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How Advisors Should Interact with Baby Boomers in the Pre-Retirement Phase

For so many years baby boomers have been excitedly planning their retirement; looking forward to trips around the world, being mortgage free, upgrading the car and so much more. This is the scenario that financial advisers are faced with when beginning their relationships with boomers.

How can advisers deliver difficult news, provide encouraging advice and retain these clients? Importantly advisers need to realize that boomers are becoming increasingly aware that they face an unsure financial future; but much has contributed to this current dilemma they face,? not least of which is, as some commentators note, the 60% lost value in investments because of the economic crisis.Retirement Planning

According to statistical information provided by the Administration on Aging report, the age-65-and-older population grew 18 percent between 2000 and 2011 to 41.4 million senior citizens and the numbers are expected to continue to rise.

A study byAmeriprise Financial found that 93% of Boomer parents report providing financial support to adult children, 71% helped with college loans and tuition, and 53% helped them buy a car. However, only 24% describe their financial situation as putting away money for the future.

Emily Brandon writing in USA News? (Retirement News) says the following in her article, The Baby Boomer Retirement Crunch Begins:

“The boomers will be the first generation to overwhelmingly not receive some sort of guaranteed benefits from employers,” says Ken Dychtwald, president of the consulting firm Age Wave and author of “A New Purpose: Redefining Money, Family, Work, Retirement, and Success.” “We now live in a 401(k) world where people are responsible for our own savings, and baby boomers have not done a very good job. It’s a generation that is going to struggle in old age in the absence of reliable anchors and support systems.”

How can financial advisers prepare for the boomer client?

  • It is very important not to believe everything you read/have read about baby boomers. Not all will have enjoyed fully the fruits of their labor as they earned it so dont be tempted to make assumptions and deliver one size fits all advice.
  • Be behaviorally smart; ask the right questions; spend time finding out what their plans have been for their future; ask them about their family and any financial promises they have made to them i.e. clearing childrens mortgage etc; get them to describe the future they see for themselves.
  • Remember that you too will one day be facing this age group. Limited finances will not be their only concern. Empathy is a key here. Confronting this season of their lives and their uncertain investment returns together with facing the potential of losing their longed for dreams in their retirement make the relationship a tricky one for advisers to navigate.

Behaviorally smart advisers should invest quality time into the boomer generation. They too will have read the doom and gloom prospects written about their financial future. Its a key strategy for you as the financial adviser to identify the real gap between their current/future financial positions and determine whether the gap is as big as they imagine in terms of the dreams they have for their retirement future.


 

 

 

 

 

 

 

Carol Pocklington is a Human Behavior Solutions Analyst at DNA Behavior, assisting with the research and development of behavioral products. DNA Behavior helps grow behaviorally smart businesses and financial advisors worldwide to increase competitive advantage using the most reliable behavioral discovery and performance development systems on cutting-edge technology platforms. Solutions are delivered in the areas of client experience management, financial personality management and human capital management.

Visit the Financial DNA website to learn more. |??? Try Financial DNA Free for 30 days!

Why Helping Your Clients Know Their Number is an Old School Approach

Have you ever had a client tell you their number? You know, the net worth number that will make them happy. Or that number they ask you to calculate so theyll know theyll be okay?

Focusing on this number is outdated, a mistake and I contend will actually hurt someones chances of reaching their long term goals. Heres why:

You are encouraging your client to focus on the wrong thing. When someone focuses on a future number they arent focusing on what they need to do to get there. Unless they are planning for a short term liquidity event, such as selling a business or winning the lottery, having a big number in their head doesnt do anything to move them toward the goal.

Helping Clients Know Their Number is an Old School ApproachClients may very well use this number to gauge their progress. One of the positive impacts of goals is that they give us a target to move towards. One of the negatives is that when we dont hit them we feel as if weve failed. When we put our attention on missing a goal, our energy is on the failing as opposed to the achieving of the goal.? For example, if your goal is to drive to Denver and you hit a detour and find yourself in Birmingham it doesnt get you to Denver any more quickly by feeling badly youre in Alabama. Instead, if you get a map or use your GPS to guide you to your preferred destination youll have a much easier time actually getting there.

In his Psychology Today blog Ray Williams surveys various research articles looking at how goal setting doesnt work. He quotes L.A. King and C.M. Burton in an article entitled, The Hazards of Goal Pursuit, for the American Psychological Association. They argue that goals should be used only in the narrowest of circumstances: “The optimally striving individual ought to endeavor to achieve and approach goals that only slightly implicate the self; that are only moderately important, fairly easy, and moderately abstract; that do not conflict with each other, and that concern the accomplishment of something other than financial gain.”

