Advisors have a huge opportunity to serve Canada’s growing retiree community, and should learn how to cater their conversations to the unique needs of this demographic, according to Kevin Strain, senior vice president of individual insurance and investments at Sun Life Financial Canada.

Speaking at the Canadian Institute of Financial Planners’ Annual National Conference in Niagara Falls on Tuesday, Strain noted that the number of seniors in Canada would grow to 10.9 million by 2036, from 4.7 million in 2009. And by 2018, the amount of wealth held by individuals aged 65 and up will double to $1.8 trillion, from $913 billion in 2008.

“That’s a massive shift in terms of wealth,” said Strain. “If you’re not aligning your practice to where these assets are going to be, you’re missing a huge opportunity.”

But Strain warned that working with retired clients demands a different financial planning approach than working with pre-retirees. The most important difference, he said, is that once clients retire, they move from the accumulation of assets phase of their life to a phase where they’re “de-accumulating” assets. As a result, their priorities shift from saving for their future and protecting their dependents, to maintaining an enjoyable standard of living in retirement, protecting their assets from health setbacks and market risks, and estate planning.

In a study of retirees’ main concerns from a financial perspective, Sun Life found that the top four were health care costs, inflation, equity market volatility and longevity risk.

“If you’re going to have effective conversations, you need to be aware of that,” Strain said. He urged advisors to speak to their retiree clients about all of these factors.

Conversations about health care costs are particularly important for retiree clients, he added, since clients often fail to grasp the extensive burden that these costs can place on them in retirement.

This burden is likely to grow increasingly cumbersome in the years ahead, since Canadians are set to shoulder a growing proportion of overall health care costs, according to Strain. He said by 2015, Canadians are expected to be bearing 34% of health care costs, up from 21% in 2005, as the proportion carried by employers and governments will decline.

“We have to be able to talk to our client base in terms of the shifting health costs over the next 10 years,” Strain said.

Sun Life Financial has conducted widespread research to determine some of the factors that these retiree clients are seeking from an advisor. It found that they’re increasingly looking for a single advisor to provide them with advice on several different fronts, rather than multiple advisors.

In 2002, Sun Life found that Canadian households had an average of 2.2 advisors for services such as insurance and investing, but this figure fell to 1.3 in 2008. This reflects a demand for consolidation of advice, Strain said.

“Canadians said ‘I want an advisor who will talk to me not just about my wealth needs, but will talk to me about life insurance, health insurance and my wealth needs,’” he said. “Holistic advice is here – clients are demanding it.”

Retiree clients are also looking to their advisor to act as a coach, Sun Life found.

“They want somebody who’s going to set up a plan for them, and then make sure they adhere to that plan, and push them towards that plan,” Strain said.

IE