The New Retirement Income Guide: The Journey to Family Financial Wellness

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  • 56 mins 24 secs
Today in America, 10,000 people turn 65 every day. That number will peak at 12,000 per day by 2024. As Baby Boomers reach the traditional retirement age, their path has been anything but traditional, and the advice they are seeking is taking on a completely different focus, forcing top financial professionals to adapt as well so that they can guide clients toward the secure retirement they want.

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Jenna Dagenhart: Hello and welcome to this exclusive masterclass with the Alliance for Lifetime Income. As we lay out the new retirement income guide, we'll also be sharing some insightful clips to help drive home some of the points we're discussing. The Alliance for Lifetime Income is rich in consumer research on how Americans think or feel and talk about saving for retirement. Alliance Senior Education Advisors, Mike Harris and Steve Gresham, have analyzed the data to layout a path for financial professionals, to have more successful conversations and guide their clients, so that they can enjoy the retirement they want. Mike, Steve, it's great to have you with us.

Mike Harris: Thanks. Good to be here.

Steve Gresham: Great. Great to see you.

Jenna Dagenhart: I'm going to start by putting you on the spot here. I know you're both overqualified to be speaking on this panel. So, why don't you share a little bit more about your backgrounds for our viewers?

Mike Harris: Steve, take off, I'll let you go first.

Steve Gresham: Yeah, that must mean I must be the oldest. So, my entire life has been working with advisors, being an advisor, working with clients. And over the years, in asset management and wealth management. More recently, before I joined the Alliance, I managed the retail and client strategy at Fidelity Investments for nine years, instead of the private client group.

Mike Harris: And I don't think it's because you're the oldest. I think, I want to go last because I'm the prettiest of the two. That's my take before beauty, and now, they say. So, again, I'm Mike Harris. I've been in the industry probably 35 years, close to 35 years, retired from one of the larger insurance companies in the business. Over that time, I've managed to accumulate my CFP, my CHFC, my CLU, a couple other certifications as well. So, that means, I've spent a lot of time reading books. And a lot of different positions, Director of Life Marketing. I've wholesaled. I've managed wholesalers in the last few years, probably a dozen years or so. I ran the Advanced Solutions Group for like, until I retired. And I was retired halfway for about a year, and I joined the Alliance to be part of this organization about three years ago.

Jenna Dagenhart: Well, I apologize, I asked the wrong question there. I should have asked, what haven't you done? But, thank you both very much for those introductions. And now, to help set the tone for our discussion about the retirement landscape, here's one of the clips that I mentioned that the Alliance has done with financial professionals.

Speaker 4: Retirement planning is changing, is no longer an age. It's about your next phase in life, is no longer winding down to relax. It's about what can I do in that next phase of life? Is enjoyment. Not punching a clock. It's just really about how can I start something that I have a passion for? It's a new purpose.

Jenna Dagenhart: Yeah. So, this video tells me that the retirement as we know it, is changing. People aren't necessarily taking the gold watch and heading to the golf course. How would you say the landscape is evolving? Mike, why don't you kick us off?

Mike Harris: Well, if you stop thinking about it, I'm one of those individuals. I spent 30 years in the business, doing a lot of different things, and decided it was time to retire, and went on my way, and was all set up to enjoy myself playing golf and just relaxing, doing the things that were... I found enjoyable. And after about a year, I found out that there was more to it than that, and that I missed certain things being engaged, being active, doing things, working in industry. I really truly had a passion for. And so, here I am today. But we're seeing that across the board, people are wanting to do more. As Blanchard mentioned there in that clip, people want to have a purpose in life. And that's a big thing. You might not think of it is, but that's a huge thing for people, doing something that keeps them going every day. And a lot of that then falls into the retirement planning side of this business as well is, it used to be always worried about, "Do I have enough money?" That's what retirement planning is all about, getting enough assets stored up for retirement. But then, you go into income planning, which is a subset of retirement planning. And you ask them questions, like, how much money or how much income will I have? Or how long will it last? Where's it going to come from? Things of that nature. It really takes on a perspective of a more holistic perspective of what I call financial wellness, and that includes a lot of things other than just about money. And that's where a lot of the big change just coming from. Steve did a lot of work with that area. So, I'd like to hear what Steve has to say about that as well.

Steve Gresham: Sure. So, it's not a gold watch that you get anymore. It's an Apple watch, and it's got a fitness app on it and the Sudoku puzzle, probably because this is the generation that has been, frankly, quite selfish and interested in what it can do. This is the baby boom generation. Median age of that generation is now 65. So, we're right at that inflection point for the entire cohort. And it's the biggest group of people in the country. So, they've got a very well-documented history of being able to do things differently from their parents, and move away from that your shared sacrifice that is where my parents came from, born in the Great Depression, and all pulling together to win the Second World War. And after that, talk about a relief coming from the pandemic. What about a relief coming from those years of self-sacrifice? So, the new retirees are showing the boomers, what you can do when you have bit in your teeth, and you're ready to go. And so, they're going to be so many individual interpretations of that. It's the pure individuality, the randomness of it that advisors have to be looking for, because that's the objective. Financial wellness can be your peace of mind, for sure, for a lot of people. But it's also for a lot of people, it's a sense of accomplishment, achievement, and a sense of adventure.

