7 Questions to Help Pivot Your Practice Towards Retirement

This is a summary of a session from the Money Management Institute’s Fall Solutions Conference that was held in October 2013 in New York City.

Moderator: Ron Fiske, Managing Director, Strategic Partnerships, Envestnet

Mary Deatherage, Managing Director, Wealth Management Advisor, Morgan Stanley
Samuel M. Kiefer, Director of Wealth Management, Partner, Risk Paradigm Group, LLC
Michael Lodes, Financial Advisor, Edward Jones

1. Do you need to pivot your practice towards retirement as your client base ages?

Deatherage, who was recently named to Barron’s Top 100 Women Financial Advisors, pointed out that the aging of investors will eventually affect the entire advisory industry.  The average Morgan Stanley client is 59 years old.  Retirement planning is an evolutionary process and advisors should be prepared to provide more customized planning services for their clients, she said.

Not only will the average client become older, but they will need more advice.  According to a survey by Lincoln Financial Group, 54% of affluent 70-year-olds found that controlling their finances throughout their lengthy retirement has proved to be more complicated than they envisioned.

The standard client meeting agenda at Risk Paradigm Group has changed from as recently as five years ago, Keifer explained.  The management of retirement income has become the top issue that clients want to discuss.  This runs parallel to traditional conversations about preservation, transfer and the gifting of capital, he noted.

In the past, it was common to base retirement planning on a 5.5% annual rate of return, Deatherage observed.  Recent studies have shown that an average return of as low as 2.8% should provide a decent probability of success (using Monte Carlo Analysis). However, in the current near 0% interest rate environment this could be tricky, she said. Continue reading