Think Retirement is a joint initiative between Tata MF and Wealth Forum, where we discuss diverse aspects of one of the most critical responsibilities of a financial advisor towards his investors: retirement planning. Our endeavour in Think Retirement is to provide advisors with insights and perspectives that can help them understand the various dimensions of retirement better and thus help clients prepare and execute effective retirement plans that enable them to live their golden years with dignity and financial security.

We discuss in this article 4 key conversations we strongly believe every retirement advisor must have with clients who are heading into retirement : conversations that may not be directly related to the numbers you have crunched, but conversations that are perhaps just as important, if not more, than the retirement plan you have made for them.

One of the key messages that we seek to deliver in our Think Retirement section is that there is a lot more to retirement planning than a simple goal calculator. An excellent retirement advisor is one who goes beyond mere numbers, to understand all the dynamics - emotional and financial - that his clients experience or are likely to experience as they make their transition into retirement. Its when you truly understand retirement, that you will be able to genuinely prepare your clients to deal with retirement effectively.

In this context, here are 4 key conversations that we recommend you have with clients who are preparing to retire in the near future. These conversations may or may not have any impact on the retirement spreadsheets you may have prepared - but they are perhaps just as relevant if not more relevant than the spreadsheets you have meticulously prepared for his retirement plan.

1. Loss of self worth

Most successful professionals have immense self worth that stems from their professional success. There are many trappings of this professional success that they get used to - office staff / secretaries to take care of routine matters, chauffer driven cars, a generous expense account picked up by the company, perquisites like business class travel and so on. Its not their fault that they get used to such a lifestyle, and its not their fault either that they feel a sudden loss of self worth when overnight, all these trappings are pulled out from their lives, the day after they retire. This loss of self worth drives many retirees into depression - unless of course they had prepared themselves mentally for this eventuality, and looked at the brighter side of retirement rather than only what they stand to lose in terms of lifestyle. That's where you, as an excellent retirement advisor, can play a material role. You can make it a point to have conversations with clients who are less than a year away from their retirement, to address this aspect. You can tell them stories of clients who couldn't deal with this phenomenon and contrast that with stories of clients who dealt with it fantastically. Alerting them well in advance helps them prepare for the eventuality, and deal with it when it happens.

2. Retiring to something or retiring from something

This is one of the most important conversations you must have with clients who are a year away from retirement. Ask them this question : "Are you retiring to something or from something?" In other words, do you have a plan of how you are going to keep yourself mentally and physically active once you retire - are you looking forward to doing things you've always wanted to do, when you retire? Are you retiring to an exciting new life, filled with many new experiences that you are looking forward to? Or are you retiring from your job into, well, nothing? When you ask your client this question and you can only find him looking at what he will not be doing rather than what he will be doing, you know he is not on the right track to deal with retirement. As an excellent retirement advisor, you can help him understand the important difference between retiring into something vs retiring from something and encourage him to make a list of activities he would like to be involved in, and then help him make a beginning with these activities. It could be associating with a charity, it could be joining a bridge club, it could be tending to his garden patch himself, it could be going back to the village he came from to do something for the village - it could be anything. The important thing is to help him plan on what he would like to do, and get him started on these activities, before he actually retires, so that he slips into retirement smoothly.

3. Where do you want to live?

This is one of the most fundamental questions you must ask your client well before he retires. This is a question that not only has profound implications on the financial plan, but is pretty much a lifestyle choice you are asking him to think about. Your client couple will need to think about this well in advance of actual retirement, and you should be the catalyst who gets them thinking. Do they want to move back to "home town" to be with extended relatives? Do they want to move to a place closer to where their children are? Do they want to consider a retirement home at some stage? Or are they perfectly happy where they are, because they have their social network in place, which they do not want to give up? We are not talking here about moving houses to downsize as a consequence of financial compulsions - we are talking about situations where it is a pure lifestyle choice, that is not necessarily driven by financial considerations alone. Getting your clients to start thinking about this early enough, will help them toss around various ideas, talk to friends and relatives, talk to children and firm up their views on this critical question, well ahead of time. The key here is helping clients prepare for some of these big decisions, by seeding the thought early enough.

4. You are now a spender, no longer a saver

Psychologically, this is one of the biggest changes that retirees struggle to come to terms with. After a life long habit of saving tidy amounts from annual earnings, and watching the kitty grow each year through savings, many retirees find it mentally distressing to come to terms with the fact that life has suddenly changed : they are no longer saving, they are now consuming from that pool of savings. This makes many feel very insecure. This is especially so for retirees who are somewhere in the middle - not so rich that they don't have to worry at all, and not so badly off that they have to make instant lifestyle downsizing decisions anyway. Its those who are in the middle who will fret a lot, because the comfort that they are spending only out of current earnings is no longer with them, and at the same time they are not absolutely confident about maintaining their present lifestyle for the next 25 years.

While you will, without doubt, guide them through their retired years, its important to sensitize them about this psychological issue before it hits them, to enable them to prepare for and deal with such anxiety attacks when they happen eventually. A retiree who trusts his financial plan and his planner, and who has been sensitized about this issue, is more likely to genuinely enjoy his retirement, without forever worrying whether he is dipping too much into his savings.

To conclude

Ask yourself these questions: are these relevant issues that your clients are likely to face when they retire? If yes, are you being an excellent retirement advisor by helping them prepare for and deal with these issues? Is such an effort likely to lead to significant appreciation and goodwill - perhaps well beyond the appreciation you get for picking the right fund that outperformed others? Is such an effort more likely to win you referrals without you even asking for them? Is such an effort good for your clients as well as for your business? If the answer to these questions is yes, please take a paper and pen now, jot down names of clients who are heading into retirement in the coming months, and schedule meetings with them - right away.

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