September 23, 2023
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Opinion: Poor communication has many financial clients playing darts in the dark


By John Grace

Does this sound familiar to you?

• 71% of people are worried about the rising costs of healthcare.

• 67% worry about rising costs of living.

• 66% are afraid market downturns will affect their savings.

• Only 1/3 have broached the subject with their advisor.

These are the findings of The Allianz 2021 Retirement Risk Readiness study. The percentages represent significant increases from the survey’s 2020 results.

More than ever, Americans are troubled about risks to their retirement plans, but they are not discussing their concerns with their financial advisors. And it is apparent my fellow professionals are failing to ask the pertinent questions of their clients. So the investors as well as the professionals are playing darts in the dark.

Lots of investors had a lot more time to sit and imagine about how bad things might get in the near future. They watched in real time how markets can go awry as the cost of living increases right before your very eyes. COVID-19 could have been the main actor behind growing retirement concerns, says Kelly LaVigne, vice president of Consumer Insights at Allianz Life, per Barron’s.

The pandemic “made people think a lot more about their savings and possibly put a little more fear of reality into their recognition of what’s going to happen in the future,” according to LaVigne.

The 1,000 respondents to the Allianz survey showed genuine concern about their ability to take care of themselves and loved ones; Social Security benefits; outliving their spouses or significant others; and running out of money before they run out of time.

LaVigne went on to say, “We have a problem with advisors listening to their clients and getting them to share what their number one fear is.” As a financial advisor, I apologize for my peers failing to ask better questions with the sincere intent of supporting our clients in preparing for the good, the bad, and the unforeseen. As I am fond of saying, “It’s not about the prediction. It’s all about the preparation.”

It is my experience that when many financial advisors declare they have been in business 40 years, for example, the truth is, they’ve been in the securities industry one year, repeating the same thing over the length of time licensed. Frankly, many of us are lazy, complacent, and overly focused on the “stocks for the long haul” mantra.
LaVigne counsels, “Don’t jump in. Let them totally finish, ask a follow-up question on that same subject — make sure you (the pro) listen and then make sure you talk about that.”

I totally agree with LaVigne’s suggestion that advisors work with clients to create a written financial plan, reviewed no less than once a year, that focusses on the clients’ biggest fears, folding in protections for those concerns, as we support clients in discovering, often for the first time, how much loss you, the investor, can accept. This is followed by designing the portfolio in such a way that it might perform withing your acceptable, pre-determined limits of losses and gains.

Let’s let the market go down like the Titanic, but do all things possible to keep your money at or above your personal water line.

LaVigne points out while newer retirees are focused on the inflation numbers, they “are feeling terrified.” Those who have been retired for more than 10 years benefited from some of the best conditions for retirement: a strong bull market and controlled inflation, notes Barron’s.

Looking forward, some observers suggest that there is real evidence that the next decade for stocks won’t be as good as the last. Now is the time for investors and advisors to huddle as we plan for a lot more uncertainty ahead.

• John Grace is the president and founder of Investor’s Advantage Corp. in Westlake Village.