As baby boomers begin to retire, they’ll increasingly value customized financial planning, and referrals will become more important for financial advisors, according to Dave Pickett, senior vice president of practice management at TD Wealth Management.

Speaking at Radius Financial Education’s Exchange Traded Forum in Toronto on Monday, Pickett said financial advisors must adjust their practices to adapt to clients’ changing needs. In particular, he said aging baby boomers are becoming less focused on accumulating assets, and more focused on generating income and preserving their wealth.

As this shift occurs, Pickett says that absolute returns are becoming more relevant to investors than relative returns.

“Relative performance will be replaced by absolute performance,” Pickett said.

He explained that clients will become more focused on how their portfolio is performing relative to their own personal benchmark, based on their unique goals for retirement.

“It will become kind of irrelevant to me how I’m doing against the Morgan Stanley composite index or against the TSX/S&P 60,” Pickett said. “It will become way more important how I’m accomplishing my dreams and goals.”

Clients will want their advisors to help them tailor their investment portfolio to their goals, Pickett said. He added that this changing mentality is particularly true among high net worth investors.

“They’ll be far more concerned that the portfolios that we have structured are designed to meet their unique needs,” he said.

Pickett pointed to TD research showing that high net worth clients tend to be much more satisfied when they’re engaged in “deep planning relationships” with their advisors. These relationships involve comprehensive customized financial planning that extends beyond investment advice to discussions about insurance, charitable giving, estate planning and other elements. Deep planning also includes regular updates and adjustments to a client’s financial plan as his or her situation changes.

Demand for this type of comprehensive planning is on the rise, according to Pickett.

Providing the services that clients want is critical in order to generate referrals, which is becoming increasingly important for financial advisors, he added. TD’s research shows that among high net worth clients, 84% said a referral ranks as the most important consideration when they’re looking for a financial advisor.

“External validation has never been more important,” he said.

He encourages advisors to regularly have open discussions with clients to find out whether they’re satisfied with the services being provided, which aspects of the relationship they value most, and whether clients would consider providing referrals.

Overall, the opportunity for advisors to serve baby boomer clients as they head into retirement is huge, Pickett said. He pointed out that by 2014, 72% of the wealth in this country will belong to individuals 50 years of age and older.

“This is a pretty good time to be in our business,” he said. “If you’ve got a focus around going after this pre-retirement marketplace, you’re capturing $3 out of every $4 available in wealth management.”