In today’s competitive world, attracting new clients often requires clearly differentiating yourself.

One way to do this is to address today’s number one concern among many investors approaching and in retirement - “Will I run out of money?”

How big a problem is this?

A report released last week by the U.S. Center for Retirement Research found that 51% of Americans are at risk of reduced living standards in retirement – including 42% of those in high income households. And if the cost of health care and long term care were included, these numbers would be even higher.

And recently, the head of the private client group for US fund giant Blackrock said that their research shows that 70% of Americans are willing to move their accounts if another firm or advisor offered expertise on constructing portfolios to avoid running out of money.

Advisors need to do two things to capitalize on this opportunity.

First,  many advisors need to ramp up their expertise around financial planning, issues like sustainable withdrawal rates and the range of available solutions for retirement income, particularly those that focus on tax effective income.

And second, having developed your expertise, you then need to get the word out.

The role of financial planning in retirement planning

In some cases, the first step is to increase your commitment to the financial planning process.

Many industry experts believe that you can’t really create an accurate investment plan without getting into financial planning, even at a limited level. And if that’s true of an investment plan, that’s doubly true of a retirement plan.

The reason is simple - the essence of a financial plan is that it clarifies options and enables intelligent tradeoffs between goals.

In light of last year’s markets, some investors believe they’re worse off than they are – they think they’ll be eating cat food when they’re in fact just fine. The only way to demonstrate that is to walk them through the numbers.

Others suffer from the opposite problem and aren’t going to be able to achieve everything they want to – they won’t be able to retire when they want, how they want with the level of risk they want in their portfolios.

What a financial plan does is clarify the available options and tradeoffs and makes it possible to identify which goals can be achieved and which have to be sacrificed. It also leads to conversation about life spans – if you’re talking to a typical 65 year old couple, they need to plan to fund expenses to age 95 or older. In some cases, this also leads to discussion about long term care insurance.

This video interview with Moshe Milevsky of the Schulich School at York University could open the door to a useful conversation about life spans with clients:

http://www.clientinsights.ca/video/understanding-longevity-risk/type:investor

Understanding retirement income options

Recently I’ve conducted interviews with retirement income experts and have been struck by the complexity of this topic.

This complexity is often tax driven. Advisors need a handle on issues like pension splitting, the role of back to back annuities, the impact of starting to take CPP at various ages, managing cash flow, reallocating income between spouses through vehicles like spousal loans and avoiding clawbacks on government programs like Old Age Security.

This video outlines some of the issues around clawbacks:

http://www.clientinsights.ca/video/avoiding-clawbacks-for-seniors/type:investor

Another key conversation relates to the percentage of savings that can be withdrawn each year so that retirees won’t run out of money – their withdrawal rates are one of the biggest decisions clients will make.

And you also need to address the risks of a stock market downturn in early retirement. This video outlines this “sequence of return” risk:

http://www.clientinsights.ca/video/understanding-longevity-risk/type:investor

And you also have to get into estate planning issues, things like minimizing capital gains on family cottages and charitable giving strategies. This video outlines the options on cottage succession:

http://www.clientinsights.ca/video/managing-capital-gains-on-a-family-cottage/type:investor

Finally, you need a solid grasp of the product solutions available for retirement income, including annuities and investments which provide tax efficient return of capital.

This video outlines how annuities can substantially increase income for retirees compared to GICs:

http://www.clientinsights.ca/video/increasing-income-in-retirement-via-back-to-back-annuities/type:investor

Getting the word out to prospects

The last piece of the puzzle is getting the story out to prospects. And you won’t capitalize on all the work to build expertise unless you do that effectively.

There is no simple solution or magic bullet to attracting prospective clients in search of advice on retirement planning.

You could seek out speaking opportunities to centers of influence or groups of people that are approaching and in retirement.

You could approach local publications about publishing articles on this topic.
 
You could make retirement income planning a focal point of your ongoing communication to existing clients, through newsletters, the articles you send and client workshops – and then extend this to prospective clients as well.

Finally, if your firm allows it, you could seek out opportunities to be interviewed on retirement issues in the media.

The key is understanding that having expertise isn’t enough, prospects have to know you have that expertise.

One solution to making this a priority is carving out two half days a week in your calendar, say Tuesday afternoons and Friday mornings, to focus on marketing your expertise on retirement planning issues – and treat that as one of the most important appointments you have every week.

However you do it, positioning yourself as a retirement income expert could be the most important decision you make to drive the success of your business going forward.