Saturday, October 23, 2021

Retirees are the Sweet Spot for This 20-Something Advisor  

He finds most individuals enjoy working with a younger advisor, although there are some exceptions.

 When I entered the financial planning industry in 2016 as a 20-something, the conventional wisdom I heard was that my age would be a liability helping people who are close to retiring. Now, as a 27-year-old advisor who owns my own firm and specializes in helping retirees, I’ve found that line of thinking to be incorrect.

Most individuals I speak with enjoy working with a younger advisor. It’s comforting for them to know that I will be around for the duration of their retirement. They aren’t left wondering if their advisor will retire in 10 years and they will have to start over with an unfamiliar person. Many retirees fear cognitive decline as they age, and having their trusted advisor retire in the future scares them. They may be concerned about their future ability to accurately evaluate a new advisor.

Of course, there are folks who don’t want to work with a younger advisor — but one of the great benefits of this profession is that I don’t need to be the best fit for everyone.

Getting Started

I started out in the industry in a paraplanner position, assisting and learning from some great advisors. They were in their 30s and already had successful practices. This first made me realize that the commonly held belief that wisdom is a function of age doesn’t apply in all situations.

I then moved to another firm where I had a hybrid role as an advisor and paraplanner. I worked with clients of the firm, got involved in marketing efforts for prospective clients, and handled many financial planning tasks for clients of the firm. The majority of these clients were close to retirement, or in retirement. This allowed me to see hundreds of people’s situations across the retirement spectrum, which gave me, relatively quickly, a breath of knowledge about retirement issues.

I also was able to see some patterns among clients who were enjoying their retirement, and those who were not.  Money wasn’t usually a factor. Instead, the people who were enjoying their retirement typically were actively involved in their communities and hobbies. Those who didn’t seem to be enjoying their retirements typically didn’t do much except watch the markets and read the news.

During this time, I did encounter some situations where clients didn’t feel comfortable working with me because of my age. One client, when he learned that I would be the lead advisor for him moving forward, said, “I like you Larry, and you’re smart, but I want someone more experienced overseeing you.”

While I’ve had these types of situations occur, they are the exception instead of the rule.

A Difficult Lesson

This year, I start my own financial planning firm that’s focused solely on helping people close to retirement and in retirement. My father played a major role in why I choose to serve this client demographic.

In 2018, at 69-years-old, my father was in excellent health. He exercised daily, ate all the right foods, and, unlike many people his age, had no serious health issues. He therefore assumed he had a long retirement ahead of himself. Even though he could retire, he justified working a few extra years to “pad” the retirement fund.

Unfortunately, things didn’t turn out quite the way he anticipated.

That year, my father was diagnosed with pancreatic cancer, and he passed away just 20 months later. He was still working at the time of his diagnosis, and all of his future retirement plans vanished. He didn’t particularly enjoy his job, and would’ve retired the second he could if he had known how little time he had left.

“My father played a major role in why I choose to serve this client demographic … He didn’t particularly enjoy his job, and would’ve retired the second he could if he had known how little time he had left.”

Unfortunately, none of us know how much time we have left. Having seen what my family went through, I recognized the tremendous impact a knowable retirement planner can have on people’s lives. Retirement is a big transition, and it’s often a scary and confusing time for people. My dad had those feelings too. Leaving the relative comfort of what you know for the unknown is difficult.

Forging Better Communication

I believe the current way we communicate retirement projections to clients, with Monte Carlo percentages, is confusing. A more much helpful communication framework, in my opinion, is using guardrail retirement income strategies. Asset/liability matching frameworks can be wonderful tools as well. These methods are more easily digestible to clients. They also lead to more confidence — and better buy-in for the plan.

Being younger does come with its own challenges. Admittedly, I often can’t relate to a large portion of my clients’ previous experiences.

When I speak with people 30+ years older than me, they often make pop culture references about a time before I was born. These references go right over my head. We usually have a good laugh about it, and they often comment that it makes them feel like their age is showing. I usually respond by telling them how big of a nerd I am, and that cultural references from any point in time aren’t my forte.

While I may not be able to relate to some of my clients’ past experiences, I’ve found that isn’t a huge deal for them. What builds a relationship with most clients is being a good listener. I aim to try and do only 20% of the talking in most meetings. Asking good questions and shutting up doesn’t depend on your age, and most people respond well to that.

Additional Reading: Overcome Biases Young Advisors May Have About Old People

We’re All in it Together

During my five years in the financial planning industry, I’ve observed that many retiring clients go through the same issues while making this large transition in their life. I can speak to some of their current concerns, even if I’m a long way away from retiring myself. This evens the playing field between advisors of all ages, as we all can only share what we’ve seen others go through.

After all, even older advisors who are still working can’t personally relate to the day-to-day issues of retirement. Instead, we are all learning together how to best serve our clients.

Larry Pershing is the founder of Optimum Retirement Planning LLC. His firm specializes in helping people retire and stay retired. Larry has helped hundreds of retirees achieve their financial goals over his career. You can contact him at larry@optimumretirementplanning.com and learn more about his firm at www.optimumretirementplanning.com.

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