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Statistics indicate a marked increase in the number of people 55-plus retiring — especially among older college educated, higher incomeworkers.
Younger baby boomers, the largest, most educated, generation of preretirees in United States history, are heading for the workplace door.
Right behind them are older members of Generation X planning their own exit from the world of work.
Whether induced by the pandemic, exhaustion, or simply wanting to do something different, this massive exodus is a transformative opportunity for the retirement planning and wealth management industry. That opportunity, however, will not be realized by providing the services the industry provides today. Instead, a longevity planning approach that provides new content, conversations, and comprehensive solutions for how to live well in later life will be viewed as true advisory value by clients that have come to expect more from every service across their life experience.
“Yeah, about four, five years,” Jay, a New York-based consultant, utters. “Four, five years until what?” I ask. Looking away as if gazing at a distant mountain at sunrise, he responds flatly, “retirement.”
I am surprised because Jay is only 54 years old. “Really?!” I blurt out. “What are you going to do?”
Tilting his gaze downward, he answers with a resolute yet ambiguous response, “I don’t know, something, anything.”
Unlike a distant mountain that comes into focus the closer you are, envisioning life in retirement for many younger boomers and older Gen Xers remains little more than a hazy ideal. Even for those already in retirement, many are still trying to identify what to do with the years, decades, that lay in front of them. The retirement planning advice industry has traditionally focused on ensuring financial security in life after work. It’s certainly not wrong, but given the characteristics and experiences of this new wave of retirees, today’s financial planning advice alone is wholly incomplete.
Younger baby boomers and Generation X are the most “advised” generation in history — except, perhaps, for their millennial and Generation Z children. Nearly every stage of their life has been carefully choreographed by legions of advisers. High-school guidance counselors and admissions advisers assisted in college choices. College career planning and placement offices advised freshly minted graduates beginning their professional lives. Demand for advice by this cohort made the nascent service of ‘life coaching’ into a full blown profession. In 1984, the generational hallmark book, “What to Expect When You’re Expecting” hit bookstores advising a generation of families on how to do what humans have done, well, since there were humans. The book has since had multiple editions and was named by USA Today as one of the 25 most influential books to be published in the United States.
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Lee Ann, a Generation X working mother of three, describes the “What to Expect” series as important to her “preparation in becoming a mom.” She goes on to say, “I studied everything to prepare for my kids — just like everything else I had done up to then — learning everything I could to get into college, improve my tennis game, jump-start my career, and buy a house.”
Now comes life in retirement. What’s the plan? Where’s the advice? Today’s near-retirees need and demand more and different advice.
Most advisers employ some form of goals-based planning. Using either a process or software-guided program, clients are asked to identify their “goals” in retirement — but what if the client does not know? Or, even if the client has a vision for life after work, what if that vision is incomplete and ambiguous?
MIT AgeLab’s Preparing for Longevity Advisory Network research indicates that people nearing retirement focus on the early years immediately following work. Planning conversations with advisers are typically filled with brochure images of travel, dreams of completing home projects previously delayed, and spending quality time with family. Most clients have great difficulty realizing how very long retirement is. They neglect to consider if travel and work on household projects can really fill nearly as many decades as it took to build a career. Moreover, most people have even more difficulty imagining their future older self confronting complex issues such as managing chronic health conditions, changing housing needs, and caregiving.
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Younger boomers and older Generation X are in need of advice that takes a longevity planning approach. Longevity planning assumes effective financial planning, but also requires the adviser to actively help clients anticipate and navigate what their possible futures might be. Effective financial planning and retirement security is no longer a commanding competitive advisory value alone. The client simply expects it.
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Adviser value must be holistic and personalized. Next-generation retirees are navigating a retirement different from the older boomer and silent generations. Advisers must be versed in engaging conversations that are beyond money to help clients envision possible futures in a new retirement context that includes smaller families, blended families, multiple home moves, higher divorce rates, adult children living far away, new tech-enabled lifestyle services, etc.
Younger boomers and Gen X clients are the most educated generation to retire so far. They are also the first thoroughly digitally-savvy generation. Female preretiree clients, in particular, are the first generation of online researchers seeking information to inform nearly every decision they make from their children’s education and professional futures, to their own decisions in health, wealth, and everything in between. Advisory practices must deliver new content that does not simply provide generic information that informs, but personalized advice that empowers and educates clients on how to prepare for the complexities of older age.
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Finally, the longevity planning adviser must offer comprehensive solutions that provide more than financial security. Adviser value will be judged increasingly on how well a firm connects clients to vetted trusted expertise and services that will be needed in older age, e.g., transportation providers, home modification consultants, specialized health referral services.
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Many younger boomers and older Gen Xers are retiring earlier than they, or anyone, had planned. They have come to expect rich conversations, content, and personalized solutions at every life stage. They have also demonstrated little loyalty to service providers that cannot meet their expectations. Longevity planning, advice and services on how to live longer, better, is a transformative opportunity for the retirement planning and wealth management industry. It’s time to rethink the business of advice now, these clients are coming in hot.