Jenna Dagenhart: Yeah, and I'm always from retirement, I have to admit. But I'm also on the Apple watch train, Steve.

Steve Gresham: Well, you do it reluctantly because now, you talk to people that are in your 60s, in my neighborhood 70s, 80s, what's the first thing they asked each other when they see each other? They say, "How many steps did you get into that?"

Jenna Dagenhart: Yeah, definitely seeing some consumer shifts. And in addition to the changing retirement landscape, or perhaps because of it, client expectations are changing as well. I know the Alliance for Lifetime Income has done a considerable amount of research on consumers and/or approaching the traditional retirement age, what are you finding?

Steve Gresham: I think one of the things we'll be starting with... Michael, will add the more important stuff. One of the things I think is mostly interesting that the Alliance has done is to help people get a better sense of who they are. So, anyone who's embarking upon retirement is doing so for the first time, by definition, right?  And so, it's a new adventure. They may be influenced by what they saw in your family, and perhaps older friends, and they see what the potential it could be. And that's sometimes for some people creates more angst and anxiety than it does create opportunity. I think about my own parents, when they retired, my mother had a plan. She'd been working on that plan for a long time. My father had been working for a long time in a more traditional household at that time. And so, he didn't really have a plan, because his work was kind of who he was. And so, my mother entered retirement and flourish. My father entered retirement, and got bored, and was unhappy, a good portion of the time. So, what we've seen a lot in this research done especially with the consumer is, to understand the consumer's values, where are they coming from, what's important to them?And the thing it stands out for me, Mike, is the kind of the challenge of being able to satisfy most people's need for security, which is really, really important, especially if you're not drawing an active paycheck from a job anymore, the security, but then also wanting to be independent and have some adventure. And that's... It's tough sometimes, to pull off those two.

Mike Harris: Absolutely, Steve. I mean, when you start thinking about the aspects are real tactical piece of retirement income planning, and that's where it's... Everybody's got to go that way because everything we accumulate over our lifetime is going to get spent somewhere by you or by your kids, somebody is going to spend it. And when you think about, like you've mentioned, being able to be secured, and being able to be safe in your retirement, feel that financial security, and having the emotions met. We'll talk about more about that later. But, of being optimistic about the future. And that's what do people want. I mean, they don't want to sit in the shadows and be afraid of what's coming around the corner. And they want to make smart and responsible decisions. And that's what this is all about is, helping people get there. And the thing is, what's kind of sad is, COVID changed a lot of that for a lot of people. I mean, there was a lot of people that are now out of work. And basically, what we will call, retired. Not because of their own choices, right?  So, that puts a modicum of fear into people and insecurity into what's going to happen in the future. And then, a lot of people that just I think is around 50% of people that have been retired or retiring, not because they necessarily want to, like I said, because they've had to. And now, all of a sudden what happens, they start claiming Social Security early in life. And I mean, wow, things just kind of snowball on you. And that's where a good financial professional, the value that they can provide, helping people make those smart and responsible decisions, and figuring out what's right for them is critical. And that's what we're always telling people, you need to seek the help of a financial professional. This is too important of an undertaking to try to do yourself because you watch, read Money Magazine, or watch the guys on television. There's a lot to it. And that's where the help comes in. And if you do it right, it can be a great life. If you do it wrong, or sometimes, just no coming back. I mean, you've just got to make ugly decisions down the road. And that's not what you want to do. You want to lead a full life and retirement period.

Steve Gresham: Yeah. So, let me just... If I can add something to that. One of the things that we see more anecdotally, probably because it's a little bit hard to pull out in research. One of the things we see is financial advisors kind of anecdotal evidence, that a lot of clients don't see them as retirement advisors. They see them as someone who helped them accumulate assets over time, help them invest. The last 12 years has given an awful lot of advisors, a pretty good looking resume, because they've had good bond markets and stock markets to choose from, and everything has done great.So, if you've been compounding your accounts and 14% a year over the last 12 years, everybody looks smart, and it's confident. Until you hit this brick wall of health issues or concerns about your longevity, or you have to start making some actual real decisions, like the one that bedevils a lot of people, which is the selection of your best choice for Medicare. And so, even if you know an awful lot about finance, you might wonder exactly, what's the right thing to do there? Because, again, it's uncharted water. So, my point being that, the financial advisor that may be working with the client today, if they are not talking about these topics proactively, bringing them up, the client is quite likely to believe that the advisor may not be interested.  And the other thing that we're seeing an awful lot of is, advisors, who are the age contemporaries of their clients. And if those advisors start rolling off and racing the clients through the retirement finish line, the clients start to wonder, "Well, who's going to be with me now? We put in all this time to get here, but now I'm alone." So, lots and lots of opportunity for advisors.

Mike Harris: Right. Absolutely. And as you were mentioning, Steve, a lot of advisors, over the last dozen years, the market has been on a tear. I think the stats are about 30% of all the financial professionals in the business now have come in since the 2008, 2009. So, they've never really seen ugly. I mean, they may have seen a thousand point drop, but they have never witnessed that 30%, 35% market correction. And that, I'll tell you, that will put a lot of people under their desk, thinking about what's going on.

