Here’s a shout-out to the Helping Advisors Blog from Russell Investments…from which the following thoughts are generated. I have always found this blog to be interesting and thought provoking; this one especially so.
In this recent post, The Realities of Generating Retirement Income, there is a very thoughtful discussion with respect to the uncertainties of retirement income with regard to what is predictable and sure in this low-interest rate environment.
In the first place, let’s put this out there. We are coaches, not investment experts. Most of you reading this blog have much better subject matter expertise when it comes to understanding and explaining the markets and investments.
Yet, when reading this post, we were struck with the impact of language and specific words that financial advisors use when explaining the reality of generating retirement income.
What this article points to is a number of possible disconnects. In some cases, clients seem to not fully understand (possibly willfully) what their advisors are doing to generate retirement income. In other cases, there is the possibility that advisors are not doing exactly what they’ve communicated to their clients. In still other instances, the advisor might not be completely clear in their explanations. Or, maybe it’s a combination of all three?
Here is the paradox, as expressed in bullet points:
Moreover, a number of questions come to mind with respect to how financial investors employ and describe income strategies:
What strategies do you use in generating retirement income for your clients?
How do you balance the desire for certainty from investors, when there is a conflict with what is best and most suitable for their situation?
What language do you use in explaining those strategies to investors who draw comfort from certainty and predictability, especially for income-generating strategies that are more nuanced than straight “yield-seeking” approaches?
Are the strategies that you employ completely consistent with the language that you use?
Ultimately, this might all be about the language of expectations. No doubt, it’s a tricky balance to communicate a sense predictability and constancy to apprehensive investors who seek certainty in an inherently uncertain world.
To negotiate this path successfully is one way that financial advisors can provide real value to their anxious clients.