Many advisors continue to struggle with and complain about lackluster organic growth. How can that be, when according to Cerulli, financial advisors were responsible for helping clients roll over 63% of the $845 billion in assets from defined contribution (DC) plans to IRAs in 2022? From rollovers to the great wealth transfer, there’s never been a better time to be an advisor, but talking to clients about longevity is critical for those who want to cash in.

We explain why these longevity conversations make a difference and how they can benefit both clients and advisors in the article below.

Key Takeaways:

  • Even millionaires have cat food diet nightmares and are afraid to spend money in retirement.
  • Advisors who embrace retirement income planning and actively promote it as a service may see up to a 25% increase in business.
  • Advisors have a distinct advantage over plan sponsors and asset managers with older and more affluent clients interested in retirement planning.
  • Advisors need to adopt a different mindset if they want to serve clients nearing retirement.
  • Technology makes it easy to personalize longevity conversations and turn prospects into clients.

Advisors don’t talk about longevity enough

For decades, the focus of financial professionals and the services they provide has centered on goal planning and wealth accumulation. That’s all fine and good—for starters—but advisors don’t talk about longevity enough. Those conversations can be uncomfortable because they involve the tough questions many investors are afraid or embarrassed to talk about but they need to be had. 

Longevity conversations—along with the peace of mind they bring clients and the business boosting effect they have for advisors—was the central theme during a recent episode of The Breakthrough Advisor Podcast. During the episode, we turned the tables on InsurMark Virtual CMO Jack Martin, CFP® and co-founder of Elite Advisor Group, and he had some valuable insight to share, starting with …

‘Even millionaires have cat food nightmares.’

The number one fear of retirees is running out of money and that includes wealthy individuals. As Jack explains, “Almost a third of millionaires fear outliving their assets. Normally you associate that with people who don’t have very much in retirement savings, right? But even people with a million dollars have that recurring cat food diet nightmare. So, as a financial advisor, you have to ask the questions and dive into that.”

For many people, there is a lot of judgment and shame associated with talking about their retirement savings (or lack thereof), so advisors need to approach clients with empathy, while providing personalized solutions that bring both clarity and hope for the future. (More on personalization later …)

Says Jack, “If I ask you, ‘Have you thought about outliving your assets?’ that kind of implies that A., you haven’t, and B., you don’t have enough money to take care of that. I’ve literally looked through the glass in consumer studies being done with live people, and watched those people say, ‘No, I don’t want to talk about it.’—just because of the shame and judgment. That’s another lesson financial advisors need to learn from a behavioral perspective. We really need to be super sensitive to the fact that even asking the question can be chilling to the conversation.”

Advisors who actively promote retirement income planning services see as much as a 25% increase in business

According to a 2022 study of 88 million consumers by eMoney, when it comes to the top areas that consumers are seeking financial advice about, “Preparing for retirement, generating income in retirement, and managing money in a tax efficient way are higher ranked among older consumers and more affluent consumers.”

As we alluded to earlier, advisors tend to lead with goal planning and wealth accumulation, while conversations about retirement planning only come up as an afterthought, if at all. Advisors are missing out on a huge opportunity for business growth if they don’t look at the whole picture.

According to Jack, “A friend of mine, Steve Gresham, who was at Fidelity and now runs a consulting group in the retirement income space told me about a study he did in conjunction the Alliance for Lifetime Income in 2023. The study revealed that advisors who embrace the concept of retirement income planning are seeing as much as a 25% increase in their business, just by saying ‘I’m in the retirement income planning business,’ talking to their clients about retirement income planning and then making that service available on their website.”

Plan sponsors and asset managers want a piece of the retirement income business pie BUT advisors have a distinct advantage

If you want to serve older and affluent retirees, it’s essential to move retirement planning to the forefront of those client conversations (not to mention your marketing efforts). If you don’t someone else will.

“Here’s the moral of the story for advisors. Over 60% of the $845 billion in IRA rollovers is advisor directed today, and the number one client request is retirement income planning. But the plan sponsors and the asset managers are now saying, ‘We want a slice of that pie!” So, two things are going to happen. The first is it’s going to get a little bit more competitive for advisors from a value prop perspective, but there’s plenty of space for advisors there because what

plan sponsors and the asset managers can’t do is personalize the client experience,” Jack says.

