With the ongoing commoditization of asset-allocated portfolios, there is an increasing focus on adding value to clients outside of the portfolio itself… which, in the context of the retirees that most financial advisors serve, means going beyond just retirement portfolio management and liquidation strategies. For many advisors, the starting point has been obtaining a deeper expertise in areas like Social Security timing and Medicare planning during Open Enrollment, and perhaps a more holistic view of planning for and managing health care costs in retirement. Arguably, though, perhaps the biggest area in which financial advisors can add value for retirees is not merely in the technical areas of planning, but in helping them make the life transition to retirement itself, and figure out how to live happy and fulfilled lives in retirement itself.
In this guest post, former actuary and Mercer retirement consultant, Anna Rappaport, shares her own perspective on retirement, the value that financial advisors can add and the “real” areas of concerns for retirees, as someone who has both consulted and studied the issue extensively… and is actually living it as a part of her own phased retirement for nearly 15 years.
As Anna finds that, in practice, the key to retirement well-being is to have a balanced “life portfolio” where the retiree focuses on 4 key areas: Health (and the activities to maintain and support health); People (family, friends, community organizations, and the ability to create new contacts as needed); Pursuits (work, volunteering, hobbies, community activities, caregiving, travel, etc.); and Places (home and community). As even with retirement finances well intact, retirees who have a gap in one or more of these areas may still struggle with their personal retirement well-being.
Accordingly, from the advisor’s perspective, asking probing questions about how a prospective retiree will round out the key areas of their People, Pursuits, Places, and Health life portfolio in retirement creates a unique way to enrich the client relationship, delving into the areas beyond the finances alone (even as finances do impact how retirees may try to fulfill their life portfolio as well).
And for those who aren’t certain what to talk about when it comes to the life portfolio, and the key questions to ask, Anna shares her own valuable perspective as a phased retiree herself on what the areas and issues really are, that retirees – and their advisors – should be more aware of!