Why do financial advisors matter to retirees?

What is your definition of retirement?

It’s a question without a clear-cut answer. For some, retirement signifies old age; for others, it represents liberation from life’s daily challenges. Then some see retirement as a new chapter in life, offering ample time and resources.

There’s a sense of pessimism surrounding retirement, particularly for those who misjudge their financial planning and find their lifespan outlasting their sources of income. This occurs because many individuals underestimate their life expectancy and financial needs. Depleting funds can cause significant stress in the long run.

Not everyone sees retirement the same way. Most individuals don’t start planning for retirement until they reach middle age. This contributes to why many people fail to save adequately for their later years. Seeking the advice or cooperation of a financial advisor hence becomes necessary.

Behavioural challenges

Many financial advisors understand that ineffective financial planning often stems more from behavioural challenges than simply a lack of understanding of numbers and how money can grow. Procrastination is a significant cause and factor that explains why so many people struggle with planning their retirement savings.

Financial advisors now act as financial coaches, assisting clients in achieving financial independence not just for retirement but for the rest of their lives. This goes beyond portfolio management. What distinguishes financial advisors from others? 

• Achieving financial freedom: It’s a journey, not a destination. Placing exclusive emphasis on retirement savings can foster a feeling of waiting or delaying a fulfilling life. A skilled advisor assists clients in establishing financial goals for different stages of life, not solely for the “golden years.”
• Retirement as a fresh start: Retirement should be viewed not as a conclusion, but as an opportunity for new beginnings. Advisors can assist clients in discovering their passions, identifying financial resources for pursuing hobbies, and planning for phased retirement with the option to continue working.
• Mindset matters: Achieving financial well-being depends as much on behaviour and perspective as it does on numbers. A skilled advisor can guide clients in cultivating healthy financial habits, navigating emotional spending triggers, and fostering a mindset of abundance rather than scarcity.

This approach is beneficial for all parties. Clients experience empowerment and gain control over their finances, resulting in enhanced peace of mind and the ability to pursue their aspirations. Advisors who adopt this approach cultivate stronger, more enduring client relationships.

Financial advisors provide a variety of services aimed at assisting you in planning for a retirement that is both secure and fulfilling. However, the services provided by financial advisors may vary.

• Goal-oriented planning: Expand beyond mere retirement savings to encompass clients’ broader life aspirations, such as travel plans and funding grandchildren’s education.
• Financial literacy: Empower clients with the skills and resources needed to make informed financial choices, promoting a sense of control over their financial destinies.
• Transparent communication: Establish an environment where clients feel comfortable sharing their concerns and goals, nurturing a collaborative and supportive partnership.

By advocating for financial freedom as an ongoing journey and reconceptualising retirement as a springboard for new opportunities, financial advisors can genuinely empower their clients to lead fulfilling and financially secure lives. Before engaging the services of any financial advisor to assist with your retirement planning, it’s crucial to comprehend their fee structure—whether commission-based, fee-based, or hourly—before making a decision.

                                                              (By arrangement with livemint.com)