‘Longevity planning’ with your clients leads to a better retirement life

The consequences of increasing lifespans will ripple through our society, shifting our views of education, careers, where we live — as well as our financial plans. Advisors will also have to help clients meet the retirement needs of an undefined period of life, which could last a few years or several decades.

I’ve been discussing longevity and how it will affect Canadians’ financial and retirement plans. Given the amount of content advisors are digesting on longevity, we know they’re keenly interested in this topic.

Bold new model for retirement advice

Dr. Joseph F. Coughlin, PhD, Founder and Director of the Massachusetts Institute of Technology (MIT) AgeLab, has been conducting financial-related research for 20 years. Dr. Coughlin believes advisors need to broaden conversations and deepen relationships with clients and their families. He’s calling for a different business model to enhance their value of advice.

The new model will meet clients’ increasing expectations as they demand solutions beyond merely providing insurance and investment products. According to Dr. Coughlin, financial advice will be far more integrated with other professionals, with the advisor at the centre of the relationship, drawing on specialized experience on aging in place,² geriatric care management, transportation, education, and part-time work. Clients will expect advisors to give direction on:

• planning for education and professional development across longer lifespans;
• having enough retirement income to last as long as they live;
• potential rising costs concerning the future treatment of chronic diseases and conditions; and
• managing relationships with children and aging parents, including providing solutions for financial demands such as post-secondary education, long-term health care, and inheritances.

Dr. Coughlin believes the financial services industry is bound for disruption, because customers have fundamentally changed.With so much information at their fingertips, clients expect the retirement advice they receive to be more personal, relevant and realistic. “The vision isn’t what it used to be — the grand image of retiring on some Caribbean island for a lifetime. Now, clients are more likely to say, ‘Can you help me plan for at least one week of retirement on a Caribbean island in March every year?’”

According to Dr. Coughlin, many clients will want to know if they’ll simply be able to afford where they want to live. “They’re wondering, ‘Who’s going to help me with all the day-to-day, mundane things we call life, such as changing light bulbs, cleaning the house, and the like?’ These are not only instrumental activities of daily living; they have money and labour associated with them. The way we plan for these is the ‘new retirement.’”

Small steps first = more retirement confidence

Canadians need help to take the important first step of creating a plan to cover these matters. Sun Life Financial’s proprietary research shows that 78% don’t have a written financial plan, and many Canadians don’t feel they have the financial knowledge to be able to make a plan for their retirement. Fewer than half (47%) say they have the knowledge; the rest say they don’t (35%) or they don’t know (18%).³

Retirement planning is missing the point by telling clients, “I need you to save, plan, and tell me all the objectives you’re going to have in a life after work.” Dr. Coughlin says it’s like asking a 15-year-old what they’re going to be doing during their mid-life crisis!“By chunking it out into smaller pieces, we reduce stress, we increase engagement, and, at the end of the day, we get it done.”

Coughlin suggests finding “nudge points” or areas where clients are likely to be responsive to talking about their future. “It’s very difficult to have clients think about 30 or 40 years in the future, when in fact, most of us are having difficulty figuring out what we’re going to do 30 or 40 minutes from now.

“As people start to realize they’re going to live longer, the challenge for advisors is to answer the question, ‘How do you plan to help me live better?’”

What’s ice cream got to do with retirement planning?

One way to start clients thinking about how they’ll live better in retirement is to ask simple questions about their vision of their future.

Dr. Coughlin suggests asking, “Have you found your ice cream?” “Do you know what things keep you happy in life?” He says an important factor to consider in retirement — will clients have access to these joys? Ask:

• Do you know what makes you happy?
• Do you know where it is?
• Do you have the mobility to be able to get where that thing is?
• Do you have the money to be able to afford it?

Capturing the answers to those questions can create the foundation of a retirement and longevity plan. You’ll assist your clients in expressing their retirement dreams and, as they live longer, making realistic plans to reach that vision.

Resources to discuss longevity planning

• Work through the Retirement Lifestyle Quiz with clients.
• Access the Longevity Risk Illustrator tool, one of several tools and calculators on the Money for Life web app; now you don’t have to sign in to use them!
• Read the Longevity and value of advice discussion paper.
• Contact a member of your Wealth sales support team to learn more about longevity strategies.

You might also like…

• 3 ways to unleash the value of your trusted advice
• Have you had the conversation about lower RRIF withdrawal rates?
• Are you stress testing your clients’ financial plans?

Rocco Taglioni, Senior Vice-President, Head of Distribution, Individual Insurance and Wealth, is responsible for the overall leadership of Sun Life Financial’s distribution organizations across its Retail business in Canada. His role encompasses the leadership of the distribution company, as President Sun Life Financial Distributors Inc., as well as the Insurance and Wealth wholesaling sales organizations. Through the various leadership teams he oversees the development, direction, and execution of the Distribution strategies centered on wealth management, protection, retirement, and estate and financial planning.

Rocco holds a Bachelor of Arts in Economics from York University.