Streaming one of those endless crime series recently, I watched the lead investigator offer bad news at a press conference – “The rescue mission has now shifted to a recovery effort”. A little dramatic for our mundane world of retirement planning – but maybe not. I wrote awhile back that most of us heading toward our next chapter have made mistakes in our preparation 

https://www.fa-mag.com/news/the-oh-sh-t-moments-of-retirement-planning-67066.html

Many of those mistakes are financial miscalculations – I know I will need to seriously restrict my spending. Some are investing errors – taking too little risk or too much. The most impactful seem to involve family and healthcare when the inevitable but still unexpected impacts of longevity take their toll. And even the lucky few not derailed by financial, investment or family issues may be weighed down by the importance of living a meaningful life. That’s a lot of potential planning potholes to navigate. Every family will fall into one or more – and most will need help to recover. The markets are not helping. Neither is the stubborn pandemic or global instability or domestic politics. Most people are worried about a lot of things. 

So get ready for the equally inevitable shift in the retirement planning profession from a mission of funding a “next chapter” to recovering a failed retirement plan. Our observations in the Next Chapter industry initiative (https://theexecutionproject.com/community/)

are clear – the industry is not ready for this job. The contrast I’d offer is that we will be shifting from mostly selling new cars to fixing them when they’ve broken down. Complementary roles for sure in my car dealerships, but not the same.

I’ve long advocated for a more realistic view of retirement planning that tracks with the experiences of leading advisors and how they help real clients with real life. Those pros tell us over and over about clients hoping to stretch savings to cover a preferred lifestyle instead of first determining the level of their retirement paycheck. They repeat stories of life events and healthcare “surprises” that are really only surprises if you think you are immune to the impacts of aging. I will never forget an interaction with the ceo of a global financial firm who called wondering if he should be added to the accounts of his father….now that Dad turned 91. I wonder what precautions are used at his company for millions of people vulnerable to mistakes and exploitation in their later years – long before 91 – especially since 25% of people aged 65+ have dementia of some kind. Common sense is a great ally when planning…..

The implications of “retirement recovery” begin with a few very uncomfortable conditions among advisors, their firms, the supporting cast of product companies – and the clients themselves. Each plays a part to right the ship. The inconvenient truth is that of course each has contributed in some way to the problem of unpreparedness. To really help Americans have a fighting chance, each will have to own their role in the current state and prepare recovery tactics. That’s now. Each actor will also have to adjust their approach to younger clients and make sure the lessons learned are applied to the future. This is not about organizational CYA – though too many advisors and firms will worry about this angle and their “liability” for confronting the truth – this is about a genuinely human concern to improve the situation. It is less important to rehash how we got here, it is more important to show our genuine commitment to recovering the plan. 

Personal health care offers a good example of this “recovery” pathway. When you have a medical issue, the first step is to deal with the current symptoms – reduce pain, improve comfort. Focus on what to do now. Only then can we look more closely at the cause(s) of the problem. Required skills here are listening and empathy. Are we really good at those?

I’m pretty sure Retirement Recovery will soon become the #1 driver of referrals and new clients. Most of the new opportunities will flow from the wreckage of plans gone off the rails. You will confront more people who are surprised, concerned, mad at their prior advisors, mad at themselves – and embarrassed. Job 1 for us is to acknowledge and normalize their condition. They are not alone – they are actually reflective of the vast majority of retirement plan clients. 

Before you dismiss that last line, which will stand in our way if we don’t accept it, is to fully comprehend the full needs of “retirement” (https://www.fa-mag.com/news/where-are-the-retirees–yachts-66565.html)

Three conversations help organize the process of recovery – financial issues, investment decisions and family concerns (mostly about health and care). Back to those top advisors who remind us that retirement is a family affair and that one or more of the family members do not really understand the multiple moving parts. True financial literacy is rare enough – how the sometimes complex and arcane concepts apply to them is even more elusive. 

The core strategy of a recovery strategy is simple but not easy, as Buffett famously observed about investing. So channel common sense and consider:

  1. Empathize to normalize – no matter the client situation, “you are not alone, everyone has issues”. Actually, multiple issues. So let’s first get a complete inventory of what you worry about. We may not be able to solve them all, but let’s get a total checkup of the car and not just fix the flat tire. A top advisor tip – start fixing the “tire” quickly, confidently and at a very reasonable price in order to set the stage for the bodywork and new transmission to follow.
  2. Educate to remediate – are we confident in the investment choices and solutions – do you know the role of each solution you own and are their better options? A tip – make sure you know where each product came from and who was involved before making any judgments. We don’t need client defensiveness in the way of building trust. 
  3. Is everyone on board? Do all family members understand the plan and the underlying choices that really determine success – such as the choice of where to live and the expectations for providing care when you need it? A tip – probe about those family dynamics – and keep probing. Fewer than half of clients with advisors told a national IWI survey their advisor does not include the spouse in planning, let alone aging parents or adult children. And we wonder why 70% of widows nuke the advisor? 
  4. Keeping the lines of communication open and active as the next chapter unfolds – there will be changes needed and more decisions. That’s life. But this aspect of staying current is where the robos are killing advisors. Failure to keep up with specific, totally predictable life events is probably the most critical need of retiring families and the best entry point for earning referrals. An advisory firm I met with recently sets the stage for what they do by first asking any new prospect about the elections they’ve made for Social Security and Medicare – and what happens to their estate if they (a couple) were hit by a bus tomorrow. No investment or performance discussion, no tax returns – just showing their interest in the decisions that are must-make for us all that reveal their level of preparation. The robo does not forget a date, does not tire of sending reminders (though only by text or email), and will keep getting smarter as it learns more about the client. If Google News, Amazon and Nordstrom can suggest what I want to read or buy with the accuracy I’ve seen so far, the most feared new advisor in town is an avatar.

Only the Outcomes Matter

While many – most – retirement plans will at some point be shifted to a “recovery” effort, we can always share our learnings with other clients. The first opportunity of the “white flags” by clients willing to accept help is the mindfulness of those clients. Saving someone’s retirement plan is not about producing financial rabbits out of a hat – it is mostly about helping the clients accept their condition and making the best of it. As we guide our own children by saying, “You cannot control what happens to you – but you can control your response”, we have a similar moment with white flag retirement realists. And that word will spread rapidly. First to the heirs, and then on to the peers and colleagues. Get ready for the line around the block to your door.