Steve Gresham: Well, we're old enough to have seen an awful lot of people try to hide under their desk over the years. So, it is what happens. But again, this time, if you say it's different, why would it be different? One of the reasons why these bull markets create such difficulty is that, they tend to give a feeling of confidence to the investor.  And so, it could be ironically, when somebody started out with an advisor, or two or three, back 10 or 12 years ago, right after the turn of the financial crisis. And it could be that today, they have said, "Well over the past 10 or 12 years, I've done pretty well on my own. And so, do I really even need an advisor?" And so, I think that's some of the most important work that the Alliance has done. Mike is to talk to advisors and clients about the importance of that advisor, endorsing that role, because this is the time where you need one, and you may not have up until now.

Mike Harris: Absolutely. And it's not always the balance sheet. That should be the driving indicator from a client of, do they need a financial professional? Because as we mentioned earlier, financial wellness really goes long beyond just the balance sheet.

Steve Gresham: Mm-hmm (affirmative)

Jenna Dagenhart: Yeah. And whether it's the financial professional or someone working with one, they might have never experienced a major downturn as you mentioned. There is so much or uncertainty with markets and just with retirement in general. So, turning to dealing with uncertainty, let's take a look at this next clip.

Speaker 5: I will say that, oftentimes, we have a misnomer. We think that life will become easier or more forgiving, and life doesn't become easier, more forgiving. We simply become stronger and more resilient.  So, as things happen, and they will continue to happen. My clients know that I'm going to be there whether good or bad to help them navigate this time, right? And so, character is everything. Character is how you act in the face of adversity, right? I'm sure your financial advisor will call you when the markets up 20%, 30%. But when the market goes down 20%, 30%, are they going to call you? Or moreover, they're going to answer your call.

Jenna Dagenhart: This clip really illustrates the expanded role financial professionals are taking on. What he's referring to is, more than just emailed were poured out on earnings or losses each quarter, could you talk a little bit about that expanded role of advisors?

Mike Harris: Steve, go ahead and take off on that one. And I'll jump in.

Steve Gresham: Yeah. So, I guess the place I would start with that is, first that what if the market didn't go down? They do go down. I've got significant personal history that reminds me that they do, so as Mike. And so, the clip is the advisors, I think in the clip is right on about, what will you say?  Now, first thing is to make sure you say something, of course. And do you have plans for that? Because a lot of what I think is going on with this new role is, I would say, it's a couple of different words. One word I would use is responsiveness, which is that responsiveness of advisors to situations is something you have to plan in advance.  The idea of something like a market drop took place... Let's just think about that for a minute. Let's say you had 150 client households in your practice as a financial professional, and the market went down a bunch, how would you communicate your opinion about that if you were going to reduce any of the anxiety that they might feel? I mean, how would you communicate quickly with 150 people, without them thinking that you were being less than personal? If it was, let's say an email... Let's say worse, it was a blast email. Let's say even worse, it was a blast email without the person's name on it.  And so, do you want to do that? Or do you want to talk to them in person? Well, sit down and think about how long it would take to have a 10-minute telephone call with 150 different households. So, you have to plan for all these things, because they are expected, they will happen. And when you take it away from the single event, now, you've got more understandable things that clients know, may happen to them.  And so, what will your response be at that point? So, the responsiveness is a function of preparation, most clients will suffer some kind of medical issue or a health cost issue, or a big health decision issue. And so, what's the way to mobilize around them? People after the pandemic, no matter what age they are, a lot of them got divorced, even though they were older, that's not unexpected.  So, there should be a plan for that. And so, again, the role expands, but the role is expanding into areas that can be forecast pretty easily and prepared for. But I think responsiveness is just such an incredible important issue, simply because responsiveness is being taught to clients. Their expectations are being set by all other kinds of consumer facing industries. And this one is going to have to play in that same area.

Mike Harris: Oh, absolutely. I can remember during the 2008, 2009 being in an office of a major wire firm and being able to look at two advisors sitting in offices right next to each other at the same time. One's elbow is on the desk, with his head in his hands, and the other one's on the phone, just dial in and talking. And one guy says, it's the worst time I've ever seen. The other guy says, it's the best time I've ever seen to talk to clients.  So, it's like, which is your glass half full or half empty? And what are you saying, the guy that's happy is like, this is a great time to reach out to your clients. Talk to him about what's going on, what are their needs, what are their concerns, how are they feeling? I mean, our job as financial professionals, a lot of times is being the psychologists or the psychiatrist, and keeping people seated on the train, while it's still moving, and getting them in the right frame of mind, so they can make, like I said, I've said it before, smart and responsible decisions.  And the people that don't do that are the ones that are going to wind up seeing clients consolidate to other financial professionals because as a retiree, as somebody who has been in the business, I have a couple different advisor or financial professionals that I use, and I expect them to call me, and I expect them to stay in touch.  And if they're going to leave it up to me, and I've got to call them, they're not doing their job. They're not servicing me properly. And that comes from somebody who has done it. So, that's part of the business. Those that can get used to it, there's a good path ahead, and those that can't, they're going to have a rougher road to owe.

Jenna Dagenhart: And of course, security is extremely important to people approaching retirement or in retirement. But has some of your research indicates, it's even more important than some financial professionals might think?