Williams continues:? There is an addiction in our culture to getting more, the going for the goals hype is disconnected from peoples’ authentic selves, and their values.there are psychological manifestations of not achieving goals that may be more damaging that not having any goals at all. The process sets up desires that are removed from everyday reality. Whenever we desire things that we don’t have, we set our brain’s nervous system to produce negative emotions. Second, highly aspirational goals require us to develop new competencies, some of which may be beyond current capabilities. As we develop these competencies, we are likely to experience failures, which then become de-motivational. Thirdly, goal setting sets up an either-or polarity of success. The only true measure can either be 100% attainment or perfection, or 99% and less, which is failure. We can then excessively focus on the missing or incomplete part of our efforts, ignoring the successful parts. Fourthly, goal setting doesn’t take into account random forces of chance. You can’t control all the environmental variables to guarantee 100% success.

If youre not buying the danger of goal setting argument, then consider that making the number the goal is the wrong goal. People think that having a money goal will motivate them to achieve it. Actually, they are focusing on the wrong incentive. People may think they are motivated by money or advisors may think clients are, but really people are motivated by what they money will do for them. The money might help them leave a job they hate, pursue a hobby they enjoy, give to causes they believe in, etc.

Build better relationships with clients and do a better job supporting them in getting to where they want to go.The number is a meaningless moving target. I had a client who told me at our first meeting that his number was $5,000,000. When he got to $5 million he said, Oh, I guess that number doesnt really make me feel like Im there. I think its really $10 million that would have me feeling okay. Guess what, $100 million might not make him feel okay. The feeling of security or knowing that well be okay isnt typically related to the number, but rather our beliefs about what okay is.

As advisors, many of us create financial plans for our clients, run projections, make assumptions etc. We help our clients create a road map for their financial futures. Anyone who has been in business over the past ten years knows that our projections are just that, projections. The world often changes in ways we cant anticipate. What we are really doing for our clients by creating a financial plan is to provide them with a plan that satisfies their logical minds and really serves to ease their concerns about the future. When we can calm our clients worries we help them to make much better decisions with their money.

There are real benefits from the financial planning process. As advisors we need to expand our views about all the benefits a plan provides. When we move past the left brain logical benefits and expand our focus to the more right brain behavioral benefits well build better relationships with our clients and do a better job supporting them in getting to where they want to go.

As a 21st century advisor make sure you understand your clients well enough to know:

  • What they want their retirement to look and feel like.
  • The most important people in your clients lives and how they want to be involved with them in the future.
  • The causes important to your clients and what impact, if any, they would like to have on these causes.
  • How strong their internal barometer is for making adjustments in their financial lives based upon whats happening in the world.
  • What they really need from you to make solid financial decisions.

Helping clients to tap into their motivation behind their number will allow us to be much more effective in helping them get to where they want to go. People are motivated by avoiding pain and moving toward their passions. To succeed as an advisor in the coming years it will be crucial to expand the conversation from just the numbers to instead, focusing on intentions and passions. This is what it will take to truly move people closer to their desired outcomes.

Ellen Rogin, CPA, CFP
is the co-author of Great with Money: 6 Steps to Lifetime Success and Prosperity. She speaks and consults to the financial services industry on business building strategies and working successfully in the women’s market. To learn more and to sign up for Prosperity Tips visit www.ellenrogin.com.

Whats Certain is Uncertainty

As a financial advisor, you have done a good job of helping your pre-retired clients dream, define their ideal goals and manage a portfolio to achieve those goals. But that may or may not have anything to do with their reality. Why?? Because so much of retirement requires managing the mental, social and physical aspects and each of your clients is a unique individual.financial personality, behavioral management, retirement planning

Helping your clients plan for retirement requires you to use a whole brain approach to financial planning.? Consider these facts recently released by the Employee Benefit Research Institute: 57% of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes.? 28% of Americans have no confidence they will have enough money to retire comfortably.

Beginning with the left-brain side of the business, you are already starting with a deficit: a lack of money and confidence.? Pre-retired couples assemble their budgets and that action alone can bring on a lot of uncertainty. Like the markets, people dont like uncertainty. How does it feel to live on the withdrawal side when your clients have always lived in the accumulation phase?? What about the possibility of another Great Recession?? Are health care costs really that high?? How do I know how much to plan for home repairs?

That left-brain conversation can take a sharp turn into the right-brain hemisphere.? A client may confide in you that even though they never liked their job, at least it gives them a sense of purpose. The reality is that when people don’t feel they are doing something meaningful, they become bored and pessimistic. Failure to address things like how much time they will spend together, changes in household responsibilities if one retires before the other, or how their golden years will be affected by financial issues such as supporting an aging parent can quickly remove the luster and shine from their golden years. Couples can, and probably will, have different priorities and attitudes about retirement and that identifying those differences is critically important to their compatibility, and success in retirement.

The emotional side of retirement coupled with the numbers side can add up to stressful conversations during your meetings with pre-retired clients.

So how do you continue to create a priceless unique experience for your pre-retired clients?

