She Saved My Life

When they’re older and wiser, your clients’ priorities get reshuffled.

By Steve Gresham

 Jackie P. didn’t mince words when she told me how she felt about Annemarie. “She saved my life.”

 Jackie lived in a home in suburban Virginia. Her husband, Tom, had died about a year before our conversation. When initially told he had multiple myeloma, Tom was expected to live three to four years. Jackie quit her job as an educator, and her attentive care helped them enjoy seven more years together.

 They made the most of that time. Tom was an engineer and had always used his analytical skills to manage the couple’s modest finances and complete their annual taxes. A true do-it-yourselfer, he’d also built a large wooden deck for their house. Jackie managed the children and the family health care, but she seldom looked at their account statements, paid the taxes, wrote a check or held a hammer. By the end of the seven years, though, she was able to do all those things. She’d even built a crib for her grandson under the watchful eye of her husband.

 Annemarie was the financial advisor assigned to Tom’s brokerage account, but he had not spoken much to her. He was a self-directed investor, and clearly confident. But he knew Jackie would need help managing the family accounts when he was gone. When he discussed the future with his wife, he made his preferences clear. “No annuities and no managed accounts,” he said. “Too expensive!”

 Despite his instruction, Jackie was never at ease selecting investments, and when Tom died, she indeed divided her assets into a managed account and a life annuity. “I don’t want to worry about markets, and I don’t want my children to worry about me. Annemarie helped me to understand [Tom’s] concerns, my options and how to be comfortable with a simple plan. His illness, his care and his death were traumatic for me. I needed to breathe. Annemarie saved my life.”

 Every year, I see a survey or two or three about the value advisors offer. The same thing always floats to the top of the list—the highest value they offer is “behavior modification.” A lot of advisors interpret that finding to mean, “I kept my clients invested when they wanted to sell.” If you look back at the last 12 years and its historic bull market, that was plainly valuable advice. But there’s another explanation in this historic wave of retiring baby boomers—69 million strong with a median age of 65. “Behavior modification” today increasingly means helping retirees cope with the significant life changes that accompany longevity – including death and sometimes divorce. The boomers numbered 78 million at their peak. Many of them have already left us. And you know the stats on “gray” divorce.

 When advisors add some kind of value, such as emotional insight into these topics, it shields them from an onslaught of competitors. Their clients can’t look into the eye of a robo-advisor for help when their spouses die or divorce them, when their long careers are ending or when an otherwise uncertain future is looming. The human advisor goes beyond the investments and offers the value of reassurance or empathy. Our clients know we are here for them when they need help, and that they can tell us when they are uncomfortable. Robos don’t hold their hand.

 And yet money is definitely moving away from us. McKinsey & Co. put the problem in perspective in December when it released a report, “North American Wealth Management: Money in Motion, But Not Always to the Bottom Line.”

 “Our consumer research,” the report said, “suggests that clients are moving assets at an unprecedented rate—5.6% of investable assets, almost $2.0 trillion, were moved from one institution to another in the first six months of the Covid-19 pandemic. This is 3.5 times the rate observed over the last three years.”

 The nearly 12 year bull market run has made many advisors complacent about their added value, and they’re in for a rude awakening. They need to understand that their clients have changed right underneath their noses.

 Consider the beginning of the bull market. In 2009, the median age of a Boomer advisory client was 53. At that age, most people are still in their peak earnings years and have a hard time imagining a far-off retirement date or implementing a serious financial plan. 

Today, the median age of that client cohort is 65. Those clients reveal in surveys that they are most concerned about retirement income, health care and longevity planning. And the No. 1 reason advisors lose top clients, according to the Investments & Wealth Institute, is that the clients die.

So we have become an industry of de facto retirement advisors, not investment managers, and we need to pivot to the real needs of our clientele. Are we really surprised when an unprepared 53-year-old accumulator turns into a new retiree having a financial anxiety attack at 65? Now add the extra worries of retiring during a global pandemic. And facing a 20% chance of cognitive impairment due to their age. Amid increasing rates of both divorce and suicide. It no longer matters whether investment returns have been stellar for the past 12 years.

To get ahead of those client concerns, advisors need to be proactive and know what their clients want to discuss -- concepts that more reactive advisors won’t. 

Consider becoming what I call “The New Advisor For Life,” or better yet, “The New Advisor for the Rest of Your Life.” Now you’re less a portfolio manager and more of a life manager. It’s a pivot, not a sea change. In many situations, your “client” relationship will include a family of as many as three to four generations and their “retirement” will be a family affair. Their financial needs will include their need for caregivers, and their plans will be stress-tested in real time, the weak spots illuminated.

Most of the work will be intuitive, as it was for Annemarie.

Will we answer the call?

 Steve Gresham is ceo of the Execution Project LLC, providing tools and training to advisors and their companies to meet the needs of a retiring age wave. He is also a senior education advisor to the Alliance for Lifetime Income, and the former head of the private client group at Fidelity Investments. He is the author of The New Advisor for Life (Wiley). See more at https://www.theexecutionproject.com/