Steve Gresham: Well, sure. And I think there's a couple of different reasons, because it's not just about older people, by the way, who are at the cusp of retirement. It's also about younger people who are looking at the uncertainty of long lives, and also, frankly, looking at retirement through the eyes of parents and grandparents.  So, in the Alliance's work, we've certainly been able to stake out a claim around the value along the way of security. And that being a trade off against freedom and independence and all that, but these are baby boomers, they want it both ways. But then again, all consumers especially and I think in response to the pandemic, and some of the uncertainty there have now thought much more seriously about having a layer of security.  Again, we're not always saying that you give up an investment portfolio, it is really about being able to balance. But when 9 out of 10 of the respondents in the survey, consumers say that they would like some kind of guaranteed income, that's the signal we can't ignore. And again, it is also not just about older people, but also younger people who are saying, "Well, could I have some measure of guarantee along the way?"  And then, when you think back, as Mike and I will be able to tell you pretty confidently that in the old days, you would have said, "Well, of course, I'd like to invest in the stock market for growth, but then I'd like to invest in something else that would be guaranteed." And in our day, there was the introduction by the US government of zero coupon bonds that were giving a measure of protection, and an awful lot of people bought that security right alongside the growth.

Jenna Dagenhart: Yeah, absolutely. And what you just said, Mike, kind of reminds me of the role of a doctor as well. We go to the doctor, when things aren't right normally. We don't go when we're in tiptop, a 100% healthy. So, why would you expect your financial advisor to only help you when everything's perfect and sunny outside?

Mike Harris: Oh, absolutely. I mean, what is perfect, nice and sunny out, I don't need the call, I don't need a howdy hi, and how you doing? It's when things get really kind of gritty is when you need somebody to call and say, "You know, this is what's going on. But we're set up for it, you're in good shape, we've taken this into consideration, you can still feel safe, you can still feel secure."  And they just want to know that they're going to be able to get where they want to go, get what they value in that financial security world, and that is being able to lead a full life. That's what it's all about. Regardless of when you retire, how long you work, what you do. That's the whole thing in a nutshell is, that full life in retirement.

Steve Gresham: Yeah, and that's why this comparison about the market going down and your response to it, why this is so important. Because as Mike said, just imagine that scene as he's looking at those two different financial professionals sitting at the desk, one of them in despair, and one of them elated. So, it really isn't much different when you start thinking about where the clients are. Clients turn it around.  So, if you're a left brain analytical, confident investment professional, and you say, "Well, market corrections are just part of life, they happen. And so, we're going to stay the course, we're going to do this, and we're going to be great." That's what the professionals says. The client is sitting on the other end of that looking at the drop in the account value. And the drop in account value to most clients means that they can no longer possibly do something that they had planned on with that money.  And so, it isn't that they have no appreciation for the long-term nature of capital markets theory and all that. And intellectually, it makes sense that if the account will bounce back. But what they immediately transfer, and that I can possibly no longer do this thing that I had been saving and investing to do. Then, that's a problem.

Mike Harris: Right. Absolutely. I mean, if you really stop to think about it, people equate assets to income, and the income provides the lifestyle. And they know that if assets go down, the income usually goes down. And when the income goes down, they've got to make an ugly decision of what part of their lifestyle they might have to give up.  And once you're there, you don't want to give up anything. You don't, believe me? You want more. I mean, that's the fun. Nobody wants to think about, "Well, I just won't golf anymore. I won't travel and see the kids, or I won't go on those vacations." That's not a fun conversation to have with a client.

Jenna Dagenhart: And that's where the emotion comes in as well.

Mike Harris: Absolutely. It's all... Everything we do, I mean, the old saying is, we persuade through reason, but we motivate through emotion. And it's the emotions that set the stage and drive everything. And what we're doing when we're talking to people is trying to cut through what I call the unconscious emotional defenses. And its people don't realize they're there, but they are. And so, we need to basically touch those, and make sure that we're calming those down a little bit, or getting them out of the way, so that people aren't dwelling on it. They're not dwelling on it necessarily on purpose. That's why they're unconscious defenses. And that can be done. I mean, and we know how to do that. And it's just being human and caring about your clients.

Jenna Dagenhart: Mm-hmm (affirmative).

Steve Gresham: It does not come naturally to everybody. And one of the criticisms that we continue to hear is that of investment professional, financial professional, who has been investing and done a good job. And they're surprised from time to time when they lose a client. And if you go back in, take a look and see what was going on. An awful lot of the time, it is that there was no real connection there.  And I don't mean to make it sound like it's all about relationships and hokey and all that. But if you are teetering on the brink of retirement, and you've got still a couple of aging parents around, maybe some adult children who didn't get through the pandemic part as well with your jobs, you're now taking your family into retirement. So, when there's a family, I think the catch word for families and emotion, because maybe it's the time that you spend together, but you know that you're going to have to accommodate different kinds of characters in a family, especially if it's got three generations, different priorities, different anxieties, different stuff that they need to do, want to do. And being able to get them all talking and working together, that is an act that requires emotion. And so, emotionally intelligence, empathy. There's an old saying, again, you get old sayings from people who been hanging around for a long time, like Mike and me. But there was an old study that was done in the Harvard Business Review about who are the most successful salespeople. Now, we're all in sales, in some level. No matter what you do, and as an advisor, you are just because you've got to portray a concept and have somebody buy it. That's called sales. The two characteristics of most successful salespeople were ego, and empathy. Empathy in the positive way, which is I understand where you're coming from, and I know how to do something about it.  Ego says, I can do something about it. It's not the egotistical ego. It is the confidence ego. And that's where the good financial professional makes that pivot. Again, in this expanded role, is it different from what they've been doing? It doesn't have to be. But for an awful lot of people, it will be.

