Monday Morning Jumpstart with Dan Richards

10 minutes to drive your week

Topic for November 2, 2009: Addressing today's number one client concern

Listen to the interview

1. Among many people approaching and in retirement, today's number one concern is very simple: "Will I run out of money?a"

   Recently, the head of the private client group for US fund giant Blackrock said that their research shows that 70% of Americans are willing to move their accounts if another firm or advisor offered expertise on constructing portfolios to avoid running out of money.

2. To capitalize on this concern, many advisors first need to ramp up their expertise around financial planning, sustainable withdrawal rates and the range of available solutions for retirement income.

3. The essence of a financial plan is that it clarifies options and enables intelligent tradeoffs between goals.

   In light of markets, some investors believe they're worse off than they are – they think they'll be eating cat food when they're in fact just fine. The only way to demonstrate that is to walk them through the numbers.

   Others aren't going to be able to achieve everything they want to – they won't be able to retire when they want, how they want with the level of risk they want in their portfolios. What a financial plan does is clarify the available options and tradeoffs and makes it possible to identify which goals can be achieved and which have to be sacrificed.

4. One of key decisions in retirement planning is the percentage of savings that can be withdrawn each year so that retirees won't run out of money. This is one of the biggest decisions clients will make.
5. I recently conducted interviews with retirement income experts and have been struck by how complex this is. This is often tax driven, advisors have to have a handle on issues like pension splitting, back to back annuities, the impact of starting to take CPP at various ages and reallocating income between spouses through vehicles like spousal loans to avoid clawbacks on government programs like Old Age Security.

6. The last piece of the puzzle is getting the story out to prospects. And you won't capitalize on all the work to build expertise unless you do that effectively.

   You can seek out speaking opportunities to groups of people that are approaching and in retirement. Seek out opportunities to have articles published. Make this a focal point of your ongoing communication to existing clients, through newsletters, the articles you send and client workshops. If your firm allows it seek out opportunities to be interviewed on retirement issues in the media.

   Just having expertise isn't enough, prospects have to know you have that expertise.