Issue 2 - June 2007
Guest speaker at INSITE 2007 and expert on generational marketing, Maddy Dychtwald talks with Shawn Justin, assistant vice president for Pershing, on her knowledge of retirement trends for baby boomers and the resulting implications for the financial services industry.
Pershing: What is the most common aspect of retirement planning that investment professionals and investors overlook?
Dychtwald: With life expectancy on the rise, the average length of retirement can be much longer than most advisors realize, and the expected quality of life is drastically different than it was with previous generations. Individuals who retire at age 65 are likely to live well into their 80s. This 20-year period needs to be defined with a detailedyet flexibleplan to ensure that a client’s assets are invested efficiently and in accordance with a client’s expected lifestyle. Once the plan has been established, it needs to be monitored and adjusted frequently to account for changes.
"Investment professionals not only need to be good financial planners, they also need to be part-time psychologists and life coaches to help their clients successfully plan for retirement."
Pershing: How can investment professionals assuage their clients’ fears about outliving their retirement savings?
Dychtwald: A little worrying is not such a bad thing. However, to ease their clients’ fears, investment professionals need to take a holistic approach. Investment professionals not only need to be good financial planners, they also need to be part-time psychologists and life coaches to help their clients successfully plan for retirement. They need to ask questions not only about their clients’ portfolios, but also about their future hopes, dreams, and goals. Open dialogue about what the client really wants out of life is critical to creating the retirement plan, and being able to help the client cope with any fears about financial health. It’s also critical to developing long-term, trusted relationships.
Pershing: Can you differentiate between the current and future generation of retirees and aspects of retirement from just 10 to 15 years ago?
Dychtwald: Retirement today is much different than it was 10 to 15 years ago. Characteristics, values, and attitudes that define the generation of yesterday’s retirees are radically different, which is at the heart of the change in attitudes around what retirement can be. For example, older generations have always had a tremendous respect for authority and the tradition of the status quo, but boomers have always been known as rule-breakers, eager to reinvent the way things are done. They are now taking this attitude and incorporating it into their view of retirement. In the past, retirement was looked at as a time to slow down. Now, retirement is viewed as a fantastic opportunity to reinvent oneself and try new things. The old rules that you can’t be healthy, can’t work, and can’t begin new adventures, no longer apply.
Pershing: What can investment professionals do to be prepared for and anticipate the needs of their clients as they reinvent their retirement years?
Dychtwald: 90 percent of boomers expect to be happy in retirement and eighty percent expect to achieve their retirement dreams. However, only fifty percent feel as though they are financially prepared to do so. This presents an enormous opportunity for investment professionals.
Investment professionals need to begin talking to their clients well in advance of retirement so they can clearly understand their clients’ hopes and dreams, and come up with a plan to help them realize their dreams. If they wait too long, there may not be enough time to fix any preexisting financial shortfalls.
For Professional Use Only.