Jenna Dagenhart: Yeah, that's a really good point. And as the financial professional, you're oftentimes selling people on concepts that maybe seem scary to them, but really are best for them in the long run, best for their families, best for their lifestyles.

Steve Gresham: Yeah. If we take your analogy, Jenna, what you had said before, with the medical profession, this is an absolute carbon copy. So, if you had bad news from a doctor, and let's hope none of us does. But when you get bad news from a doctor, you don't expect to see the doctor break out into tears, or B, or even go to the other end of the spectrum, you'd be dismissive and say, "Well, we see this all the time." Well, yeah, but it's really bad. Yeah, I know. But we see it all the time. I mean, that doesn't really help you either, right?  And that's a little bit of that capital market's theory coming in to say, "Don't worry about this. It's just the down market." You say, "Okay, but that's a spot on my lung. Oh, well, yeah, we see this all the time." So, again, it's the analogy is there for a reason is to put into maybe brought in... Maybe, more harsh light, something that unfortunately, too many people take for granted out of familiarity.

Mike Harris: Mm-hmm (affirmative).

Jenna Dagenhart: Mm-hmm (affirmative). And the clip mentioned, not just calling clients when markets are up, but also when they take a dive as we've been discussing, advisors receive hard questions from clients all the time, questions like how much will I need to retire? Or can I stay in my house? This really just seems like a much broader role than just financial advice as we've been talking about, how can advisors succeed in this expanded role? I mean, we know it's expanded, but how can they do a good job?

Mike Harris: Well, I'll tell you, one thing is, this is not an easy job. If it was easy, there'll be a lot of more people doing it. I mean, when you're dealing with somebody, first of all, dealing with money, that they've worked their entire life to accumulate. So, that has a value to them, not in necessarily just in the asset itself, the dollar figure, but what it's going to provide for them? What it's going to allow them to do going for? Because that asset has to generate that income.  And so, how do you, as an advisor take that into consideration? That's one thing. But then, you'd mentioned, what about the person that wants to know, "Am I going to be able to stay in my house? I want to live, maintain my personal dignity, I don't have to move into my children? Or what's going to happen when I can't drive anymore?" Or whatever it is.  These are questions that don't... Aren't necessarily wrapped up in how much growth have I got this year in my mutual fund or my manage money account? That's kind of, to the side of that question, they need someone there to help them figure that out. And to say, "Look, we'll work on it. I understand where you're coming from." But again, that's the emotional side of it as well. But they want to know that people are there to help. And if you want really as a financial professional, take on and it feels like we're talking about this holistic planning. Well, it is kind of holistic, but I call it financial wellness, because even if I want to stay in my house, that generates a need for income, or what happens when if a spouse goes in to a long-term care facility? Well, hopefully, you've planned for that. But there's other expenses, that people don't necessarily think about. Let's say the husband goes in, well, if he was the person mowing the grass, or cleaning the gutters, or doing that, and you've got to replace that cost, that's over and above what you're going to have to pay. So, those kinds of things people don't necessarily think about. That's the role of a financial professional going forward. And for those that can navigate those waters, and understand it, the future looks good to them, and they will be the acquire, they will be that person standing through the consolidation. And when clients will, I mean, the stats were I think, years ago that people on average have three or four financial advisors. Now, one may or financial professionals, I call them advisors. Maybe, once their brother, or their butcher or somebody, but they're listening to somebody. But when it comes to retirement, and then income planning, they have a tendency to consolidate to one because that's what they're looking for. I think our statistics tell us that people would love to have a more consolidated approach to their overall total financial wellness. And if you could give them a tool on their Apple watch that can help them track that, they would love it. And so... But right now, that's not there. So, as the financial professional choice, you've got to be able to deliver that for them.

Jenna Dagenhart: Yeah, and to your point about the unexpected expenses, those are oftentimes the ones that really get you.

Mike Harris: Oh, absolutely. Well, they're the ones that sneak up on you, because you don't think about it. I mean, nobody wants to go to bed at night, thinking about, "Oh, my gosh, what's going to happen if I go to..." That's not... That'll help lead you to an early grave early, faster, worry as a killer. So, you want to live in the today, and in the now, and enjoy it. And that's part of life. But somebody has to be there when the question arises to help people out. And that's why we're always, like I said, always telling people, you need to seek out professional help. You can't do it yourself. There's no do overs in this. Once you're gone, once it's done, and you're down that path, there may not be any coming back. And that's not fun. If you've ever had to talk to clients that were there, it's not a fun conversation.

