Marc Vosen is president and CEO of Key Investment Services, as well as the current president of BISA, the trade association for bank brokerage and bank insurance sales. More communication between advisor and client is key, he says, especially when the customer feels more in the loop.
How can bank advisors best serve their clients to prepare for retirement?
MV: The best thing they can do is sit down and have meaningful conversations about retirement. The financial world has changed so much over past three years. In a high tide, all boats rise. So in better times [in the past], nobody thought they needed an advisor. But now everyone is scrambling and people feel lost. Clients need to feel like they're part of the process. If you can facilitate that, and help them get their hands around this retirement issue, you'll get their business.
What areas do clients need the most help in, even if they don't realize it?
MV: FAs have so many tools but they need to present things in an easy way. People need help in calculating and even gathering all their financial instruments. And this can be a long process. This process doesn't happen in 10 minutes. Ultimately, people mostly have the same financial goals: they want to grow their money so it outpaces taxes and inflation, they want to educate their children, they want to retire comfortably, and they want to leave something for their heirs.
What about the differences across different age groups?
MV: There has been a real shift in the way that baby boomers think about and treat money. Before, people lived by the philosophy of never spending your principal. Now, in the boom generation, they have something those generations didn't have: retirement accounts. Before, you had a pension but now you have IRAs, 401(k), annuities. And the sole purpose is to use it during retirement.
So much is written about retirement preparation, what's the one aspect you think hasn't received enough attention?
MV: No doubt, health care. You can have the best-laid plans in the world, but without this [consideration factored in], you're cooked. And the industry isn't offering good solutions. You have to have health care insurance, and there are some combination products, like annuities combined with long-term care, but expenses can be catastrophic. They're out of control and they're only going in one direction.
You mention combination products, what other financial product will grow in popularity over the next few years?
MV: There was almost an "arms race" on financial products a few years ago, but then the markets went south, and a lot of the assumptions being made couldn't be supported. So companies pulled back to a de-armament phase where the products began looking alike. And when [the products] become commoditized, the real difference will be in the quality of the advisor.
Any other tips for our readers?
MV: Everyone wants to retire, so you don't have to sell someone on retirement. There are studies that show that as people get close to retirement, they consolidate their financial relationships. Others show that the advisors who takes customers by the hand through the process will end up with that relationship. Advisors should keep that in mind.