– Insights from John Diehl at our 2025 ClientWise Ensemble Leaders’ Summit –
For over 25 years, John Diehl has stood at the intersection of finance and sociology, studying aging and longevity in partnership with the Massachusetts Institute of Technology (MIT). His findings suggest a startling reality for the financial services industry: while advisors have become masters of the ‘currency’ of investments, they’re often unprepared when it comes to the day-to-day business of their clients' lives.
We need to start challenging the traditional retirement paradigm: focusing instead on the concept of the Freedom Paradox, and emphasizing the necessity of helping to build ‘psychological portfolios’ for your clients. What does all that actually mean?
Legendary restaurateur Danny Meyer (founder of Shake Shack) famously noted that while people assume he’s in the food business, he’s actually in the hospitality business – pointing out that food is simply his currency. In the same manner, as advisors we aren’t really in the investment business. Investments are our currency, but it’s calming the minds of our clients and meeting their expectations which are our true business.
As we age, money shifts from a goal to a utility. Clients don't get excited about portfolio construction; they get excited about what those returns will allow them to do. However, countless research studies have shown that as retirement nears, excitement is often eclipsed by anxiety. This is what we call the "Freedom Paradox" – referring to the fact that while retirees desire freedom above all else, having a completely blank calendar can lead to a serious crisis of identity.
To understand why we struggle with retirement today, we must look at where our current vision of it came from. An entrepreneur named Del Webb (a guy who owned half of Las Vegas and a lot of Los Angeles) built the first retirement community in the United States. Sun City Arizona opened for business on January 1, 1960.
The idea was to build a lot of high density homes close together, surrounded with golf courses, swimming pools, shuffleboard alleys and other amenities. Critics scoffed at the idea that people would sell their homes in Seattle, Chicago, or New York and move to the middle of the desert just to swim and play golf.
But the first day it opened, there was a four and a half mile line of cars waiting to get in. The retirement of relaxation and pleasure (meant to last five to seven years) was born. Now, retirements are lasting 25 to 30 years, and yet we're applying that same philosophy to how we should live our retired lives.
Recently, MIT surveyed 5,000 people regarding their lives after their primary career. The most common word respondents used to describe their experience was ‘freedom.’ But the one missing word that didn’t show up is one we believe has the most significance in quality of life after we retire. And that word is mattering. Do I feel like I still matter to others? Am I still relevant? When someone retires, it may be the first time in their life that they have to really consider those questions. Who do they really matter to?
Without these, retirees face potential boredom, loneliness, and isolation. Research from BYU suggests that the physical toll of loneliness is equivalent to smoking 15 cigarettes a day. This explains why many wealthy retirees (who no longer have the phone ringing for their advice) often experience significant bouts of depression.
Just as an advisor balances stocks and bonds, a retiree must balance their psychological portfolio which consists of three core components: Identity, Relationships, and Mission.
Identity: beyond "I used to be…"
When a retired doctor or engineer is asked "What do you do?", they often struggle because their identity was inexorably tied to their title. Ask your clients to define themselves in five to eight words based on their interests and motivations rather than their past job title. This can help uncover their true identity and serve to fuel a second-act career or deep volunteer commitment.
Relationships: the Rule of 150
The Harvard Study of Human Development (the longest longitudinal study of its kind) found that the single greatest predictor of a long, healthy life isn't income or cholesterol levels; it’s the quality of one's relationships. Malcolm Gladwell’s ‘Rule of 150’ notes that while we have many acquaintances, we must be intentional about maintaining close circles. He suggests two strategies:
Repotting: Taking a friend from one context (e.g., church), identifying other shared interests (e.g., pickleball) and using those interests to deepen the bond while broadening your pool of potential connections.
Rekindling: Reaching out to friends from previous life stages and seeking opportunities to rekindle those old relationships.
Ever wonder why so many Uber drivers (30%+) are over age 50? For many, the motivation isn't so much a paycheck as it’s the flexibility and the social ritual of regularly meeting new people.
Mission and Purpose: Finding Your Path
It’s time for advisors to look beyond the portfolio. If a client is boiling their happiness down to a certain financial return percentage or an algorithm, they’re going to be ill-prepared for the realities of retirement longevity. Instead, consider implementing some or all of the following:
The next 25-30 years of retirement shouldn't be a slow fade into the desert sunset that retirees envisioned in 1960. Instead, it should be a period of regearing and refining. By focusing on helping clients find their purpose and ‘mattering’ and strengthening their psychological portfolio, advisors can help ensure that they not only have enough money to live comfortably – but that they also have a reason to get out of bed every morning.
Coaching Questions from this Article
What specific community-building events or activities could your firm offer to help clients solve the '200-hour rule' for making new friendships during their retirement transition?
If you stopped viewing retirement as a 'finish line' and started treating it as a '30-year start-up phase,' how would your long-term planning meetings change for clients in their late 50s and early 60s?
Since retirement is often the first time a client lacks an external structure (schedule, location, mission), what tools or frameworks could your firm provide to help them start building a new daily architecture?
The Freedom Paradox describes the tension retirees experience when they finally achieve financial freedom but struggle with a lack of structure, identity, and purpose. While clients desire freedom above all else, having a completely blank calendar can lead to anxiety, loss of identity, and dissatisfaction rather than fulfillment.
A psychological portfolio is the balance retirees must maintain between identity, relationships, and mission. Just as an advisor balances stocks and bonds, retirees need intentional balance across these three areas to avoid boredom, loneliness, and loss of purpose during a 25–30 year retirement.
Many retirees struggle to define themselves because their identity was tied to their job title. When asked “What do you do?”, they often default to “I used to be…”. Encouraging clients to describe themselves in five to eight words based on interests and motivations helps uncover identity beyond their former career.
When retirees leave their careers, they often lose the five pillars of mattering:
Without these, retirees are more susceptible to loneliness, boredom, isolation, and depression.
Retirees typically fall into one of six categories:
Each path reflects how individuals approach purpose, structure, and engagement after leaving their primary career.
Advisors are not truly in the investment business; investments are simply the currency. Much like how Danny Meyer describes hospitality as the real business behind Shake Shack, an advisor’s true role is calming clients’ minds, managing expectations, and helping them prepare psychologically for longevity.
The retirement model created in 1960 emphasized leisure and relaxation for a short phase of life. Today’s retirees may spend 25–30 years in retirement, making purpose, mattering, and structure essential components of long-term wellbeing.