Lewis Schiff
Lewis Schiff
Best Practices for Retirement Planning

A new study of advisors who specialize in retirement planning identifies the evolution of best practices

December 17, 2009
by Lewis Schiff

According to an in-depth survey of experienced advisors who devoted a significant portion of their practices to retirement planning, demands from clients are driving the evolution of retirement services. While responding to the push from clients to deliver more in the way of lifestyle services and to provide more financial education, advisors have not uniformly adjusted their fees to respond to the added service-weight on their practices. The conclusions that appear in fall 2008 report, Advisor Best Practices: Delivering Retirement Income and Transition Support, was undertaken by Dennis Gallant of GDC Research, Sherborn, MA and Howard Schneider of Practical Perspectives, Boxford, MA — two financial services industry consultants.

The researchers interviewed advisors including professionals who work in wirehouse, RIA, regional, bank, insurance and independent firms and have devoted a significant portion of their practice to retirement income and transition support for more affluent clients — and had been doing so for at least 10 years.

“The advisors told us [that] there are two kinds of clients,” notes Schneider. “One of the clients who they’ve been working with for an extended period of time and where retirement is something they’ve talked about and planned. They get to retirement and it's just a transition — there’re no surprises. And then, of course, there’s the other kind of client who parachutes in right before retirement. They’re 63-years old and they have six months, six weeks, six days and six hours until they’re going to retire.”

The study illuminated several trends in the delivery of retirement support:

  • More services beyond the typical asset management, retirement income strategies, etc. to now include healthcare, eldercare and more family-office types of support
  • Additional analysis of the client’s emotional component as they consider transitioning and various lifestyle options
  • Increased calculations for longevity planning to accommodate a range of life-stage needs, such as new career to nursing care
  • Evolving practice models leading to more independent, fee-based team practices, with RIAs and independent broker-dealers taking the lead in serving this marketplace
  • Greater use of comprehensive planning as opposed to isolated product solutions
  • Improved advisor listening and emotional analysis ability in which listening skills are coupled with technical skills

In general, advisors view their retirement clients as differing in significant ways from their younger clients in accumulation mode. They view retirement as requiring a higher degree overall integrated planning given the larger number of life issues that need to be addressed within a context of living off investment income without knowing the actual time horizon.

Traditional Services

Not surprisingly for a service area undergoing transition, advisors agree more widely on what constitutes traditional service offerings than what’s included among the newer practices areas.

There are a number of services that almost all advisors deliver to retirement clients. The traditional functions that define advice delivery and include:

  • Selecting and managing investments, including asset allocation
  • Establishing and executing draw down strategies for income distributions
  • Delivering estate planning guidance, including generational wealth transfer
  • Considering client employment based benefits related to retirement, including Social Security and other sources of income
  • Providing tax planning support and guidance
  • Developing strategies for charitable giving
  • Creating customized financial plans
  • Offering advice on insurance, including life, property and casualty and disability policies
  • Personal finance support, such as advice on mortgage refinancing, auto purchases, or other significant expenditures
  • Monitoring client progress against agreed upon goals and plans

The study found that almost all advisors had considerable experience in these areas and apply them as a regular part of the client solutions. Advisors either consult directly with clients or coordinated solutions with the help of outside-specialist attorneys, CPAs and insurance experts.

“Beyond the study, we would expect with more and more advisors, if they really want to deliver retirement income and retirement transitions that address a clients’ needs well, they are going to need to broaden the scope of what they do,” states Schneider. They can do it one of two ways. They can either bring some of that resource into their own practice so they can handle it internally, or what a lot of them were doing is networking with others. So, they’d find an elder care specialist in their community and that would become the eldercare specialist to whom they bring their client. Especially with the smaller practices, it’s much more likely that they’re going to network with others.”

Driving Change

With clients considering new scenarios for retirement life styles, they’re bringing more nonfinancial issues to discussions with advisors. Beyond satisfying client needs, broadening a practice focus often reflects a business strategy for positioning as the key trusted advisor for any challenge or issue clients face. ”For most clients, life decisions are more crucial than investment choices,” notes one advisor in the study. “Retirement is a door for most clients, not a wall. I need to help them get through the door.”

