- 4-Minute Article
- Jun 01, 2017
Understanding Your Clients’ Priorities for Retirement
For retirement, advisors are prioritizing different needs than consumers. We look at reasons why and how you can become more aligned.
Financial advisors are set to play an increasingly important part in the lives of hundreds of thousands of Americans. With more than 10,000 people now retiring in the United States every day, the population of over-65 is set to double in the next 30 years.1
The good news is nearly three quarters (74%) of pre-retirees would welcome greater help from advisors in managing the day-to-day progress against goals.2 But it is important for advisors to stay attuned to their clients’ needs to retain and grow this level of trust.
Recent Brighthouse Financial advisor and consumer research revealed that the needs advisors prioritize for their clients are different from the needs consumers prioritize for themselves.2
Advisors are heavily focused on preparing for retirement, ranking their clients’ top three needs as “saving for retirement,” “having access to a guaranteed stream of income during retirement” and “protecting assets.”
By contrast, the top three consumer needs are “protecting my income in case of a serious illness,” “taking steps to make sure I don’t outlive my assets” and “accumulating wealth.” 2
This research shows that advisors and consumers are both thinking about how to achieve the same goal - a secure and predictable financial future in later life - but they are approaching it from different perspectives.
Advisors are starting from the point of view of the practical steps their clients need to take to achieve financial security - savings, guaranteed income and protection. Consumers are starting from the point of view of the lifestyle they want to lead and the things that might threaten it, such as serious illness or outliving their assets.
What should advisors do?
We spoke to Michael Bitton and Kevin Russ from Brighthouse Financial Advanced Sales to get their insights into how advisors can better understand their clients’ perspectives.
- Learn about their lifestyles now. Knowing the lifestyle choices your clients have made will help you understand what is important to them and set solid foundations for advising them on their priorities for later life. Kevin says: “When they’re still working, your clients might deal with 5 or 6 advisors, but when they retire it’s usually just one. If you understand their lifestyle and where they want to go, you stand a better chance of being that one advisor.”
- Identify the changes they want to make. Being aware of these changes can help you identify the right products for your clients and give you the opportunity to talk about alternatives and contingencies. Michael says: “For retired clients, it’s not about spreadsheets and portfolios anymore. It’s about tangible stuff like downsizing the house, playing golf three times a week, or going to the beach every summer with the family.”
- Discuss the risks. Do your clients have a plan in place to maintain their lifestyle if something happens? Almost half of retirees have to stop working sooner than expected due to health issues.3 People generally become less active the older they get, so they may want to think about a plan to reflect this. Kevin says: “So many things can change and not just health. If they are expecting 2% on their bonds, what happens to their paycheck if they only get 1.5%? You should be meeting at least once or twice a year so you can manage the risks.”
- Talk about dollars. Michael recommends talking about dollars rather than percentages. “It’s a very different conversation. Percentages can sound benign, but when you’re talking actual dollars in their paycheck it makes it real.”
- Consider products that give a guaranteed income. Both advisors and clients want to achieve financial predictability in later life, but clients are increasingly leading unpredictable lifestyles. Michael says: “In my experience, the more guaranteed income your clients have, the happier they are in retirement, the less stressed they are. Ask ‘How are you going to provide that guaranteed income for your clients?' A product such as an annuity could give your client the peace of mind to enjoy the retirement they prefer.
Conversations like these can transform a relationship, so consider scheduling regular meetings to discuss your clients’ circumstances and ensure their portfolio is still meeting their evolving needs.
To learn more about how annuities and life insurance could benefit the prioritized needs of your clients, call your Brighthouse Financial wholesaler.