October 16, 2023

Helping high net worth clients create their retirement purpose plan

Mass-affluent individuals may have few financial concerns as they transition into retirement, but they frequently have concerns that have nothing to do with money.

That was the finding from a Northwestern Mutual study, “Planning for a Modern Retirement,” that showed retirees who work with a financial advisor are more likely to feel positive about their sense of purpose in retirement. The study revealed that mass-affluent individuals have become successful in their businesses and careers– only to find there is no “road map” for their purpose after retirement.

Among the findings:

66% of recent retirees who work with a financial advisor feel optimistic about their hobbies, passions and interests, compared to 53% of recent retirees who don’t work with a financial advisor.
70% of recent retirees who work with a financial advisor feel positive about their sense of purpose, compared to 64% of recent retirees who don’t work with a financial advisor.

Christina Collins is a Northwestern Mutual wealth management advisor in Chicago who works with clients to develop what she calls a “purpose plan” as she helps them to envision their post-employment years. She said high net worth clients have a unique set of challenges in preparing for retirement, and those challenges have little to do with money.

“I find that a lot of high net worth individuals have been in very demanding careers,” she said. “They have found those careers to be quite fulfilling and they certainly have enjoyed the challenge of them. But it’s a significant loss to give that up. Some clients can even grieve over the loss of the thrill and challenge of their professional endeavors. And people who have been that engaged with their work over the years have not always had the time or energy to build or strengthen relationships outside of the work environment or to explore hobbies and interests beyond work to the same extent that someone else might have done. All these things can make the transition to retirement psychologically challenging, and the stress of that transition can be physically challenging as well.”

Collins begins the retirement discussion with high net worth clients by asking them to think three years in advance.

“I want them to get as crystal clear as they possibly can about what is important to them, what will be meaningful to them, in a three-year window of time. So I will ask them, ‘Tell me, if we were sitting here three years from today, what would have had to happen in your life for you to be satisfied with the progress that you’ve made?’”

Collins said that by asking that open-ended question, clients are free to brainstorm with their partners about their retirement vision.

“I’m there as a neutral third party to help facilitate the dialogue. And some couples are very much on the same page. They are very clear about what’s important to them. They have a very specific vision as a couple. But sometimes couples never really talked about this before. And they’re sort of thinking about it as we discuss it. Sometimes, one person is clear about specific goals, the other one who has been more engaged professionally is less clear about their goals. So it’s a healthy discussion.”

After Collins and her clients talk about the three-year vision, she asks them what challenges they need to overcome to make that vision a reality.

“I want to know what obstacles might get in the way so I can help them think through what to do about them and how to manage them,” she said. “Sometimes there are things we can’t control, but we still can think about planning around them.”

Next, Collins asks her clients what they perceive as their strengths, to help support them in achieving their vision.

“I want to end with a positive piece, because I don’t want to get too wrapped up in focusing on the challenges and the obstacles,” she said. “I want to acknowledge those, and I want my clients to know what they are. But I also want to acknowledge and respect the strengths that will help my clients achieve their vision.”

After the discussion is over, Collins creates and gives to clients a document that summarizes what clients discussed.

“I do this along with doing the financial planning piece, which is part of the broader discussion,” she said. “I’ll pull all of it together and say, ‘These are the things you say are a priority for you. This is how we’re going to get the cash to support those goals and endeavors.’ And then I build the financial plan to support that, so they have the confidence to move forward and pursue those goals.”

The entire retirement purpose plan takes about three months to complete, Collins said.

Advisors who want to help high net worth clients find their retirement purpose must first recognize that retirement is not always good news for a client, she said.

“There is a loss,” she said. “There is a loss of professional stimulation, there can be a loss of friendships and business relationships that have been meaningful. It’s important to talk with clients candidly and honestly about that, and even give them a safe space where they can express that.”

Collins also said she tries not to ask clients what she calls “questions with a question mark at the end.”

“I like to say things that are open ended and a little less confrontational,” she said. “I believe that the sound of a question mark – asking question after question of someone – feels aggressive. It seems as though we’re coming after them and it’s an attack.

“I want clients to relax and think about things on a deeper level. So It’s important to make a statement as opposed to asking a question. For example, I’ll say, ‘Tell me about …, ‘ or ‘I’m curious about …,’ instead of something that has a question mark at the end.”

Collins advised financial professionals to discuss what activities would interest their clients during retirement.

“Will they do something else from a professional standpoint, such as consulting or teaching? Will they start a little business that they’ve always dreamed about? Do they want to serve on some boards? Do they have some charitable interests they want to explore? Do they want to focus on their relationships and their physical health?”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents’ association and was an award-winning newspaper reporter and editor. Contact her at Susan.Rupe@innfeedback.com. Follow her on Twitter @INNsusan.