Retirement planning is generally considered to be a financial undertaking. But an equally important, if often neglected part of the planning process is the non-financial side of the equation. By helping clients prepare for the lifestyle changes associated with the next stage of their life, financial advisors can deepen client relationships and build more comprehensive financial plans for their clients.
“The financial and the non-financial [aspects] really go hand in hand,” says Amy D’Aprix, life transition expert at Bank of Montreal in Toronto. “Our money and our life can’t be separated; they go together.”
Indeed, financial planning is about helping your clients reach their life goals financially — and retirement planning is no different. Your job may be, first and foremost, to get your clients on track financially for retirement; but to do this effectively, you first must understand exactly how your clients plan to spend their time in retirement.
“Get people to figure out first what they want to do with their life,” says Ted Rechtshaffen, president and CEO of TriDelta Financial Partners Inc. in Toronto. “And then figure out financially if they can support what they want to do.”
This may sound straightforward, but that’s not always the case. Although many clients dream about golfing, fishing and travelling in retirement, they often don’t spend a great deal of time thinking about the specifics. And those clients who haven’t done this type of planning often end up feeling isolated, depressed or unfulfilled when they finally retire.
“If they do any planning, it tends to be financial,” says D’Aprix. “They just think their life will take care of itself when they get there. But it doesn’t.”
You are in a unique position to get your clients to start thinking about the kind of lifestyle they want. Ask clients where they plan to live once they’re retired, how they plan to stay engaged and socially connected, and how an unexpected change in their health might alter their plans.
Clients may not have anyone else in their life asking them these types of thought-provoking questions about their future.
“The advisor is the front line, in a sense, for many people to start this discovery and exploration,” says Eileen Chadnick, a certified coach and principal with Big Cheese Coaching in Toronto.
It’s not always easy to ask your clients personal questions about their health and aspirations. But studies show that clients want their financial advisors to know more about them than just their money, according to D’Aprix. “It only enhances the relationship,” she says, “when the client knows that you care and that you’re trying to help them have a good life — that it’s not just about the money.”
Rechtshaffen finds that most clients are open to having conversations about their personal goals. “People come to us because they want to do a financial plan,” he says. “They want someone to know their whole picture, so they can build a plan for the next 20 or 30 years.”
He uses a questionnaire to get clients thinking about their future. The questionnaire asks clients to identify goals in five categories: financial, health, relationships, adventure and spiritual. “Sometimes, going through that questionnaire really clarifies things,” Rechtshaffen says, “or opens up a different goal than what they thought their goals might be.”
Quite often, he adds, these personal goals have implications for the client’s financial plan. For example, if the client is intent on going on a Himalayan adventure in retirement but is beginning to experience health-related challenges, that client may need to consider retiring earlier than planned in order for the trip to be viable.
“It can have a very significant financial impact,” says Rechtshaffen.
If it’s clear that clients haven’t considered how they’ll spend the abundance of spare time they’ll have in retirement, it may be necessary to challenge them. Ask specific questions about how they’ll structure their days when they’re no longer working and who they’ll spend time with.
It’s especially important that clients who are very career-oriented plan ways to occupy their time in retirement, according to D’Aprix. “It’s not just about staying busy; it’s about feeling that sense of purpose and engagement,” she says. “That is a huge issue for a lot of folks.”
If your clients seem to be struggling with the idea of making the transition to a life that’s not defined by work, suggests Chadnick, consider referring them to a life coach while you focus on their finances.
“If they need to get at some more personal exploration [in an area in which] the advisor may not feel comfortable,” Chadnick says, “a life coach could take it to more personal levels.” IE