Creating a spending plan for retirees is just the first step to ensuring they’re able to live the expected lifestyle without running out of money. Because people are living longer than ever before, it’s vital that individuals undertake more planning to avoid outliving their assets. Regardless of what plan an advisor may devise for clients, the advisor is going to need to play an active role in making sure people actually stick to it.
How Can Advisors Keep Retirees on the Right Track?
While clients are aware of what they’re supposed to do, that doesn’t mean they’re going to continue doing it. A great comparison is a trainer who gives a client a nutrition plan to follow. Although that plan may be the ideal fit for the client, if the trainer doesn’t check in on a regular basis and ensure the client isn’t cheating, chances are that person won’t end up losing much weight.
For advisors, the check-in process often happens on an annual basis. For advisors who are looking for a creative but effective way to connect with clients, one option to consider is a visual report card. To keep things engaging, this report can either have a green checkmark in areas where a client stayed within their budget, or a red X where they overspent. Depending on the specific plan a retiree is following, these visual ratings may be used for each month of the previous year, or in different sections of the budget.
Another advantage of communicating in a visual fashion is it can help remind clients of decisions they’ve made but may be quick to forget. For example, if a retiree decided to cut back on traveling so they can put money towards their grandchild’s education, reminding them of this decison can be worthwhile. By reinforcing that they are staying in line with the financial goals they made for themselves, this communication may be exactly the change of perspective a client needs so they will feel positive about their situation.
Help Clients By Creating a Buffer for Them
Regardless of their motivation or discipline, it’s almost guaranteed that there will still be times when a client wants to spend more than is currently allotted. Whether it’s an amazing trip opportunity or another form of entertainment, the temptation may be too much for a client to resist.
Since retirees should be able to enjoy life after working hard for so long, a discretionary spending account is ideal for these occasions. While it’s important to emphasize that this account is still coming out of overall wealth, knowing that these funds are available if a special occasion does arise is a great strategy for preventing clients from dipping into their portfolio.
By not only setting retirees up for success, but also providing ongoing support, financial advisors can reap benefits such as increased referrals that go along with happy clients.