Editor’s note: Bryce Sanders is a longtime columnist with Rethinking65. Read more of his articles here.
Bryce Sanders
Life is like a pizza. It has eight slices. (Six larger slices if you buy a slice at Costco.) As a metaphor, each slice represents an aspect of your life. They might include career, marriage, health, family, home, personal finances and others, depending on your situation. You can deal with serious disruption in one segment if the others are stable. Put another way, if you open the box holding your eight-slice pizza and one slice falls cheese side down on the floor, you can cope with the loss because you have seven intact slices left.
How does this relate to clients contemplating major life changes? Your client can cope with major disruption in one segment if the other segments are solid and can provide support.
The client who loses their job can find support from their family, spouse and religious community. They conclude, “We can get through this.” Serious problems develop when your client loses their job and decides they are also going to file for divorce and sell the house. Too much is getting disrupted. They need stability to weather a major life change.
Suppose your client has decided 2025 is the year they will retire. You and they have worked shoulder to shoulder to achieve this goal. They know what they will be getting in regular income, like Social Security and annuity payments. They intend to draw on their retirement savings to cover the shortfall. Your client is also considering selling their house, downsizing and moving to Florida. They would be leaving their support network of friends behind and making new friends in Florida. What could possibly go wrong?
This is when you should proactively offer advice if your client don’t ask you for it first. Suggest that they approach the next chapter of their life in stages. For example, start with retiring and spending time at home. They have free time at last! They can get those household repairs done, the ones they have put on the back burner for 10 years. How are they coping after the first month or two? Are they bored? Are they thinking they miss work? Perhaps they can get part-time work as an industry consultant. This needs to be on their terms.
This would not be a wild departure from their financial plan for retirement. You have likely already brought it up. Retirement in the future might be funded through three income sources: payments like Social Security, income drawn from retirement assets and a “gig on the side” like consulting or working part time.
Ease Them into Retirement
Your client needs to get comfortable in their new retirement lifestyle. They need to learn what it actually costs to live a retired lifestyle. You have helped them plan in advance, but how often are they going out to lunch with friends? How much are they drinking? Where does vacation travel fit in? Do they prefer a monthly payment like a paycheck or are they OK with drawing on their retirement assets while keeping careful records?
After they are comfortable with their retirement lifestyle, they can consider selling the house and moving to Florida. Research by Zillow indicates selling a house is one of the most stressful things you can do; 36% of people cry, 20% did five or more times.
Or Advise Them on a New Career
What about other big changes in life? Your client might be considering leaving the corporate world and starting a business. This is a big step that must be approached with eyes wide open. The Bureau of Labor Statistics reports that 20% of new businesses fail in the first two years, 45% within five years and 65% in 10 years. However, many survive. Your client needs to get the right advice.
Starting a business can be defined in several ways. Yes, they can start from nothing and build it from the ground up. They might also buy into a franchise, like a fast-food chain. They might buy an established business from an owner considering retiring. You can help your client seek out the right advice to consider all their options.
A client who is not ready to retire may also be considering retooling for a second career. Say they are in sales but discovered they have a passion for numbers. They want to go back to school, earn an accounting degree, pass the CPA exam and become a certified public accountant. Choosing accounting as a second career is not as unusual as you might think. It’s also not unheard of to graduate law school in one’s 70s. And the average person will have 12 different jobs in their lifetime. I am guessing this includes staying in the same profession and changing employers.
Your client needs a plan. If they are going to change careers, they need to support themselves in the meantime. How will they do that? If they are getting divorced or were recently widowed, how have their needs and priorities shifted?
Part of your expertise in financial planning should be helping clients explore their options. There is an old saying, “Marry in haste, repent at leisure.” That is another major lifestyle change. Looking at that one can be left for another time.
Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor” is available on Amazon.
