Guiding Huddled Masses Yearning To Retire

By Steven A. Morelli
InsuranceNewsNet

NEW YORK CITY – Imagine anxious 50-somethings holding armfuls of cash while being shouted at from all sides about what to do with the money to avoid being stranded in a bleak desert of old age.

That’s the picture of many pre-retirees in the middle market, according to Richard Weber’s presentation, The Retirement Planning Gap, New Tools of Engagement, at the LIMRA annual meeting. Weber, principal at Ethical Edge, spoke to InsuranceNewsNet about the issue before today’s workshop.

Retirees are already drawing down enormous sums, $1 trillion a year, with boomers expected to pull down much more, but with even less good advice on what to do with it. Retirees and those who hope to retire are left to the “Evangelists of Financial Misinformation” in various media, Weber said.

They also are not helped by the decreasing numbers of insurance producers and the rise of fee-only advisors who tend to give short shrift to insurance. Then add the pressure from product-centric producers, throw in a dash of blood-curdling stock market chaos and what remains is a frightened, huddled mass yearning to retire.

Now is the time for the calming voice of the retirement advisor who asks gentle questions about what clients really want for their future. These shell-shocked prospects are not ready to talk dollars and products, Weber said. They first need to reconnect with the basics.

“If you were to ask a bunch of people about what their sense of retirement planning was all about, they would immediately start talking numbers” Weber said. “They would ask – how much money should I set aside for retirement? When should I take my Social Security? Should I buy an annuity? Those are very important questions at the right time. When you’re first starting to deal with all this, ideally it’s your attitudes, uncertainties and anxieties that need to be expressed and understood.”

It’s helpful to clients and advisors to put numbers and products aside and explore first, he said. “They should be thinking about questions like, ‘What do I want to pursue? Where am I going to live? And what are my sources of funds? Not how much yet, that comes later.”

Then an assessment of risks comes. That means more than a simple understanding of risk tolerance, but an ordering of priorities.

“It’s a question of how shall I consider the various risks that stand between me and what I’d like to do,” Weber said. “You look at it in terms of risks from longevity, inflation, investment, health care, taxes and, these days, I would add public policy risk – will the programs that I thought would be there really be there?”

Only then can advisors have a real discussion about options. “When it comes time to talk about numbers, clients are prepared to deal with them and they don’t come all at once,” Weber explained.

When this discussion is done well, it also better prepares advisors. Producers can relate to clients more effectively by understanding their consumer style.

“Are you a delegator? Are you a validator? Or – are you a do-it-yourselfer?” Weber asked. “How do you best take in what can be complicated information with emotional components to it?”

Many tools, such as personality tests, can help determine those styles and answer some of the questions.  Weber said a program called Ready-2-Retire that LIMRA is offering in partnership with Impact Technologies Group, Charlotte, N.C., is an effective tool for the pre-retirement conversation.

“It’s interactive and the best way to use it is on an iPad,” Weber said. “So if I‘m sitting with you at a Starbucks, I can hand you an iPad and say, ‘I’d like to take you 15 minutes to tell me what’s important for you.’”

Weber, president-elect of the Society of Financial Services Professionals, said the society is also expecting to offer the program, which Weber uses with his insurance clients.

“Pure insurance agents can use it,” Weber said. “There is nothing in it that takes a number or calculates a number, which from a compliance standpoint makes it much easier to deal with.”

The program leads through decision-making and even allows segues to explore particular areas. A bit of serendipity for Weber was discovering the often vast differences in couples’ perspectives.

“It’s mostly because couples don’t talk about it – it’s ‘the longer I put it off, the better.’ Then you get to the point where you can’t put it off,” Weber said. “But rarely are couples on the same page, often not even in the same book. One will turn to the other and say, ‘Are you kidding me – that’s what you want to do in retirement?’ ”

Weber said it is gratifying to help clients find their way through these decisions and see this process as the future for his peers.

“This is an area where agents and financial planners can do their best work,” he said. It takes extra time, but not only are producers performing a service for clients, they are also adding sales.

“I can appreciate that some agents are more product-driven,” Weber said. “But I have a hard time understanding why you wouldn’t be on the planning side. It’s easier to sell a product when you help a client perceive a need they didn’t even realize they had. It’s also a differentiator. You can coach people to help them figure out how not to just survive but thrive from mid-life to aging.”

Steven A. Morelli is editor-in-chief of InsuranceNewsNet. He can be reached at [email protected].

© Entire contents copyright 2011 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

Steven A. Morelli is a contributing editor for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at [email protected].