Why Advisors Need to Be 'Like a Quarterback': Ken Dychtwald

The No. 1 response was guide. They want their advisor to have a sense of what's ahead in their lives and to get them thinking, talking and planning so they can have secure and satisfying longevity. 

They want their advisors to be a kind of quarterback. 

What does that encompass?

Going beyond just the financial. But it doesn't mean they want them to be a psychotherapist or life coach.

They want their advisors to let them know the sorts of discussions they ought to be having or what articles or books they should read or TED Talks they ought to watch to prepare them.

As a practical matter, how do clients capture for posterity those values and life lessons they want to pass along? 

Two questions that you suggest asking are: "What is the smartest decision you've ever made?" and "What is the biggest mistake you've ever made?"

There are so many devices you can use to record, such as an iPad or using video.

I think there will be a growing craving to do this. As boomers get a little closer to their own end of life, it will become more commonplace — whether it's writing a memoir or being interviewed by children or grandchildren — to record their legacy and what they hold to be really important.

In what other areas can financial advisors expand their role?

Much of the industry has been built around helping people plan for retirement savings, investments, some insurance, managing debt and so forth.

However, we now have over 70 million people who are retired — and, to a large extent, the financial industry hasn't been organized around what they're grappling with.

It's a different thing preparing to retire and then dealing with the costs.  

What has become clear to me is that the average person — principally the middle half of the population — doesn't understand finances.

Please elaborate.

They're accustomed to getting a paycheck each month. But then you send them off into retirement-land where they're no longer getting a paycheck.

How do they manage their finances to make sure they'll have resources to last them till their [final] days? 

The average couple [in retirement] requires $450,000 till the end of life.

Where do financial advisors enter the picture?

We're living in an era where decreasing numbers of people have guaranteed pensions. So it's on each of us to put together the financial wherewithal to live comfortably in our later years.

Therefore, people are really looking for a trusted advisor.

I can think of no other time in my life when the forces that are in play, such as living longer, are leaning in the direction of the financial advisory community to really step up and not just be about stocks and bonds and how you're doing compared to the Dow and Nasdaq — but to really listen to people and their needs. 

It's not just about getting a good portfolio and having good returns.

How should advisors prepare?

It's up to the financial advisory community to be more tuned in, more holistic, and read the books and articles and get the training in order [for example] to learn about health care [costs].

Our study found that for people over 50, their greatest financial worry was health and long-term care costs, more than the economy, inflation and market volatility. 

If a financial advisor never brings up a discussion about health care costs, they're out of touch with what clients are frightened of. It's irresponsible for those who claim to be financial advisors — not brokers or insurance agents — to [fail to] engage in discussions with clients and their family members about things like long-term care, survivorship and leaving a legacy.

No one should claim to be a financial advisor to help people into retirement without thinking through these potential hurdles, like who'll care for a widow when her husband passes away.

Obviously, these issues are critical to initiate discussions about, right?

This is about the things that people worry about and how, as an excellent advisor, you can show them what their future might be and, hopefully, encourage them to do the right thing so they can have a wonderful "third age," as I call it. 

Is the area of retirement income going through a time of change?

I'm watching the world of investments trying to stake its claim in the retirement zone, but the world of annuities and insurance is moving swiftly as well.

What you're seeing is the evolution of guaranteed income and lifetime income products. They're getting more reasonably priced and simpler to understand — and [companies] are stepping up their marketing.

So do you foresee greater interest in people buying annuities? 

In the future, there'll be a place in many people's portfolios for some type of guaranteed or lifetime income products so that those in the middle half of the population can know they'll have a paycheck for life.

There's so much fear and worry. We're going to need solutions that are worry-free. You'll see an evolution in the market in that direction. 

You'll see a piece of a lot of people's portfolios taken up with new evolved annuities.