Financial advisors at times face big challenges in their careers, but often these situations can really be treated as opportunities. Since the financial crisis of 2008, many investors continue to fear equities, feeling more content with “low-risk, low-return” alternatives. Unfortunately, while these other investment classes might be less volatile, they don’t always do an adequate job of building wealth for clients over the long-term. As clients approach the age of retirement, the accepted wisdom has been to cut down on the amount of equities in the portfolio. However, this is not appropriate in all circumstances, as the asset class decision should depend on a meaningful assessment of the investment horizon, which may extend well beyond the individuals own life. A client planning to pass along a portfolio to a future generation may be quite comfortable with a more “aggressive” equity based portfolio designed to drive growth and wealth accumulation. Advisors are challenged to once again get comfortable with discussing equity based solutions for client’s portfolios. This conversation is particularly important when the asset class is undervalued.
Perhaps an even more significant challenge for advisors relates to their changing responsibilities. As clients approach retirement, advisors must offer a range of planning solutions that help clients balance debt, income, insurance, succession and more. As such, advisers need to be aware of their other responsibilities outside of asset allocation as their clients progress through life to retirement and beyond. As part of this process, advisers must target and establish relationships with inheritors as wealth transitions to the next generation.
Moreover, advisors need to dig deeper and discover what their clients expect of retirement, while making sure clients understand how to embrace retirement through real dialogue. Rewards are there for the advisors who can actively engage in more personal, holistic discussions with their clients.