many older clients on avoiding a drop in the value of their investments. Martin, another advisor at the lunch, joked: “If clients get a statement that shows them up by $5,000 from last month, I don’t hear a word. But if they’re down by $50, my phone rings off the hook.”
There was considerable conversation about the various investment vehicles that can be used to generate steady cash flow. Although annuities can help to stabilize a retirement-income portfolio, persuading clients to give up access to a big chunk of their money can be difficult.
– Speak the right language
Donald, another advisor at the meeting, raised a different hot-button topic: “I’ve been surprised about how much my older clients hate paying taxes. None of my clients like paying taxes; but, for some older clients, it verges on fixation. As a result, I spend a fair amount of time pointing out how we’ve structured things to pay the least possible amount of taxes.”
Donald also talked about how he’d changed his approach after hearing a talk by Heidi Grant Halvorson, associate director for the Motivation Science Center at the Columbia Graduate School of Business and co-author, with E. Tory Higgins, of Focus: Use Different Ways of Seeing the World for Success and Influence. In that book, Halvorson Grant outlines research that identifies two types of personalities: those who are motivated by achieving gains, and those motivated by avoiding losses.
That research shows that aligning the right message to the personality of your audience can dramatically improve results. Because seniors are motivated overwhelmingly by avoiding losses, Donald frames his recommendations in terms of avoiding negative outcomes. For example, when Donald suggests that clients invite their children to sit in on meetings, he describes unhappy situations that have arisen when kids have been kept in the dark. Since taking that tack, Donald has seen perceptible improvement in buy-in to his recommendations.
– Respecting independence
Donald’s comments sparked a conversation on two other hot buttons for seniors.
One is leaving a legacy – in some cases for their children and especially their grandchildren and, in other instances, for charitable causes. Several advisors commented on the growing desire by aging clients to get recognition for contributions while they are still alive; a couple of advisors had seen success with insurance-driven solutions that can provide a significant sum to a charity and, at the same time, lower a client’s tax bill, which taps into two motivators.
The other big issue for clients relates to independence. Several advisors talked about how aging clients often feel threatened when it is suggested that their adult children get more involved. No one had a really good answer for this, except to suggest that the earlier this issue is raised with clients, the better. Introducing the notion of getting children actively involved when clients are still vital is a lot easier than when they are feeling vulnerable.
And when it comes to meeting with older clients, plan for longer meetings and don’t rush them. “For some clients, I’ve learned to book off an entire morning,” one advisor says.
A number of advisors talked about needing to be prepared to meet at clients’ homes. Another advisor has had success with Skype meetings, in which a junior staff member drives to clients’ homes to set up Skype for client meetings and, in some cases, stays afterward to help clients Skype with their grandkids.
“You have to be patient,” one advisor comments. “My best support person is in her 50s and has a natural warmth and interest that my older clients love.”
Dan Richards is CEO of Clientinsights (www.clientinsights.ca) in Toronto. For more of Dan’s columns and informative videos, visit www.investmentexecutive.com.
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