By understanding where to focus the conversation depending on the type of client sitting in front of you.? If your client is primarily a goal-setter, then helping them with ideas to redirect their time, energy and talents into new ventures will help reduce the tension.? An information seeker will need more details and research on retirement ideas and will probably be more at ease with identifying and following detailed cash flow projections.? Your client who is more lifestyle oriented would do better with you telling stories about your other retired clients who have successfully made that transition. And, finally, a security seeking clients mind will be at ease when you combine both their feelings and very concrete, specific ideas about retirement.

financial planning process, client confidence, advisor trustHelping your clients prepare for retirement requires you to move from the clients outer world to their inner world with grace and ease.? Instilling confidence and a sense of certainty in these uncertain times is your number one priority.? And to do that, you need to have a heightened self -awareness to show both your logical, and emotional side.? Your payoff is loyal clients who will stay with you and provide referrals for life.

For more information on how you can determine the financial personality of your clients to guide them in all financial planning conversations, visit the Financial DNA website.

The One Thing Women Really Want

Youve read all the reasons why targeting women as clients is lucrative.? They control a lot of money, make the family financial decisions, are more loyal, and refer you more business.? You know what the potential is for your practice.

But what is the one thing that women really want from YOU, the financial advisor?

The same thing as menTRUST.? Easier said than done.

A recent MetLife study at the nonprofit Womens Institute for a Secure Retirement found that 61% of women executives (earnings of at least $75,000 annually) cite trust and respect as the most important factor in choosing and keeping a financial advisor.

As a financial advisor, you envision yourself as a relationship expert, being able to easily identify personality traits with the well-crafted questions asked in your initial consultation.? While you may be highly intuitive, you will only be guessing about your conclusions by using this random hit or miss strategy.? Research shows you only naturally connect with roughly 40% of your clients.

financial planning for women, working with clients, women in financeBuilding trust is most effortless when your communication style is matched with a similar style of a potential client. If you are the opposite style, you can still build trust but it will take a lot of modification and you will find yourself being drained by the relationship.

So how do you build trust with women? 84% of wealthy women interviewed by Schwab said that in-person meetings are key for establishing trust.? The research also adds that, women want to be understood for their unique circumstances. You cant just walk in with the same package for male clients and change the font to pink and think the women are going to be fooled.

Building trust starts with knowing YOU first. Your behavior is the foundation for you to tailor your strategies with women.? How trusting are you?? Do you need to be in control at all times?? Are you a natural listener or can you hardly wait to complete someone elses sentence?

Next, you need to understand the behavior of each individual woman. They (like men) are not all the same.? Some women will want to be in total control, get to the bottom line quickly and will want to engage in minimal personal small talk. Others will want to build a deep relationship, talk a lot, and care very little for the details of your business.

When you are equipped with behavioral information you can then create the marketing approach that best attracts the type of woman you want as a client. So take our industrys advice about marketing to women by educating, moving to a relationship based model and getting personal through stories. But be sure to create unique experiences based on who these women are.? Customization is the new normal.

Dare to go one step further to build the level of trust that will keep women as clients for life.?? Find out more on how to understand and unlock the potential of female clients at: http://www.financialdna.com

The Definition of Retirement is Changing

What is your definition of retirement? It might be good to think about that a bit. Do not just listen to the “noise” out there about what it means or what others are doing. Focus on you and who you are. You may just be surprised what retirement really means in the context of your life. The key point is that the definition of retirement will depend on your unique financial personality – how you are uniquely wired to make life and financial decisions. In effect, your financial personality will shape how you see life and deal with the retirement question. Whatever stage of your career or life you are at, addressing this question will be very liberating.

In recent times we have started to do a lot more work with the executives of corporations. In particular, we are delivering Quality Life Programs to executives participating in 401k plans. An interesting trend emerging is more and more executives are starting to realize that retirement does not necessarily mean they have to stop work. The point is, the definition of retirement is changing. A friend of mine who is a senior executive with a large fund manager providing retirement services and products to executives, said he is seeing the same trend of people including work in their definition of retirement. In fact, the discussion that their company has with executives is now becoming much more focused on getting each person to define what retirement means for them. Our focus is similar, bundling the question of retirement up with what is a “Quality Life” for you, again recognizing that this is different for everyone.

Another person recently said to me that their definition of retirement is “Doing what you want, when you want and with whom you want”. I thought that was a great one and truly resonated. How much freedom can you get from this type of thinking? Frankly, it is a lot. The person who said this was actually still working, the point being he is now in a role he loves to do every day. When you get this pinpointed it is amazing how you then find yourself around the people you enjoy being with, and managing your working schedule becomes easier. Again, the key is getting centered on who you are by addressing the retirement question from the inside out.

Even if you are a long way from the traditional retiring age of 60 or more, you can still address the question because the answer will shape a lot of career and life choices and hence your financial planning.