Globe Advisor is moving, click here to see

Advisor Insights

photo: drake

Peter Drake's 5 Retirement Lessons

Fidelity's retirement guru is leaving the workforce at the end of June, but he has a few words of wisdom to share before he goes.


Date: June 22,2015

For more than 40 years, Peter Drake has offered Canadians retirement advice, but, at the end of June, Fidelity Investments’ vice-president of retirement and economic research will finally call it a day.

Speaking at the Canadian Institute of Financial Planners (CIFPs) 13th annual conference, held in Vancouver in early June, Mr. Drake admitted that while he is a retirement expert, he’s actually not very good at retiring.

“I tried it,” he says. “I was not successful, and now I’ve been at Fidelity’s retirement helm for nine years.”

Naturally, Mr. Drake has learned a lot about retirement since he joined Fidelity in 2006, and he shared five of the most important lessons with a room full of financial planners and advisors.

There will always be another crisis and it will be resolved

“I have seen too many crises in my career to count,” says Mr. Drake. He lists off a few: the great oil crisis in the 1970s, when oil jumped from $4 a barrel to $12; the equity market meltdown in 1987; and the recent global financial crisis.

“There will always be analysts during these crises who say, ‘It’s an economic disaster and the world is ending.’ Yet all of these problems have been solved,” says Mr. Drake.

While advisors obviously should not ignore crises, they should avoid the doomsayers and concentrate instead on finding intelligent analysis.

As well, Mr. Drake says that crises become easier to handle as advisors gain more experience in dealing with them and seeing how governments respond.

Your clients will get out what they put into retirement planning

Retirement planning has evolved over the years, says Mr. Drake. Previously, when life expectancy was short, retirement was a passive concept – it’s now a much more active endeavour.

That means that advisors need to push their clients to think about what they want to get out of retirement.

“And you will have to push them, there is no question,” he says.

Do that and you’ll see two benefits. First, clients will get more out of retirement if they have a plan going in, even if that plan has to change occasionally. And second, the advisor will have a better gauge on the potential cost of the client’s retirement.

The family dynamic for retirees has changed

At one time, middle-aged individuals only had to care for their kids. Now, though, the “sandwich generation” is looking after adult children as well as their own parents.

Supporting children and parents – not to mention themselves – might well alter retirement plans for such people because of the often large costs involved in taking care of multiple generations.

Mr. Drake thinks this trend will only increase, in part because older Canadians are living longer and because adult children are facing an enormously competitive labour market. Many have go to school for longer, and when they do start working they tend not to make much money initially, which hurts their chances of owning a home.

“Starting salaries aren’t very high, but housing prices are,” says Mr. Drake.

Your health today isn’t your health tomorrow

“It’s part of the human condition to not want to admit that you may get to the point where you are incapable of making decisions for yourself,” says Mr. Drake.

Whenever he does a presentation, he conducts an informal survey: He asks members of the audience to raise their hands if they think they will live in a nursing home one day. The answer is the same across Canada, with approximately five participants out of 100 raising their hands.

“We all know it happens, the inability to make a decision or possibly going to a nursing home, but it’s easier to think that it only happens to other people,” says Mr. Drake.

Advisors need to speak with their clients about how they are going to handle financial decisions, as well as health decisions. Once these decisions are made, the client will have an easier time settling into their retirement.

Keep it simple

Retirement planning can be complicated. There are countless variables, such as when clients want to retire, when they started saving and what their current portfolio looks like.

Clients often say, “‘I don’t want a long, convoluted answer. I just want to know how much money to save so I can retire,’” says Mr. Drake.

His response? “I can’t answer that question because I don’t know much you make, spend or what your plans are for retirement. However, if you have that conversation with a financial advisor, then there is a pretty good chance that you’ll get an answer,” he says.

In turn, the advisor’s job is to take care of the complicated aspects and keep it as simple as possible for the client.

Mr. Drake may be officially retiring from Fidelity at the end of the month, but will he listen to himself? He sure hopes so.

“I’ll have to start taking my own advice, which I so freely offer to others. And that’s never an easy task,” he says.

Advisor Insights

Market outlook: Time to get real

A new frontier

photo: marketoutlookfor2016

Investors got a harsh dose of reality in 2015, and while next year doesn’t look much better, there are still opportunities to be had.

photo: Investinginfrontiermarkets

An increasing number of investors are turning to countries such as Vietnam, Pakistan and Nigeria for returns they can no longer get in the usual go-to emerging markets.

powered by Globe Edge