Even when your clients have significant retirement resources, it is important to create a comprehensive plan specifically for them. If you do not do your best to help each unique client, you risk your client's future as well as your own.
Some Clients are More Prepared
I recently met with a couple whose financial life is quite complex. These folks have done well for themselves. They managed to live well within their means throughout their working years, managed to consistently save for retirement, and have successfully accumulated more than enough resources to maintain their desired retirement lifestyle. Kudos to them. Their retirement resources support their desired standard of living, and they have an overwhelming desire to give back to others. They are not in jeopardy of running out of money in retirement, and they could sustain substantial market losses without batting an eye. In other words, they're in a financial position to absorb significant inefficiencies from a planning perspective.
Avoidable Forced Choices
It may not seem like it at first, but from a prudent planning perspective, there is still work to do for this couple. The difference between a well-crafted financial plan, and an unorganized generic plan, would significantly limit the couple's potential to impact the organizations that they are already committed to supporting financially. Choosing between maintaining their lifestyle or maintaining their increasing contributions to charities they support would be devastating. Paying more in taxes than they are legally required, a poorly timed bear market without a loss avoidance strategy, and a landslide of other retirement risks are all potential contributing factors to consider.
Incomplete planning could lead the couple down a path that requires them to make choices in the future that they would rather not have to make. For example, should they continue enjoying a retirement lifestyle that they have become accustomed to and scale back their plan to give to organizations they support, or let inflationary pressures reduce their standard of living and continue increasing their charitable contributions as desired?
Don't Cut Corners
Many advisers in our industry still rely on simple tools to help them plan for their client’s future. A legal pad, pencil, and calculator are all the primary tools they use to do “good work” for their clients. Perhaps their measure of good work is different than mine. I believe we should strive for excellence in our profession. Doing "good work" instead of excellent individualized planning is careless and unprofessional.
I’m not a human super computer. I’m limited by my own abilities. I’m not capable of making thousands of calculations per minute, or managing my client’s entire financial profile in my head. My mind is not a filing cabinet. Therefore, I am biased towards leveraging essential planning tools.
Am I saying that if you're only using a legal pad, pencil, and a calculator to create a retirement income plan that you're not truly acting in the best interest of your client? You bet I am! Can you do “good work” by your clients and improve their lives? Sure. Can you do excellent individualized planning on their behalf? I don’t think so.
Don't Just Sell Stuff
If you're not using tools to manage financial data, organize all of the facts, and then spotlight weak points, before recommending actions to fix those weak points, you're just selling stuff. You may be good at selling stuff too. You may have some very happy clients to boot. However, explaining your recommendations for product purchases will become increasingly more difficult without a strong and clear reason for doing so. Regulators, attorneys, and a jury of your peers may want to see hard evidence that you acted in the best interest of the clients you have advised, if and when the time comes.
If doing the right thing by your clients isn't enough to inspire change to your business maybe this will: When you go the extra mile and create individualized plans for your clients, your business revenue will increase, because you'll be able to do more for the clients you have and gain new clients through positive referrals.
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