Advising the wealthy retiree

I recently had some interesting conversations about retirement with affluent boomers who were vacationing at the same resort I was visiting. I suspected they might be HNW when one talked about arriving in his own plane and another proclaimed this her fourth visit to the pricey destination this year.

Here are a few comments from these folks, who varied in age and stage of life. Some were leading up to, and others were already within, retirement:

• “I have no idea what I’ll do and can’t imagine not working.”
• “After I retire from this career, I might start a new business.”
• “When my father retired he had tons of money but nothing to do. He drove us all crazy. I definitely don’t want that kind of retirement.”

That last comment reminds me of a conversation I had with a CFP about a recently retired HNW client who didn’t have a life plan, and became so bored he started to call incessantly about his investments. Boredom’s a real problem because it can turn a HNW client into a high-maintenance client.

Next year, the first baby boomers will reach the traditional retirement age of 65. Many boomers intrinsically know they don’t want the old version of retirement, but haven’t clarified what their new version will look like. So prompting clients to reflect more meaningfully on life stage possibilities can better serve the financial planning relationship.

Imagine a HNW client who decides his retirement career will involve buying into a business or starting a new one. A life and career coach can draw out this meaningful dream and help the client actualize his goal. But without the financial planning alignment, the client faces enormous risk and will need advice associated with retirement savings, tax, estate planning, insurance needs — and more.

Similarly, financial planning without life planning can be equally risky. Time is money, so start the process of reflection and planning early. And count on lots of transition—many boomers will test-drive various retirement life options in the early stages. Here are some key techniques:

• Challenge old assumptions: People used to work, and then retire. Today, clients may extend their accumulator years, which buys more time to save and pay down debt. But others will choose paths that extend their debt years by having late-life kids, starting businesses, or buying dream homes.

• Ask new questions: The standard “How much will you need in retirement?” will always be important, but it’s no longer sufficient when life choices make it difficult to answer. The new retirement calls for new questions: “How long will you work? What kind of retraining will you do? If you stop working, what will keep you engaged?” These “what if” questions help advisors with both life and risk planning.
• Develop coaching skills: In addition to questions that cover practical matters, ask questions that prompt deeper reflection: “Who will you be when you no longer own this business?” People who retire without ample life planning risk identity crisis, boredom and even depression.
• Expand your network: Some clients may need a professional life coach who provides thorough exploration and support. Consider affiliating with these professionals.
• Rethink and redefine: The “unretirement” landscape is just beginning to unfold. So the question is: are you ready to help your clients clarify their vision, and are you ready to contemplate your own?