Clients can often let their financial plans fall by the wayside once they retire, according to Chris Buttigieg, senior manager, wealth planning strategy with Bank of Montreal in Toronto. But there are many things that you can do to keep older clients on track financially.
“Once [clients] stop working, things may tend to fall off in terms of the routines — the monthly meetings, review and updates,” says Buttigieg. “So, it’s important that they keep their financial life organized once they retire.”
For Theresa Tosh, vice president and investment advisor with TD Wealth Private Investment Advice in Toronto, the key to keeping clients on track is establishing a routine of meetings and communications before they retire. “I think if you’ve always stayed in touch, it’s a habit,” she says. “If you set up that routine to begin with, that will continue.”
Barry LaValley, founder of the Retirement Lifestyle Centre in Nanaimo, B.C. recommends establishing a kind of informal contract with clients outlining how your relationship with them will work. For example, the contract would set out how often, when and where you will meet with clients, he says. As well, introduce clients to your team members and let them know they can also speak with your staff.
Whereas some clients tend to lose touch in retirement, others may call a little too frequently. Buttigieg, for instance, had a client who would call every day at 4 p.m. Although it’s up to advisors to decide how much time they’re willing to give a client, it’s important to set up some boundaries.
Of course, when establishing rules, you also need to take each client’s individual situation into consideration. The client who is downsizing his or her home or whose spouse has recently died may need more of your time.
Another habit to reinforce in retirement is budgeting. “A budget goes a long way,” says Buttigieg. “It’s something that we always preach pre-retirement, of course, and during retirement, it’s important to maintain.”
Holding to their budget will help clients curb excessive spending, he says, and keep their finances in order throughout retirement.
To keep clients focused on their finances in retirement, you also need to make sure they remain engaged with their investments, says Buttigieg. Previously, retirees were likely to place their money in a conservative investment, such as a guaranteed investment certificate (GIC) or a money market fund, and then forget about it, he says. Today, however, clients need more comprehensive plans that will help to ward off longevity risk, and these plans need a little more attention.
“There’s a risk that [clients] may outlive their money,” he says. “So, they need their money to continue to grow, keep up with the cost of living and to make sure that those funds could be available for retirement that could last 30 to 40 years.”
The way a client invests in order to make sure their money lasts will vary, depending on their risk tolerance. However, Buttigieg says some exposure to equities is necessary over the long term, whether it’s through a balanced mutual fund, an equity-linked GIC or dividend paying stocks.
This is the second article in a three-part series on working with aging clients.
On Thursday: Protecting clients from scams.