This article appears in the November 2020 issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.
Preparing clients for retirement is about more than just finances. Retirees may face challenges such as loneliness, loss of purpose, unforeseen medical conditions and boredom. But you can help by discussing the psychological aspects of retirement with your clients before their working days are over.
While conversations about the emotions your clients may experience in retirement can be challenging, the “advisor of the future” provides value by helping clients realize that preparing for retirement isn’t just about money, says Darren Coleman, senior vice-president, private client group, and portfolio manager with Toronto-based Coleman Wealth, a unit of Raymond James Ltd.
“There is a segment of clients who may want their advisor to be very businesslike. But, increasingly, we’re finding people want more of a relationship,” Coleman says.
Encourage a new perspective
For many clients, separating their work identity from their new, retired identity can be hard.
“When you think about what you gain from working, [it’s] a sense of status, a sense of belonging, a sense of a social network and having structure around your day,” says Catherine Osborne, a retirement coach with Toronto-based UpShift Coaching. “All of those things are really hard to let go of.”
Your clients may need to look at retirement as an opportunity to try new experiences and gain a new perspective on life. This is often tied to developing a sense of purpose, which looks different for everyone, Osborne says. Clients may find purpose in picking up part-time employment, building houses for those in need or learning to play bridge or the piano.
“People need to retire to something and not from something,” says Daniel Roy, financial planner and retirement coach with Ottawa-based Praxis Wealth Management. Clients who plan to go on several vacations won’t find that sustainable over the long run, Roy says. He recommends you help your clients understand how they want to spend their retirement at least five years before they retire.
Map out values
When Osborne speaks to her clients about retirement, she asks questions about what matters most to them, what makes them tick and how they express their values in everyday life. Once clients are able to articulate their values, preparing for retirement becomes much easier.
While most people seem to understand their values already, that isn’t always the case, Osborne says. Even clients who say they understand their values don’t always live by them. For example, a client who says they value lifelong learning may not be able to recall the last time they picked up a new skill.
“Retirement then becomes the perfect time to honour those values,” Osborne says. “It’s a beautiful opportunity [for clients] to start paying attention to the things they haven’t been paying attention to.”
Offer referrals
Aside from speaking to clients about the psychological side of retirement, you can also direct them to professionals who can provide additional support. Coleman, for example, recommends developing a referral network of marriage counsellors, health-care advocates and other support-services professionals. “I probably need more of those people than I need more accountants,” he says.
You also may help clients by referring them to real estate agents, home contractors and interior designers, especially in light of the pandemic, which may have caused some of your clients to consider giving up second properties to remodel their home instead for increased comfort and functionality.
Spot signs of danger
Clients won’t always be outspoken about the struggles they’re facing in retirement, especially if those struggles don’t revolve around finances. However, certain clues may indicate that your clients need support.
Behavioural changes may be a sign that a client is not adapting easily to life in retirement. For example, if a client loves to golf but says they haven’t been hitting the links or getting out of the house much, that could be a sign. The same goes for social interactions. “Are [your clients] reaching out and connecting, or are they lonely people getting even lonelier?” Coleman asks.
To answer that question, you can ask clients if they’re spending time with social groups beyond their former co-workers. “It can be tempting to drift back into old habits, but you want to ensure your clients are moving forward and not repeatedly returning to the lunchroom,” Coleman says.
You also should pay attention to how your clients are expressing themselves. Some clients may lack positive energy in retirement and “flatline emotionally,” Roy says. “As a good advisor, you have to tune yourself into those subliminal, discreet messages that clients are sending you.”
Supporting clients throughout the pandemic
The shutdowns enacted because of the pandemic have led to major changes in travel, social gatherings and other activities typically associated with a leisurely retirement. Even though some businesses and activities have reopened, many seniors may not want to return to normal life yet.
Some clients may be forgoing choir practice, family visits, vacations and more, so “it’s important they do activities that can partially replace those things,” says Daniel Roy, financial planner and retirement coach with Ottawa-based Praxis Wealth Management.
For example, if a client regularly attends aquafit classes, encourage them to try chair yoga at home instead. To help clients stay connected to family and friends, you may want to recommend using video platforms such as Zoom or FaceTime.
Darren Coleman, senior vice-president, private client group, and portfolio manager with Toronto-based Coleman Wealth, a unit of Raymond James Ltd., says he has his staff members spend one to two hours working remotely with technology-resistant clients to help familiarize them with video conferencing tools.
Letting your clients know that you’re available as a lifeline should they need you is helpful, Roy adds: “Holding hands is part of our job. There’s a big level of trust that exists between us and clients, and that trust will extend to other aspects of their lives.”
Depression in retirement
Retirement is a huge lifestyle change for many clients. If your client hasn’t planned well, they may feel isolated when they no longer experience the cognitive, physical and social stimulation of being at work.
As a result, that client may be at risk of developing mood symptoms and possibly a depressive disorder, says Tarek Rajji, geriatric psychiatrist and chief of the adult neurodevelopment and geriatric psychiatry division of the Centre for Addiction and Mental Health in Toronto.
Seniors typically exhibit the same symptoms of depression as other adults do. They may experience a sad mood, no longer enjoy things they used to enjoy, feel a sense of worthlessness or that life is not worth living, and experience changes to their sleep habits, appetite and energy, Rajji says. Some people with severe depression may experience suicidal thoughts.
Seniors also may experience memory problems. “Sometimes depression can manifest with significant cognitive impediments,” Rajji says. “So, some people may even look as if they’ve developed dementia [when they are] in the middle of an acute depression.”
While financial advisors can’t diagnose clients, there are some warning signs to consider. If your clients show major changes in their behaviour, such as reduced motivation, interest or attention, or they’re assessing risk and managing their money differently, they may be struggling with their mental health. If you’ve developed a trusting relationship with your clients, you may be able to encourage them to speak to their doctor or connect them to a professional in your network.