Clients need a chief financial officer for their lives

By Eric Thomes

We’re living through unstable times. The stock market is volatile. Inflation and interest rates are rising. And we don’t know how the coming years will play out in the economy. People are looking for stability.

One of the ways that people are looking for stability is through their financial plan.

This chaos presents an opportunity for financial professionals to show their value. Clients who engage with financial professionals need a chief financial officer for their lives. Preparing clients for retirement is so much more than helping them accumulate a nest egg – it is creating a strategy to last them through retirement.

The majority of people who have yet to retire (63%) said they fear running out of money more than death in the 2022 Retirement Risk Readiness Study from Allianz Life. At the same time, 44% of all respondents said making sure they have enough money is one of the most important things financial professionals can do to help.

Holistic financial planning is an industry trend that is helping provide that stability. There is a lot of talk in the industry about holistic planning, so let’s take a step back. What is holistic financial planning?

Holistic financial planning takes into account many facets of what a client is doing, or wants to do, in their life. It creates a strategy for clients to achieve the retirement they desire - everything from traveling to maintaining their health. It’s not just about dollars and cents but about securing the life clients want in retirement. The idea is for financial professionals to be more than product providers – but to tailor risk management solutions to enhance a client’s retirement outcomes in many areas of life.

Technology has enabled financial professionals to provide holistic financial pictures to clients. Then, with that holistic financial picture established, an advisor has the ability to be a one-stop shop for clients.

A holistic plan will include measures to reduce a client’s exposure to many risks so they can feel secure even in uncertain times. One of those measures could be a source of guaranteed lifetime income.

A guaranteed lifetime income product such as an annuity often can increase the probability of success for a client’s retirement. The guarantees offered are backed by the issuing company. Financial professionals can illustrate how adding an annuity into a client’s retirement strategy could increase the probability of success using new fintech tools. The technology allows for tailored models for the personalized guidance consumers desire.

Holistic financial planning also allows advisors to personalize strategies further to manage risks and changing consumer needs. This style of preparing for retirement creates a strategy that helps consumers navigate an increasingly complex environment. The guidance of a trusted financial professional becomes even more important as the world get more complex with intricate medical systems and a global economy.

The economic environment is incredibly interconnected and unpredictable. We have gone from a bull run in the market and historically low interest rates to deep worries about persistent inflation and a bear market in just the last couple of years. Holistic financial strategies should be nimble to manage these shifts in the economic environment.

Clients’ needs change over time too. Travel or building a second home may be top priorities when a client first talks about strategies for retirement. But a serious medical diagnosis or other life-altering event could drastically change what goals are most important in retirement. A financial professional is there to help clients feel confident in their ability to secure their financial future. Fine-tuning and making adjustments along the way is key.

Meanwhile, the scope of a financial professional’s work has expanded.

New tools make it easier for a financial professional to look at a client’s life, from saving and spending to health and wellness. At the same time, many people reassessed their priorities during the COVID-19 pandemic and their lives have changed. Addressing financial needs requires addressing quality of life for clients and creating strategies to ensure they can age at home. You can have a great financial plan, but if you don’t have mental and physical health, what does it mean?

The value that financial professionals can add to a client’s life is clear. A financial professional can help people better manage risks to their retirement with holistic planning.

Those who have worked with a financial professional reported feeling significantly more prepared to manage risks to retirement plans, including having a plan for retirement income and addressing the rising cost of living, the Allianz study found.

Americans are worried. Inflation, a looming recession and market volatility are adding to financial anxiety. With holistic financial planning and use of guaranteed lifetime income products, financial professionals can help provide stability in unstable times for their client by reducing the risks in their retirement strategy. Financial professionals can help clients understand and take advantage of those benefits. Because providing stability in unstable times is invaluable.

Eric Thomes is the chief distribution officer of Allianz Life Insurance Company of North American and the chief executive officer of Allianz Life Financial Services. He may be contacted at eric.thomes@innfeedback.com.