Advisors must clearly understand what their clients want their retirement to look like in order to design customized portfolios that meet those clients’ needs, says Janet Peddigrew, regional vice president and managing director, Ontario region, for BMO Private Banking.
This includes being aware that a client will likely have more than one specific goal as is demonstrated by a recent poll studying what retirement looks like for high net-worth (HNW) Canadians with investible assets of $1 million or more.
For example, 83% of HNW Canadians want to travel during retirement and 73% also want to spend time with their family. Slightly more than half of HNW Canadians want to focus on their hobbies and 40% would like to volunteer when they are retired.
While these high numbers indicate that HNW Canadians are looking forward to various activities during retirement, accomplishing different goals may be made more difficult if clients and their families do not agree on what retirement looks like.
“Some of the information that we have received over the years is that we all dream of retirement but we’re not always having the best conversation to prepare for retirement,” says Peddigrew.
Advisors have an important role to play in ensuring that clients planning for retirement are having in-depth conversations with their partners and any children regarding their goals.
“You want to make sure everyone is aligned and that there are no surprises along the way,” says Peddigrew.
Do not assume your clients are on the same page as their spouses or partners, she adds.
It is very possible that one client expects to travel during retirement while that person’s partner prefers to stay home near the kids.
The survey also found that almost two-thirds of HNW Canadians consider themselves balanced investors while 24% are conservative investors and 14% are aggressive investors.
These figures suggest that protection of capital is top of mind for many regardless of how they plan on using their retirement funds, says Peddigrew.
When the financial market is in a volatile period, clients want to make sure they are in the best portfolio or balanced approach portfolio that is looking after both their short and long-term goals, she says.
Pollara Strategic Insights conducted this poll for BMO Private Banking between Oct. 15 and 18, 2014. A sample of 306 adult Canadians with at least $1 million in investible assets participated in the survey.