Advisors viewed several drivers in the expansion of additional retirement services: higher client expectations, shifted financial responsibility to the individual from the safety of pension plans, increased longevity, more complicated family and personal situations and greater need for self-fulfillment in retirement years.

The emerging services that advisors are adding to their practices fall into five groups:

  1. Eldercare. Eldercare remains a main concern of clients for themselves, a spouse, or a parent. Many advisors have relationships with care facilities and eldercare specialists who can work with them to resolve the financial and logistical issues clients confront. Advisors may:
    • Help identify eligibility for assistance programs
    • Identify care givers in the local community
    • Secure space in a nursing home or assisted living facility
    • Find a local elder day care facility
    • Consider the impact of remodeling a home to meet the physical limitations of an aging individual
  2. Personal Development. The new retirement often means a new career, launching a new business, or locating meaningful volunteer work and. advisors have seen addressing these issues as central to planning financial and lifestyle issues. They guide clients to counselors, other resources and also:
    • Provide career counseling including skills assessment
    • Identify employment opportunities, including full time and part time
    • Assist clients in establishing a new business
    • Find volunteer opportunities for clients
    • Guide clients through employment transitions, including graduated retirement
  3. Healthcare. As even affluent clients express concerns about medical care costs during the post-career phase, it’s not surprising that retirement-focused advisors tend to view their support in this area as critical. Advisors typically discuss long-term-care insurance, other financial and protection issues and special needs and they may:
    • Identify supplemental health care coverage
    • Analyze benefits of long-term coverage options
    • Guide clients through intricacies of Medicare coverage
    • Identify caregivers for particular medical issues
    • Act as advocate to insure appropriate medical proxies are in place as needed
  4. Real Estate. For most clients, advisors don’t view personal real estate as an investment asset, but as a factor in wealth transfer and tax planning. They may:
    • Identify mortgage or refinancing options
    • Analyze potential real estate transactions
    • Examine opportunities for downsizing of primary residence
    • Consider the impact of vacation home purchase
    • Assist with relocation decisions
    • Provide perspective on local real estate market conditions
    • Suggest needed improvements to accommodate aging homeowners
  5. Family Several Advisors in the study position themselves as a financial coach or quarterback and expect to address any issue that has an impact on their clients, which can range far beyond the financial into the personal. For clients who are affluent careerists, post-working retirement lifestyle poses more challenges than adequate income streams. Advisors refer clients to third-party resources for this kind of lifestyle report and consider any time spent in their discussions as a core service, so they don’t seek additional compensation. One advisor has developed his interests in this area to the extent that he created a family office for clients, which include broad services, as household finances, family dynamics, career planning, travel and more. Advisors seek to:
    • Provide business transition support
    • Educate younger family members about key financial subjects, such as investing or personal finance
    • Resolve family disputes related to wealth issues
    • Establish funding mechanisms for special needs situations
    • Help clients develop wealth transfer strategies

Some Surprises

After conducting the study, Schneider was surprised that there really was no agreed-upon best practice on how to manage money for retirement income clients. Their confidence in their investment plan remained equally strong, however. Advisors express little concern that clients would return in 10 years or 15 years to complain about inadequate retirement income, as long as they regularly checked in with clients to make sure no major issues have arisen. Over-spending by the client could disrupt any carefully plotted plan, they felt.

Schneider and Gallant have just completed a second study in which they went back to the same advisors and asked how they were doing with the market downturn. They remained confident in their abilities to help their clients, although they showed somewhat lower confidence in their clients’ ability to achieve the type of retirement that many had expected.


Advisors are still being compensated primarily through asset-management fees, which again surprised Schneider and Gallant. Advisors spoke about providing more retirement support and the extra effort and time it requires and the additional follow-up conversations. Yet the fees they’re charging are for assets under management. Some are charging planning fees, some insurance premiums, depending upon the products, but the core of is asset-based fees and they have not moved aggressively to charge any kind of retainer or project fee or other kinds of non-asset management fees. “We think that that will ultimately happen, but it hasn’t happened yet,” notes Schneider.

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Lewis Schiff is the principal of Advanced Planning Group, a family office network for advisors. Schiff is also the chairman of Inc. Magazine's Business Owners Council. His latest book, The Influence of Affluence, reveals the startling details on how the new rich are changing America.