Guide your clients to financial well-being in retirement

Guide your clients to financial well-being in retirement

Financial advisors are uniquely responsible for helping their clients secure their financial well-being. This is particularly true in their years of retirement. However, recent market fluctuations and high inflation rates have made achieving this considerably harder for advisors.

Among Canadians considering retirement, 66% are concerned about not having enough funds to live comfortably, according to a CIBC survey. Yet only 14% have identified the sum of money needed with the aid of a professional.

Indeed, planning for retirement is no easy task. Wealth management firms offering quality advising with a personalized human touch are the most effective at building optimal retirement plans. Understanding this age group’s demographic situation, demands, and social realities are crucial.

In today’s increasingly competitive market, success may not be achievable without the help of the latest FinTech tools. These allow planners to provide more efficient and tailored services.

Changing demographics and retirement concerns

With tremendous advances in science, we are living much longer and healthier lives than ever before. Canadians aged 65 and older accounted for 19% of the population in 2022, up from 17% in 2016. According to Statistic Canada’s projections, 25% of Canadians will be over 65 by 2051. This represents almost 12 million people.

The increase in life expectancy has dramatically reshaped how people manage their money long-term. As such, it has also changed how financial advisors approach portfolio management in a client’s later life. To successfully cater to retired and retiring clients, money managers need to step into their shoes.

This demographic trend exemplifies the need for tailored financial services. But what exactly are the needs and expectations of this population?

A CIBC poll found that 43% of Canadians want to retire to slow down and enjoy more leisure time. Another 35% want to travel more frequently, and 29% want to spend more time with loved ones.

These variables allow us to make inferences about their financial priorities. Predictably, investors in this age group will likely have these priorities in mind when making investment decisions and building their portfolios.

Financial considerations for the aging population

Considering the possibility of a long retirement should generally be top of mind. Long-term, low-risk investments supplemented by high-yield and dividend stocks should be a priority to provide sufficient funds for a happy retirement.

Including an aging client’s family in the advising process can also be a good idea. Having an entire family to advise can significantly benefit both advisor and client. It allows individuals to plan their succession better and help them build wealth for generations to come.

Adapting to the current financial situation

Decumulation of assets is usually shallow. Nearly 20 years into retirement, median retirees only spend 17% to 23% of their wealth. This is what the US BlackRock Retirement Institute (BRI) found in a study of retirees’ spending habits. The study also noted that it is very likely that future retirees will not be as fortunate.

Statistics Canada reported a 6.8% year-over-year increase in the Canadian Consumer Price Index (CPI) in 2022. This may be a concern for those in their 50s and 60s who are considering retirement in the coming years. In fact, Angus Reid Institute found that most Canadians (56%) cannot keep up with rising prices and that 19% delay making contributions to their RRSP and TFSA.

With this harsh reality in mind, financial advisors must strive to communicate honestly and transparently with clients. This helps them set realistic investment goals while offering competitive and tailored services. Making communications more person-centered is an excellent way to stand out from the competition.

Personalized messages and newsletters focused on pension plans, life insurance, health care cost, investing opportunities, and other retirement-centered advertising are great ways to enhance client relationships. It boosts client retention within this population age segment.

How wealth management solutions can help

There is no question that the current climate is making it harder for retirees, those close to retirement, and their advisors. Fortunately, WealthTech companies can help.

Democratize wealth

New technologies have the potential to educate and assist investors and advisors alike, claim researchers Julie Agnew and Olivia S. Mitchell.

Robo-advisors, for instance, allow those who do not have the financial means to afford a human advisor to receive accurate and tailored financial guidance. While the importance of the human element associated with physical advisors can never be discounted. Adopting a hybrid model may offer the best of both worlds for wealth management firms and investors alike.

Some financial institutions now offer to guide their clients through their investment journey both using an automated system and in person with a financial advisor.

Enhance performance and profitability

FinTechs also allow advisors to fine-tune investment plans quickly, effectively, and consistently, based on multiple clients’ needs and risk tolerances. With an automated rebalancing solution, for example, you can combine portfolio analysis and rebalancing with modeling and scenario analysis. This helps you make the best decisions for your clients.

The most efficient solutions consider several factors at various levels and allow you to group your actions. This saves you time by not having to perform the same action repeatedly. Because you want to offer more for less to your clients, you should opt for a solution that saves on transaction costs by grouping orders.

Enriche relationships

Software featuring a customer relationship management (CRM) system helps build closer and stronger relationships with clients and prospects. By supporting portfolio data, relationships, and interactions, these tools can generate targeted business intelligence and help you create tailored communications.


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