Originating: The Four Most Important Questions Retirement Advisors Can Ask

Written by Don Graves, as originally published in The Reverse Review.

It’s no secret that retirement today will last longer than that of past generations, and it’s essential that a client’s retirement income lasts just as long. But how do advisors engage in conversations that reveal client expectations, make the clients aware of their own goals and priorities, and help them make the necessary adjustments to ensure a great retirement?

Most skilled advisors already use an initial consultation/annual review questionnaire. Recently, I’ve discovered the immense value in tailoring these questions for each client. I developed a strategic core framework to simplify my questions and discover what clients truly want.

I call it the Four Core Client Concerns (or the four Ls): Longevity (Lo) Lifestyle (Lf) Liquidity (Lq) Legacy (Lg)

They are simple to understand and extremely powerful when combined with laser-focused questions. You can view my video explanation here.

Let’s examine each of the Four Core Client Concerns and the subsequent questions that arise.

Longevity Concern: Will I have enough savings to meet my basic living expenses?

This goal focuses on the lifetime survival of clients’ savings to meet essential living requirements, e.g., housing expenses. According to a 2016 survey, the No. 1 concern of retirees is how not to run out of savings.

Clearly, there are many things that can erode a nest egg, including market fluctuation, sequence risks, inflation, excessive withdrawals and unexpected expenses. The bottom line remains: Running out of money and not being a burden on family is still at the forefront of every retiree’s mind. Try asking your clients the following question: On a scale of 1 to 10, how much does the thought of running out of savings in retirement trouble you?

Lifestyle Concern: Will I have enough money to enjoy retirement on my terms?

It’s one thing to have enough savings to meet your basic needs, but it’s another to maintain your desired overall standard of living and not be forced to make moderate to drastic lifestyle changes. These lifestyle components tend to be more discretionary in nature and may include things like travel and leisure, self-improvement activities, social engagements and helping a family member.

My friend Dr. Wade Pfau suggests that maximizing spending power is the key to meeting this concern. That way, spending can remain consistent and sustainable while allowing for an acceptable degree of risk. Furthermore, clients must keep in mind that these expenses may need to be scaled back at certain points in retirement.

Regardless of the components, lifestyle goals can be revealing when it comes to your clients’ retirement expectations. Try asking your clients the following question: On a scale of 1 to 10, how disappointed would you be if you had to adjust your standard of living to make your savings last?

Legacy Concern: How will I be financially remembered?

How will you be financially remembered? This is my definition of Legacy. Traditionally, legacy goals relate to leaving assets for subsequent generations, or to charities. However, I believe it includes significantly more.  

It could be that your clients don’t have to borrow money from their children, move into their son’s spare bedroom, or ask their daughter to quit working to care for them. Try asking your clients the following question: On a scale of 1 to 10, how important is it for you to cut back on your retirement lifestyle if it meant leaving more legacy for your heirs?

Liquidity Concern: Will I have access to tax-advantaged money when I need it?

Maintaining additional assets that can be tapped quickly to provide funds for unexpected contingencies is critical in retirement. Ideally, these reserves should be accessible with as little taxable or opportunity-loss impact as possible. 

The possibilities for spending shocks in retirement are endless. The two biggest are out-of-pocket medical costs, which averages $265,000 per couple, and long-term medical care costs, which affect 70 percent of retirees to the tune of $130,000.

This, of course, is in addition to the run-of-the-mill spending shocks such as emergencies, hurricanes, unexpected illness or death. The “what ifs” of retirement are endless and having access to a reserve for the inevitable is essential. Try asking your clients: On a scale of 1 to 10, how prepared are you for unexpected spending shocks in retirement?

My Favorite Example:

You’re meeting with a 65-year-old couple. They have $500,000 in savings, a $400,000 home, and a $155,000 mortgage with payments of $1,250 a month. Although you could ask the aforementioned questions verbatim, you could also employ a little creativity to get their Longevity, Lifestyle, Liquidity and Legacy concerns out in the open.

Sample Question: What would retirement be like if you didn’t have to make a monthly mortgage payment?

Their answer will be the conversational launching point for cycling through the Four Core Client Concerns.  But remember, the fruit is in the follow-up questions.

If a client says, “It would be great not to have to make that monthly payment,” you could then ask, “Why or in what regard would it be great?” And from there they will tell you about having more money to spend (Lf), or not having to draw out as much from savings (Lo), or being able to save that money for a rainy day (Lq), or using those dollars to help their grandchildren save for college or private middle school (Lg).

You have helped your clients gain awareness of their goals and hone in on their expectations. You can now work with them to make the appropriate adjustments to help them achieve the retirement they want.


About Don Don Graves, RICP® is a Retirement Income Certified Professional and one of the nation’s leading educators on the emerging role of reverse mortgages in retirement income planning. He is the president and founder of the HECM Institute for Housing Wealth Studies and an adjunct professor of Retirement Income at The American College of Financial Services. He has helped tens of thousands of advisors as well as more than 3,000 personal clients since 2000.


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