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How the advisor’s role is changing: Are you ready?

As clients live longer and their needs become more complex, the role of the financial advisor will go well beyond investment and retirement plans


Date: December 16, 2015

In the years ahead, though, that will no longer be enough. Given the huge number of boomers entering or preparing for retirement healthier (and wealthier) than any generation before them, they will be demanding more from their advisors than straightforward financial advice.

“We’re now expanding the notion of financial planning and retirement planning to encompass longevity planning,” says Rocco Taglioni, senior vice-president, distribution and marketing, individual insurance and wealth with Sun Life Financial Canada.

“As people start to realize they’re going to live longer, the challenge for the financial services industry is how to answer the question – how do you plan to help me live better?”

What is on the future “to-do” list of advisors? Mr. Taglioni predicts that financial advisors will increasingly be called upon to provide advice across an expanding array of needs, such as planning for education and professional development across longer lifespans and helping clients manage their relationships with children and aging parents. That family management role will include providing solutions for financial demands such as post-secondary education, long-term health care and inheritances. Not that all of this is new, but the need is growing, he says.

“Advisors now need products that provide a number of important benefits for clients,” says Mr. Taglioni. Those benefits include guaranteed income for life and the ability to build savings while protecting against market downturns, inflation and rising health-care costs, as well as the insurance benefits of prompt estate settlement and guarantees.

The financial services industry has created a number of new products to satisfy these demands, such as life annuities that provide lifetime guaranteed income for as long as the owner is alive.

“Consumers don’t like the word ‘annuity,’ but they do like the idea of a lifetime guaranteed income,” explains Mr. Taglioni. “If advisors promise a lifetime of retirement on a Caribbean island, people might roll their eyes and not believe it. But if they ask them, ‘Would you like to maintain your lifestyle and have the means to protect that lifestyle?’ Well, the response is quite different, and it’s in line with what really does make them happy and what they can identify with.”

He points to Sun Life Guaranteed Investment Funds (GIFs) as a potential solution. For example, Sun GIF Solutions can help with investment, income and estate goals in one contract. “Depending on the clients’ needs, they can move money around in each series,” says Mr. Taglioni.

The Investment Series is geared towards clients who want to grow assets and participate in the market while protecting themselves with guarantees and insurance benefits. The Income Series is for clients who are ready to take immediate income in retirement and want it guaranteed for life. Lastly, the Estate Series – the leading estate series within the industry – is positioned for clients who want to leave a legacy and have control over how their estate will be distributed among beneficiaries.

Such products are a good fit for clients who find the prospect of planning for decades in retirement daunting.

“It’s very difficult to have clients think about 30 or 40 years of the future, when in fact, most of us are having difficulty figuring out what we’re going to do 30 or 40 minutes from now,” says Joseph Coughlin, director of the Massachusetts Institute of Technology (MIT) AgeLab.

The MIT professor, who is an authority on the “disruptive demographics” of an aging society, says that an advisor’s role in the future will increasingly be to help clients navigate more complex and challenging lives.

“The advisor’s role is to be the expert, the planner, the number cruncher,” says Prof. Coughlin. “But perhaps one of the most important roles of the advisor is to be the agenda-setter – to put things in front of clients, what they need to be thinking about.”

He gives the example of a retired couple mulling over a move to another city to be closer to their children and grandchildren.

“They know that eventually they’re going to be older and frailer, and maybe down the road they could be alone,” he says. “How do they prepare for that? A financial advisor can help guide you in terms of what your risk tolerance ought to be, but ideally should be able to counsel you on what some of those choices are and what the implications could be.”

Prof. Coughlin notes that planning can get more complex as people start to manage one, two or more chronic conditions. “Unfortunately, a lot of their time is taken up – they may have a much older parent or they’re caring for a spouse or partner or loved one with complex health conditions who is taking many medications,” he says.

“So ironically, in retirement when they think they’re going to be relaxing, they’ll find that actually, retirement is a lot of work. And advisors can help them with that.”

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