Steve Gresham: Yeah, but this, of course, as we both are saying, this is where the added value comes from. And this is where you get bluntly, this is where you get value in pricing power isn't as a good advisor. Because again, just like a really good medical professional, a good financial advisor or financial professional is going to ask questions of the client that the client hadn't thought of. And so, when you are asking somebody in the medical world, and you're trying to get a better handle on your health, that person may ask you a question about something about, well, have you ever felt this pain before or this or this or this? Well, that could be an indication of something else. Well, that's what you're paying for, right? And so, financial professionals today have so many things to choose from. They have so many ideas. They've got so much experience. There's so much information that we try to share with the Alliance, about what advisors are doing with clients. There should be those cases out there that you become really comfortable and being able to portray back to the client. Everybody learns more when you tell a story, tell a story about a client. So, unexpected costs in retirement. It could be that that aging parents of yours does not have the cash you thought they did. Because in their generation, they don't share that information as readily as you might, as a baby boomer. It could be that a child of yours gets in trouble. It could be that, well, it could be a parent and he also gets in trouble as well, right? So, but it could be any of those things. And, but you know those. So, as a financial professional, you can be talking about things. Well, what if your house were to need a new roof? What if your condo association dues went up an extraordinary amount? I got news for you, if you didn't guess already, you live in a tall building, that's a condo anywhere near water, there could be a lot of conversations that are going to be going on. And some of those assessments could be significant. And a lot of people will tell you that that was an unexpected expense. Your sister runs out of money and shows up at the doorstep one day, you thought she was doing okay. And now, she's 65 years old and doesn't have a job. Now, what? So, a lot of things can happen. The advisors and the professionals add a lot of benefits, and a lot of that value to those clients, when you start bringing that stuff up that you might not have thought. So, a lot of this conversation that we've been talking about bounces back and forth about the issues of retirement. But that's also the experience of the retirees. And so, traveling around the country, at least virtually for the past year and a half or so, probably, again, augmented by the impact of the pandemic. There is definitely the sense of opportunity, and you get that in a couple of ways. If these issues of longevity are so important, these basic questions that people are asking, if those are so difficult for advisors to answer, then it stands to reason that advisors can spend a little time having better answers, or at least being able to provoke those questions. They're going to get a lot more attention. That's opportunity. It's a big opportunity. Basically, what we look at today is that the average advisor in the average book, across the average clientele is holding about 50% of the client's total assets. And we've talked a little bit about that and why that's important, and the consolidation potential. But there's another kind of a darker side to it, which is, if half of those assets are being held someplace else, they're being held by other firms that actually think that that same client of yours is a client of theirs. And so, there's a gravitational pull there that can pull that client away, just as easily as if you have this half on your side or less. So, we're seeing an awful lot of that challenge, that if we don't engage on these topics that are so important to the client, that opens the door for other people. And so, it could be that you could lose all of the assets because somebody else bids you to it, this conversation. Or it could be that you're the one that bids them to it, and you double the money. So, with a trade between zero and doubling the money, let's go for doubling the money.

Jenna Dagenhart: Yeah, and whether you're a financial or a medical professional, you know those what ifs. But knowing them is one thing and communicating them is another and that's also critical, which leads us into our next and final topic, the new retirement income guide. Here's one final clip on that.

Speaker 6: So, if you're worried about your retirement money working out, you're not alone. This is a concern, of course, that we hear all the time. And so, it's our job to make sure that we communicate to the client, what the expectations are long-term, and then what the client's role and is it? They're part of the equation here. So, if you tell me that your monthly budget is $3,000 and I find that you're spending $5,000, every month, that's where we might have a little bit of a mismatch, and we would need to rework the plan in that case. But communication is definitely the key.

Jenna Dagenhart: Yeah, that's an excellent point about communication there. But in the end, financial advice is a service industry. How are successful financial professionals approaching sticky situations like keeping to a budget with their clients, without hurting the relationship or saying, "Hey, you got to be prepared for your roof replacement or your condo dues?" Who knows?

