Having been a financial planner for almost 17 years I totally embrace many common concepts of money management and asset growth. But I also have a great appreciation for (and knowledge of) the legitimate role of insurance products properly included in the portfolio. It saddens me to see folks who have built a respectable portfolio of assets under the rules of the last 30 years who are yet to understand the New Rules going forward. Their rules are different for several reasons.
1. They are now in the last 20 (more or less) years of their lives which will require them to live off the assets they have built up,
2. They will reduce their spending as they move through the “Go-Go years” in early retirement to the “Slow-Go years” as they continue to age.
3. At some point, most will experience diminished capacity when many of them will need assistance with activities of daily living.
Advisors should understand the needs of their clients and recognize that older clients have an even greater need for more predictability and less uncertainty in the plans you provide them. For example, 2008 was serious; but younger clients have time to recover and can still be positive about the future. Clients in their 70s and 80s experienced much greater stress. In 2008 your 75 year old client was very nervous when she saw her portfolio take a serious hit. It has now recovered and we are ready to experience yet another “event” in the next year or two. She will be 81 or 82. Are you ready to start all over reassuring her that things will get better? What if she is taking out more money each month to pay for care, will that help her recover in a timely fashion? Will it make it more difficult to reassure her? She should be offered products and strategies to assure that she will have extra money to pay for eventual long-term care; and that there is basic monthly income that will be there every month as long as she lives, no matter what. The products and strategies we offer do just that, and should be included in a well balanced portfolio.