It’s time for the financial services industry to retire the word “retire.” What was once a meaningful term to describe an aspirational life stage is on the verge of becoming an outdated concept.
During most of human history, life was spent in toil and physical struggle for survival, oft described as nasty, brutish and short. It was extremely unlikely that a person would experience a time of prolonged leisure and comfort — as retirement is typically depicted. With increased life expectancy and the introduction of pensions and then financial products, an entire industry around the idea of retirement emerged. The industry addressed an increasing need for resources at a time in life when people were physically unable to generate those resources through work and employment.
However, the contemporary experience of employment for a great number of Canadians bears little resemblance to that of their grandparents. Financial advisors’ current clients and targeted prospects are increasingly knowledge workers, empowered by personal mobile devices to move seamlessly between work and leisure activities to the point where the distinction between the two is becoming immaterial. And the pandemic merely accelerated the trend of remote work, allowing professionals to be compensated for value delivery from anywhere — including the beach, a cruise ship, the cottage and any number of other venues historically associated with retirees.
Further, retirement is not a human need. Maslow, the famed articulator of human needs, presents five categories of needs culminating in the pinnacle of self-actualization. Retirement per se is not among Maslow’s human needs, and every need he identified is arguably more likely to be satisfied by meaningful work.
Millennials are often characterized as seekers of work-life balance. If this is achieved and self-actualization can be pursued, the vision of retirement as typically packaged and sold by the financial services industry will have declining appeal.
Serena Williams, age 40, in her recent farewell to tennis in Vogue magazine said: “I have never liked the word retirement. It doesn’t feel like a modern word to me. I’ve been thinking of this as a transition…. Maybe the best word to describe what I am up to is evolution.”
The idea of evolution likely appeals to more people than professional athletes. Rather than addressing a real need, the financial services industry’s focus on retirement planning as a core element of its value proposition will increasingly miss its mark. Consumers are being told what they should want and do, much as the greeting card industry pushes the purchase of cards on designated dates, or the diamond industry insists that a stone of a particular value relative to income is a required expression of love and romantic worthiness.
Consumers will challenge the notion, perpetuated by clever and persistent marketing, that retirement is the ultimate representation of success and accomplishment. Lifelong work and meaningful employment will be seen by many as the true measure of success. They’ll be in pursuit of their best lives, which may have very little to do with a traditional vision of retirement.
Certainly, there are some who will need to retire — not because it is the optimal scenario but because they aren’t positioned to achieve the work-life balance that permits the pursuit of self-actualization. For these people, retirement planning will become more like estate planning and insurance-related risk management, with consumers purchasing products and services they wish they didn’t need.
Though financial advisors may not have openly questioned the current paradigm of retirement, judging from the number of them who avoid their own retirement planning, it appears they recognize the value and desirability of meaningful lifelong work.
The financial services industry is increasingly struggling with the articulation of a value proposition that attracts the most desired clients: professionals, entrepreneurs, business owners and even superstar tennis players. Such people may not be attracted to the idea of retirement and retirement planning services. Perhaps, instead, they’ll need financial services that enable transition, evolution and self-actualization.
Rod Burylo, CIM, FCSI, is manager of investment fund manager and exempt market dealer services with Axcess Capital Advisors in Calgary.