Mike Harris: Well, one thing that we've done the Alliance's kind of break down... I should say like this, when you're thinking and individual consumer, thinking about income planning for retirement, you need to have a strategy for income plan. Income planning just isn't saying, "Okay, I've got a million dollars and I can take 4% or 3.5% off of that, I'll be fine." That that is not income playing. That's just kind of... It is, what it is. It's just pick a number and we'll go with it, right? And because that's all... That's changed over the years. The old 4% rule went to 3.5%. And now, 3%. And some people say it's now about 2%, 0.75%. We don't know. I mean, that's just kind of what it is. But when we think about creating an income hierarchy for people and getting them engaged, so that they know that certain expenses and what they have to work with, and we have on our website, We have an income hierarchy sheet, worksheet that is that financial professionals can use with consumers. That lays out, basically, it's very simple, but it shows you... It's like a pyramid. That the needs are on the bottom. Those are your... The things you can't do without your expenses, that you've got to have, your clothing, food, and shelter and Medicaid, the health care and transportation. Things that even as long as they're paid for, you could probably survive. It might not be a full life in retirement, but it's not going to be better living under our bridge, and eating dandelions, and things of that nature.  So, what we try to do is get people to realize where's... Are those needs met? And usually, they're filled up with Social Security, pensions, and annuities, because what we want is guaranteed or protected income to make sure no matter what happens, no matter how much the market goes up or down, that those needs are met. And that's a slice of a diversified portfolio. Well, with pension is going away. I mean, that's kind of a rare thing anymore and find people that have a pension. If they do, they're older like I am and retired. Newer people entering the workforce, that's just not available to them. So, now, they get Social Security. So, when you think about Social Security, when it was designed, it was really only designed to meet about 40% of your preretirement income once you've retired. As I mentioned earlier, now, you got all these people yet, like 40% of the people that are retiring are claiming at age 62. They're taking a 30% cut in that. So, now, that protected income is down about 28% of coverage of your needs. Well, how do you make that up? How do you make sure that those needs are met? Well, that's the first thing to do. Then, we move up the hierarchy to what we call probable income. Probable incomes, income that can change, it's going to be around. Bonds can be income from your managed money, or mutual funds, or stocks or whatever it may be. But that can fluctuate. That's where we have room to move, right? And then, the very top, you got the wishes, and wishes are the things that would really... If everything went extremely well, the trip, the lifetime trip around the world, or giving money to a school, the church or charities or whatever it is. But create a hierarchy, an income plan that consumers or clients can engage with. And that's what this tool is designed, is to get them engaged because as was shown on the video clip, as a financial professional, you don't want to say and tell people, "Okay, well, your expenses, according to what we've discussed, is $3,000 a month," and you find out that all sudden, they're spending $5,000 or $6,000.  Well, something wasn't accounted for, or either the client just took... Decided to really go crazy, or they didn't tell the truth in the first place. So, that's what all these tools are designed to do is, help engage the client in a deeper conversation, make the conversation more meaningful, relate and better drive the client and the financial professional closer together in an understanding of what's going to happen. And one nice thing about that is, if you ask, yeah, somebody that's retired, somebody my age, I'm almost 70 years old. What's important to you in retirement? I'll give you a couple answers. I'll say, "Oh, my grandchild, my granddaughter, she's important. I'd like to travel. I'll give you three or four.This has about 60 different things on there that we call, thought joggers. That you can go in and just makes people think about... I never thought of that. Maybe, I want to do that. But where does it go? Where does it get plugged in? Because maybe that Country Club, your golf club is a necessity to you. It's a must have. Then, we have to account for that. We have to put that in the right box. These are the kinds of things that they're talking about here is, how do you make sure that you've built a plan, that you can always come back to, I call it the bedrock, so that when they do all of a sudden go a little nutty and start spending more than they should. You can always have something to go back and review and pull them back, and say, "No, wait a minute, that's not what we talked about earlier. Your handwriting, and this is what you said." To bring them back to what I call the level set. So, those tools were all out there on our website, but it's back again to communicate, to making sure that we touch the emotions, to make sure people... That's the empathy that Steve was talking about. When you touch the emotions, and there are several groups of emotions that really come into play are safety and security. That's a group of emotions that had drive people, optimism, and pride, and smart, and responsible. We know that because of our research, 70% of the people we had on our research, and we did a research study with about 2,500 people, 70% told us, those are the emotions, that really motivate them and move them up to be able to provide that, that full life. And that'll be on our website, as well. So, it's something that you should really, as a financial professional, be aware of, because as Steve said, not everybody's good at it. Some people have a little more challenge being empathetic. But it can be done and it can be as a skill, it can be learned. It really is.

Steve Gresham: Mm-hmm (affirmative). And you know who you are, if you're not.

Mike Harris: Yes, yes, absolutely.

Jenna Dagenhart: Mike, you mentioned thought joggers, do you mind sharing a few more of those with us?

Mike Harris: Well, sure. Matter of fact, I have a kind of a list of them here, along that one the brochure. Things like, here's one... What about tickets? Do you like to go to concerts or things of that nature? Have you ever thought about that? Have you ever thought about what other kinds of hobbies do you want? What about if you want to... How about funding a trust? Have you ever... It was not something we think about in our daily planning, but we get down the road and all of a sudden, maybe, I need to set up a trust for my family or whatever that may be. Well, there's an expense for that. What about pets, I've got a couple dogs. I'll tell you what, it doesn't take long for those kinds of things to really... The expensive... Not necessarily feeding them. But if they get sick, they're one of the family, they get taken care of. And that can be very costly. So, things of that nature that are very tiny, as far as an idea that you may not think about as something that as a retirement planning need for income things, you should think about. But you add a bunch of them together. And I'll tell you, it can put a serious ding in a retirement portfolio.

Steve Gresham: And that's really what we're after, right? Is to be able to start conversations, have conversations. And it's as simple in many ways as being comfortable not knowing the answer, if the client were to ask you something that is related to one of these conversations. And that is the part that I personally thank. Mike, I'm sure you agree. think that's holding this entire generation of advisors back. Because as they're watching these clients go from a very simple relationship that they had with the advisor, which was helping them to invest. It's not really that simple. But advisors and advisory firms and investment managers have made it simple over the years. So, now, we're entering into this area where everything is kind of make it up as you go along. And so, the world of being a retiree, whatever that may mean, whether it's a diversity of activities that you have, and just the fact that you don't have to punch a clock as the young woman said, in that very first clip. I mean, that's really what this is about. They want the freedom and the security at the same time, because they're complimentary in their months.  And that's really what you're hearing with an awful lot of these conversation starters, there's an undercurrent of asking for permission from the advisor, can I do this? They're looking for that reassurance.

Mike Harris: Mm-hmm (affirmative).

Jenna Dagenhart: Avoiding that clock punching and dandelion eating.

Mike Harris: Yeah.

Steve Gresham: Yeah. I got to say that, as long as I've known this man who has interest in dandelions is a new one on me.

Mike Harris: They're good, if you know how to fix them.

Steve Gresham: Yeah. I will tell you, there's a conversation starter, so.

