Holistic retirement planning: the best way to build trust

By Cathy Weatherford

Insured Retirement Institute (IRI)


Much has been written in the financial press about the need and importance of building trust, but equal attention has not been paid on how to build trust. Trust must be earned. For an advisor, that means demonstrating value to clients — both current and prospective — and establishing meaningful relationships in the process. Holistic retirement planning offers advisors the key.

Holistic retirement planning is not selling. Holistic retirement planning is taking a 360-degree look at a client’s retirement situation and developing a plan tailored to meet his/her individual needs. It requires learning about your clients’ goals, dreams and needs. It also requires helping your clients see the big picture.

Many appreciate the notion of holistic retirement planning, but are unsure of how to incorporate it into their practices. It starts with having broader retirement planning discussions and going beyond the traditional conversation starters. Here are five retirement planning conversation topics for financial advisors willing to take a holistic approach.

1. Social Security

Social Security has been woven into the fabric of almost every American’s retirement plan. While Social Security allows recipients to claim at various ages, clients collecting Social Security before their normal retirement age may reduce their benefits by as much as 30 percent — potentially amounting to hundreds of thousands of dollars in lifetime payouts.

Beyond age, there are other factors to consider, such as marital status, health condition, taxes, income needs and sources, to name a few. Because of the sheer number of variables, an abundance of claiming strategies have emerged to help maximize income. Advisors can help their clients employ these strategies and demonstrate value in the process. Social Security planning also presents an opportunity to discuss the program’s part within a holistic retirement income plan and how to supplement Social Security benefits with additional retirement income.

2. Medicare

Developing a plan to cover medical expenses in retirement starts with Medicare. Unfortunately, the program can be difficult to navigate and understand. A survey by Nationwide Financial revealed that 72 percent of soon-to-be-retired consumers said they wish they understood the program better, and 54 percent said they would be more likely to continue to work with their current advisor if he/she could discuss Medicare as part of their retirement.

Beyond explaining the program, your discussions about Medicare should include developing a plan to meet expenses not covered. Average annual out-of-pocket medical expenses, including premiums, are about $4,300 for an individual and $8,600 for a couple covered by Medicare. Evaluating health care costs should lead to a more in-depth discussion about total expenses in retirement and ensuring clients have sufficient income sources to meet these costs.

3. Long-term care

As Americans continue to live longer and into advanced ages, the likelihood of needing long-term care services in retirement also increases. The Insurance Retirement Institute (IRI), however, has found that confidence in meeting long-term care declines with age. The confidence drop is the result of an out-of-sight, out-of-mind attitude. As consumers age, the realization sets in that long-term care may be required, and many begin to understand just how expensive it can be. Help your clients understand the need and the cost of long-term care, and develop a retirement plan to help them meet these challenges.

4. Inheritance

More than two-thirds of Baby Boomers said leaving behind an inheritance to loved ones is important, according to an IRI survey. Do your clients share this view? If they do, this is not a conversation that can be separated from planning for your clients’ own needs. Help your clients to determine what can be set aside to be bequeathed to loved ones, while ensuring that sufficient retirement income is available to meet your clients’ other goals and needs.

5. Goals

Your clients’ goals should be the foundation of any retirement planning conversation. We often think of money as numbers on a statement. Those numbers are the means to achieving something greater. As such, the objective of a retirement plan should not be to reach “X percent” growth. That might be part of it, but the true objective of any retirement plan should be to create an income plan that will allow your clients to reach their goals. Talk to your clients about their goals in retirement, and turn your relationship into a partnership in accomplishing those goals.

By making the effort to take a holistic approach to retirement planning, advisors can develop more meaningful relationships with their clients. These relationships built on trust are mutually beneficial for clients and advisors, alike. Clients will have a retirement plan focused on attaining financial security for life, and advisors will experience the reward of satisfied and loyal clients.

See also:

What is holistic financial planning?

Build value and trust with a code of accountability

3 surefire ways for financial advisors to earn the trust of prospects