Ask successful financial advisors how they provide the most value for their clients, and most answers revolve around financial outcomes, such as developing the right financial plan, improving portfolio returns through diversification, lowering taxes and managing risk. But a recent conversation I had with Pamela, a successful advisor who attracts new clients via “countdown to retirement” workshops, raises the question of whether advisors need a broader definition of their purpose to include helping clients rethink how they’ll spend their retirement years. (Pamela’s website is headed “Guiding clients to a successful retirement.”)

In 1960, the Harvard Business Review published an article by marketing professor Ted Levitt entitled “Marketing Myopia.” In it, Levitt explored why the once-dominant railway industry was blindsided by competition from automobiles in the 1920s, and why Hollywood movie studios ignored competition from television in the 1950s.

Levitt’s conclusion: both industries defined their businesses too narrowly. Railways didn’t understand that they were in the transportation industry and movie studios didn’t understand that they were in the entertainment industry.

Levitt’s article maintained that the most important question for any company is: “What business am I really in?”

More than 50 years later, that question still is relevant. Indeed, many top business schools use “Marketing Myopia” in their courses on marketing. And Levitt’s question raises another question: “As low-cost online portfolios become more readily available and financial advice gets increasingly commoditized, are financial advisors who define their business narrowly around financial advice making the same mistake as the railway industry in the 1920s and Hollywood in the 1950s?”

I met Pamela at a conference earlier this year. Pamela, who is based in a large city in the U.S. Midwest, delivered 30 half-day workshops to employees of 20 companies in her community last year. She described to me how she fell into her niche of delivering workshops to help singles and couples prepare for retirement, workshops that are paid for by the companies those people work for.

Pamela launched her niche business more than 10 years ago with a conversation about retirement plans she had with a couple in their early 50s with whom she’d worked with for some time.

This couple, like many affluent clients, had placed travel high on their list and had accumulated a list of destinations they planned to visit. Pamela asked the couple if they’d thought of ramping up their travel now rather than waiting for retirement. She described to the couple how other clients had waited until retirement to travel, only to run into health issues.

Pamela and her client couple spent half an hour discussing this topic, with Pamela sharing observations about the travel that her clients found the most satisfying. She offered to run some numbers on the impact of spending $10,000 annually on travel in the years leading up to retirement.

As the conversation was being wrapped up, the woman said to Pamela: “You realize that the more we spend on travel, the less we’ll have to invest with you?”

Pamela’s response was that she measures success not by the assets that clients have with her, but by clients’ ability to achieve their goals and lead a satisfying retirement without having undue worries about their finances. A week later, Pamela got a call from the human resources (HR) director of the company that one of the client couple worked for. The HR director said that Pamela’s client had passed Pamela’s name along and asked if Pamela was interested in running a half-day workshop for employees retiring in the next couple of years and their spouses.

From that modest beginning, Pamela has built a significant presence in the HR community in her city. Less than half of the workshop is devoted to financial issues; the majority of time is spent on tapping into the research on the factors that lead to a successful retirement. Pamela meets with any participants interested in becoming clients after the workshop, and makes clear that she charges for development of an initial financial plan for all clients.

– Satisfaction

Pamela’s presentations start by pointing to research that indicates retirees are among the most satisfied segments of U.S. society because well-being and happiness peak as people age. Numerous articles pointing to research on this topic have been published. For example, “Why Retirees Are Happier Than You May Think,”published by the Wall Street Journal last winter, pointed to research among American retirees that found that 56% of retirees said they were very satisfied with retirement; 34% said they are, on balance, satisfied; and only 9% said they are not at all satisfied. What’s striking is that the longer people have been retired, the happier they are.

And this satisfaction isn’t because they’re rolling in money. An article in the May issue of Money Magazine, “Why Retirees with Low Savings Are Happy Anyway,” pointed out that even retirees with low income are surprisingly happy. A key message in the latter article: “For most retirees, having the time to do what they want is far more satisfying than having money to live well.”

– Four categories of retirees

A research report on retirement in Canada by the Angus Reid Institute divided retirees into four segments: Lovin’ It; Comfortable; Strugglers; and Unhealthy.

Overall, that survey found that the Canadian retirement experience is vastly different for different groups, but largely fulfilling for most – notwithstanding very widespread financial anxiety.

The Angus Reid research also dug into the drivers of retirement satisfaction. Survey participants identified the following elements as the things that make retirement meaningful, aside from health and having sufficient money:

– quality time with family is a key source of meaning and vitality for most retirees (cited by 54% of survey participants)

– travel (cited by 50% )

– rest and relaxation should not be underestimated (45%)

– participating in leisure activities is something that adds meaning (43%)

– socializing with friends was highlighted by four in 10 (39%)

– volunteering was selected as a source of meaning in retirement by one in four (25%).

– Rethinking the bucket list

The 2001 movie The Bucket List popularized the idea of people building up a list of things to do and see before they die. As many clients plan for retirement, they develop their own list of things to do, often revolving around travel.

But there is a downside to fixating on a bucket list in retirement. Here’s what Miami-based geriatric psychiatrist Marc Agronin had to say in a Wall Street Journal article entitled “It’s Time to Rethink the Bucket-List Retirement”:

“As a therapist, I’ve talked to numerous seniors as both patients and colleagues. Rather than feeling exhilarated by a life of bucket-list adventures, they often end up feeling depressed and disconnected.

“As they travel the world to soak up experiences, too many seniors inevitably lose track of what really matters – their connections to family, friends and community.

“They feel like strangers in their own homes. Eventually, the bucket list becomes something of an addiction: the high from an adventure doesn’t last, so seniors find themselves piling on experiences to keep the thrills coming, further alienating them from real life back home.

“There’s a way out of this trap. Retirees should think about using all of the advantages that make a bucket list possible, such as wealth and vigour, to build something much deeper and more meaningful. Instead of taking a dream vacation to chase fleeting thrills, they should use their time to create something more lasting instead – whether that means building bonds with family or their community or reimagining travel adventures as an opportunity to share experiences and wisdom with grandchildren.”

Dan Richards is CEO of Clientinsights (www.clientinsights.ca) in Toronto. For more of Dan’s columns and videos, visit www.investmentexecutive.com.

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