Jenna Dagenhart: Yeah, yeah, certainly. I love to cook, but I don't know how to cook those. Anyhow, you mentioned earlier, peak is 65, and how more Americans than ever are hitting that traditional retirement age. The stakes are high. What opportunities or potential hurdles should every advisor be aware of?

Mike Harris: Steve, how... Right there.

Steve Gresham: Yeah, I'm just eluding, just got to give the backdrop. So, 65, we talk about that a lot. It's actually not the average retirement age in the United States, which is still about 62. The retirement story is really one that is not age dedicated. It's just more common. So, last year in, I think significantly as a result of the pandemic, 12,000 people a day were retiring. Now, every financial professional has heard the tired story of 10,000 baby boomers turning 65 every day. Well, the rate continues to accelerate. And so, because the more people that are turning 65, they're actually being added to a group that was already there. And so, people who are 65 and older mean, we're just midpoint in the cohort. But the more significant issue is 12,000 people retiring every day, significant issue $2.5 trillion dollars' worth of retirement plan assets in the hands of people who are over 55. So, you could assume that if the rate of retirement is increasing in speed, then those assets are now available more readily, more often. And that, again, is the picture we're trying to paint here is one in significant opportunity. You're using us as the backdrop because we've been around for a long time. And we have the ability to say with a lot of confidence, well, there was a really good opportunity, when this particular market break in 1987 created opportunity for the managed account business, which grew to $7 trillion from nothing. And was it a product that had been around? Sure, but it got an awful lot of horsepower when the market went down. And people said, "I'm not so sure I want to be managing my own investments with a stockbroker. Now, I prefer to have them professionally managed." Well, there's a whole new industry was born out of that. Retirement income is in that same spot right now. So, with all of these people arriving on the scene, looking for, as we've said repeatedly, through this discussion here today, we've talked a lot about security and the values that people have, of wanting to be protected, but then also to be free, to be independent, to stay in their own home. How much do I knew? And so, having some certainty in that discussion, which is where protected lifetime income comes from, that is, in fact, one of the building blocks or as Mike says, foundation.

Jenna Dagenhart: That bedrock.

Mike Harris: Absolutely.

Steve Gresham: Bedrock, dandelions. I mean, it's... I don't know where to go next.

Jenna Dagenhart: Oh, well, as we wrap up this panel discussion, it's very clear that the retirement landscape is changing. And in effect, it's catapulting financial professionals into new roles and making them wear even more hats than they were before. Any final thoughts that you'd like to leave with our viewers today?

Mike Harris: The only thing I would say is, the world of financial professional is changing. It has changed, it's still changing, it will change as we move forward. Those that will... Can adapt to that change, have a huge opportunity now. And those that can't adapt may still be successful. But it's not going to be as rosy a path for them. Plus, I don't know any financial professionals out there that say, "I really don't care about my clients." They do care about their clients. And these kinds of things, the fact that the clients want more, they want more planning, they want more help, they want protection as well. Not just protected income. What they're telling us is, they want some form of protection on their assets as they're growing as well. These are important things to them. And so, the financial professionals out there that want to help their clients that feel an obligation to help them and do what's right for their clients, should at least include some of these ideas for the consideration when you're building a financial portfolio or strategy. It doesn't mean you're always going to use every product with every client. But you shouldn't discount these types of opportunities for having some kind of protection or protected income as part of a potential solution set. And what we're saying as a part of, a slice, because it will... It can help set the stage for a much better relationship with your clients, and a much better outlook and future for you to grow your business.

Steve Gresham: And I guess, I would close with three things that I think every financial advisor should be doing. A great number of them are, but again, it's important. First is, to understand the full nature of the book. There is an old 80-20 rule that says, that we get 80% of our income benefits, whatever it might be from just 20% of the clients. I think that's an acute problem in the industry today. And it happens again, in bull markets, have a tendency to ignore the people because everyone's doing really well. But I guarantee you, that outside of that top 20%, there's an entire other group of people wondering if anybody's paying attention. Second thing is that, you have to start to consider the client as a family, three generations. There's a lot of opportunity there. But one of the things that also suggest is driving it into this third area, which is build a team, whether it's virtual, whether it is just a partner or two or something. You've got to be able to have different perspectives. And increasingly, you've got to be able to have different people, different... In some cases, genders and sometimes, different ages in order to be able to go back and deal with much more effectively that family. And that will pay itself off in droves over time. And it will also help with that responsibility angle that I'm glad Mike brought forward. You've gotten the people this far, help them go farther, reap the benefits of that. That's a very, very valuable creation that you have of this practice, and to be able to include other people in it, to take it from here and move on, that's a fantastic opportunity. And a lot of advisors are doing really, really well. May not want to have these conversations yourself, may not have the tenure that you want to continue to stay with them. But you certainly have that opportunity as the handle.

Jenna Dagenhart: Well, there's so much more we could say. But we better leave it there. Mike, Steve, thank you both for being with us.

Steve Gresham: Okay. Thank you.

Mike Harris: Thank you.

Jenna Dagenhart: And thank you for watching this exclusive masterclass with the Alliance for Lifetime Income. To learn more about the resources that the Alliance for Lifetime Income provides, please visit And to access the practice management toolbox for financial professionals that Mike and Steve highlighted, please visit Once again, I was joined by Alliance Senior Education Advisors, Mike Harris and Steve Gresham. And I'm Jenna Dagenhart with Asset TV.


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