They can’t have a relationship with a client and say, “Let’s sit down and figure out, what the right amount of income is for you and how much guaranteed income you need. And, let’s take a look at your financial situation and your emotional makeup, etc.” Some people are going to need more income than others in order to be comfortable. Fortunately, advisors have a leg up in pinpointing what’s right for the client because they have a personal relationship with them.

Clients struggle with several “hows?” as the retirement years close in

When you’re working with clients during the early days of the wealth accumulation stage, the realities of retirement seem light years away for most folks. Advisors need to modify their mindset when talking with older clients because those retirement realities are starting to hit home and hit home hard. So, what’s going on in our clients’ minds as the retirement years close in?

According to Jack, “The whole conversation about retirement income planning and what that means, it’s a whole lot different than thinking about accumulation. There’s this whole other set of concerns. Emotionally, they wonder, how am I going to make the transition from working full-time into retirement? How do I work through those stages? Financially, how do I take care of my kids and my parents and my income stream? From a health perspective, do I have my ducks in a row? 

“Do I have long-term care insurance so I can stay at home? If we’re going to age in place, how do my spouse and I modify our home so we can stay as long as we want? What architectural, system and technology things can be done to make us comfortable, so we can age in place? There’s a lot that goes into it. And there’s an emerging segment of advisors who are really embracing that, who are starting to coach their clients about transitioning into retirement.”

A guaranteed income stream brings clients peace of mind in retirement

Annuities get a lot of negative press out there but there are good annuities out there and bad ones. Just like there are good ETFs and bad ETFs. You just need to stay away from the bad ones. 

Here’s the thing, retirees want to have a guaranteed income stream because it puts those cat food diet nightmares to rest. And as we discussed in this previous blog, research shows that having guaranteed income gives clients permission to spend their money. They will spend more and enjoy retirement a whole lot more if they’re not worried about running out of money. 

And let’s not forget Social Security. That’s a guaranteed income stream, too, but clients need to be educated about the benefits of delaying their withdrawals, something that ultimately gives them a nice monthly raise. Unfortunately, many advisors neglect to bring that topic up, as Jack discussed on the podcast.

Here’s the other thing about annuities clients need to know. “We’re not saying you should put all your money into annuities. But we are saying, if you dial it in to the right level—and there’s technology now that makes it easy to do that (HALO)— that gives clients peace of mind. And when you add the right level of guaranteed income for a client, their spending actually goes up by as much as 30% because they feel comfortable,” explains Jack.

Also important, clients are able to invest more appropriately when they know they have guaranteed income coming in. If they choose, clients with guaranteed income have the freedom to be more aggressive with the investment side of their portfolios, instead of keeping their money in low risk, low return accounts. 

Technology makes it easier to personalize longevity conversations and help clients visualize the future

It’s hard for clients to visualize what longevity looks like for them. That’s why InsurMark partnered with Genivity, the company and brains behind HALO, an app that makes it easy for advisors to have personalized longevity conversations with clients that prompt them to take action. 

We took a deep dive into the HALO app in this past post and this earlier podcast but here’s a quick snapshot of how advisors can use HALO to engage and convert prospects into clients.

In brief, clients answer a handful of questions, largely based on family history, that are determinant of their personal longevity. The app tells the client what they can personally expect from a longevity perspective by laying it out in a timeline. It shows the client’s go-go years, slow-go years and no-go years, along with the healthcare expenses they can expect in those no-go years. The app finishes up with things the client can do to add more years to their timeline throughout the various stages of retirement.

According to Jack, “It’s super easy technology to use and it makes it easy to engage with a client, have them run through the assessment, then lay everything out. The app really helps them start to visualize their longevity, so they are better prepared to work with their advisor and build a plan.”

We can help you capitalize on the opportunities available to ambitious advisors today

As an Advisor Development Organization, we have the tools, technology, training and mentorship top advisors need to level up their advisory practices. To schedule a discovery call and learn more about our proven Value Engineering Process, contact our office toll-free at (800) 752-0207 or connect with us online.

As an ADO – Advisor Development Organization™, InsurMark provides solutions to meet the ever-evolving needs of financial professionals with a mission to protect and enhance the financial security of every home in America.