The Comprehensive Advisor Newsletter
With the aging of the baby boomer generation and the extinction of company pensions, the need for retirement planning has become a major focus for many clients and advisors. We have the pleasure of working with several types of advisors and firms. Most of them can easily explain their investment process but we find their ability to explain their retirement process is not as simple. At The BluePrint Insurance Services, our commitment is to help you be a more comprehensive advisor. To meet this commitment, our goal is to bring simple and actionable ideas that help you increase your revenue and create enterprise value, while providing your client a more comprehensive experience. In this month’s The Comprehensive Advisor Newsletter, we address some of the best ideas we have learned from successful “retirement advisors” that are easy to incorporate into any practice.
Managing Returns Vs. Managing Needs
Performance can be a funny thing in retirement. Your investment strategy may outperform a benchmark but still hurt a client’s retirement. For example, the benchmark may have lost 15% and your strategy only lost 10%. By investment standards the client’s portfolio “did well,” but for someone living off their money the negative return may affect their lifestyle. Some best practices we have seen are built around managing to the client’s needs. Focus on the client’s spending and have them segment their needs by “essential” vs. “discretionary” spending. Use more consistent and predictable strategies for their essential needs and strategies with less predictability for discretionary needs. This approach may not be the best to maximize returns, but it helps with addressing behavior risk as well as potential volatility, especially in the early spending years of retirement where it is most critical. Want to learn more? We have created a simple tool to help you incorporate this idea into your process.
Teach vs. Tell
In the “old days”, you worked for 30 years and you knew exactly what your pension and social security income would be. Most people made sure their expenses were less than what they were going to receive from these sources. That was their retirement planning. Today, retirement can be complicated. People need to understand longevity risk, inflation risk, behavior risk, sequence of return risk, healthcare risk, and so on. How do you help them understand their retirement? The best practices we see from advisors are centered around educating clients prior to implementing any investment strategies. Their process teaches them and helps them truly understand their retirement. "Teaching" someone can have a tremendous impact on a client relationship and is far different than “telling” the client what you are going to do for them. We have developed a great educational process that many of our advisors have incorporated into their practice. We will review it in an upcoming webinar but if you want an early preview, let us know.
Are you a comprehensive advisor? We mean truly comprehensive and not just for marketing purposes. We meet a lot of retirement planning advisors that tell us they are comprehensive. Then we ask them to walk us through their long-term care conversation and its crickets. "I don't do insurance," is usually the reply. Being comprehensive doesn’t mean selling insurance. It means addressing all areas that may affect the client’s financial life. Health care planning is a real example of something most clients will be affected by in their retirement years. If you want to start having discussions like these, it is as simple as incorporating a question or two into your review meetings. Addressing topics like these is not only right for the client but also good for your business. It helps insulate your business and (if you choose) can be another revenue source.
Helping you is our primary focus. If you would like to review or discuss any of the topics above, please contact us at 855.204.6353 or visit us at www.tblueprint.com.