Retirement is the big financial finish line, but clients often don’t know what they want to do when they get there. Advisors are delving into psychological aspects of retirement planning to help them figure it out.
The need for this became clear to Amy Jo Lauber, certified financial planner and owner of Lauber Financial Planning, 15 years ago when 10 of her clients were offered early retirement packages—and eight were dead within a year of accepting them.
“They had enough money, but they didn’t have enough interests [or] activities to make a new life,” she said.
“Now when someone comes to me for retirement planning, I ask them what they plan to do—volunteer, help with the grandkids, spend more time with a hobby, sport or interest,” Lauber added. “If they don’t have some clear answers, I explain that no amount of money will create a life of meaning and suggest collaborating with a life coach and [reading] some books to help them discover what their retirement can look like.”
Lauber compares her clients’ stated values and priorities against their cash flow.
“For example, are they buying a lot of cable service when they say they want to spend time with family hiking?” she said. “If this is in conflict, it’s a big source of stress.”
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For his part, Alan Goldfarb, CFP and managing director at Financial Strategies Group, said that most of his clients “don’t know their goals.”
“The advisor needs to get into the client’s head and point out the best options,” he said. The key part of the process is to ask the appropriate questions—the kind “that shake them,” said Goldfarb, such as “What do you want your legacy to be?”
“Every question leads to more questions,” he added. “Keep asking why—why is that important? Eventually, you zero in on what’s most important.”
Goldfarb probes into clients’ physical, mental and spiritual health and well-being, as well as their social and spouse/partner relationships. [See info box below.] “After being an advisor for more than 40 years, you do become more into psychology,” he said.
Retirement visualization exercise questions
Advisor Alan Goldfarb of Financial Strategies Group steers his clients toward a visualization exercise that helps them to reflect on the following:
- What does retirement mean to you?
- What attracts, scares or excites you?
- What makes you happy?
- How much money do you need?
- How are you spending your time?
- Who is in your retirement picture?
- How are your relationships with family and friends?
- How do you want to be remembered?
Some advisors take a structured approach to facilitate discussions with clients.
Kevin Reardon, CFP and president of Shakespeare Wealth Management, said he uses the book “The New Retirementality,” by Mitch Anthony, and the related “New Retirementality Profile” to guide clients through a deliberate thinking process.
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“We were seeing a lot of challenges,” Reardon said, referring to retirement conversations. “One spouse would say to the next: ‘What are you going to do?’
“And we found that clients were not retiring from something to something,” he added. “We saw clients languish.”
“The profiler was a tool I needed,” Reardon said. “I was fumbling around with these discussions, and it creates a structured conversation.”
The profiler he uses analyzes clients’ individual goals and wishes, how they currently spend their week compared to how they would like to spend it, their attitudes toward their work and their outlook and motivations related to aging.
Reardon uses the printout generated to facilitate a discussion between spouses, comparing the results with their existing plan.
“The client response has been off the charts,” he said. “They’re saying: ‘It gives me peace of mind’; ‘I never did a time sheet before’; and ‘I feel a sense of relief.'”
“As a planner, I like to know what’s down the road, to know the markers. I’d like my clients to know that I have their interests at heart.”
San Asato, CFP and president of McNellis & Asato, relies on the book “Aging Well” by Dr. George Valiant.
Based on numerous reputable studies, the book is a trusted resource for Asato, who uses it to help his clients ponder such retirement topics as money, health, companionship, time and relevance (including mentoring).
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Asato also gives clients the Ameriprise New Retirement Mindscape IISM study, which highlights six emotional phases of retirement: Imagination (six to 15 years before retirement), Hesitation (up to three to five years before retirement), Anticipation (up to two years before retirement), Realization (retirement day and the year following), Reorientation (two to 15 years after retirement) and Reconciliation (16 or more years after retirement).
“As people go through these emotional [and] psychological phases of retirement, we find they are surprised by them,” he said. “Having the book and the study gave me the framework to tell them, ‘These are the things you need to be aware of.'”
“As a planner, I like to know what’s down the road, to know the markers,” Asato said, adding that these resources allow him “to manage their own expectations about aging.”