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Merrill Study: Focus on Life, Not Just Family Finances

By Murray Coleman April 17, 2017

Successful long-term planning hinges as much on helping clients manage their personal goals as mastering household financial issues. But finding those points of intersection – where changing workplace demographics and lifestyle dynamics meet – is likely to be an even bigger moving target for advisors in coming years.

At least that’s what retirement researchers at Merrill Lynch find in their latest study – “Finance in Retirement: New Challenges, New Solutions.” It concludes an eight-part research series that surveyed 4,854 retirees and pre-retirees exploring changing life priorities.

Merrill’s new research points to a heightened need for advisors to understand how clients are coping with rapid advances in technologies, financial services and ways to build family wealth. Such a generational confluence of events, the study argues, is promising to make melding personal and financial goals an even more fluid planning process when working with both retirees and pre-retirees.

One key takeaway uncovered in surveying clients is a strong preference to attain “peace of mind” rather than “wealth accumulation” in retirement. Some 88% of respondents put such a goal as their top priority, according to the wirehouse.

But financial peace of mind “can mean different things to different people,” the study notes. For example, 57% of participants listed living “comfortably” within their own means as central to feeling satisfied in retirement. Others defined their top goals as being able to maintain flexible lifestyles, confidence in dealing with unforeseen expenses and educating other family members about their finances.

Michael Garcia

“If you ask 1,000 different people what will give them peace of mind in retirement, you’re probably going to get 1,000 different answers,” says Michael Garcia, a Merrill advisor who manages about $150 million.

The wirehouse’s research makes a strong case to proactively help clients “change their mindsets” while still in the accumulation stage to start preparing for retirement, says the Dallas-based advisor who has reviewed Merrill’s most recent research.

To aid future discussions and develop new talking points, Garcia says he takes notes on each client’s personal interests, goals and expectations. He refers to such anecdotes and clues uncovered in everyday conversations as a person’s “life file.”

Garcia tucks away such notes as reference points for future discussions.

“These files serve as good tools to remind my clients of how they tend to compartmentalize their fears,” he says. Likewise, such a system helps him bring up such concerns in a timely manner as different issues arise.

“When it’s time to circle all of the wagons and start focusing more immediately on retirement,” Garcia says, “these files are what we call our ‘peace of mind’ building blocks.”

Most advisors aren’t trained as full-fledged life coaches, notes Leah Sciabarrasi, a managing partner at Crestwood Advisors in Boston, which manages more than $1.3 billion.

Even so, she feels advisors can easily learn from like-minded professionals and incorporate similar techniques into wealth management.

Focus on life-defining moments rather than just momentary “dollars-and-cents” issues, Sciabarrasi suggests. She likes to have clients write down their individual retirement goals. It’s a method Sciabarrasi uses to jumpstart conversations with pre-retirees in “black-and-white” terms and to help them begin to “conceptualize” what they’ll need to do to in their golden years.

“Before you’re in it, retirement can seem a rather abstract and overwhelming concept,” she says. “So I find that developing a planning framework built around living more fulfilled lives – instead of just dollars and cents – helps my clients to feel less overwhelmed as they transition out of the workforce.”

Kjersten Lazar, an advisor at Raymond James in Somers, N.Y., warns that evaluating a family’s preparation for retirement shouldn’t take a “cookie-cutter” approach.

“We refer to ourselves as "mother hens" – we explain to our clients from the beginning that no matter what their age, our focus is on everything in their lives that their money touches,” says the longtime advisor whose practice manages about $140 million.

While many families she works with tell her they also tap into the expertise of other professional experts, Lazar separates herself as “a different type of resource.” She makes sure to alert clients that her team will be calling at key points in their lives such as times of illness, weddings or anniversaries.

“For us, financial planning is part of a journey – it’s not a process designed to set some straight-line path through retirement,” she says. “We try to help our clients realize that rerouting their financial and personal goals is a constant in their lives, not something to be dreaded or avoided.”