Why Clients Delay Retirement

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What do you do when you have a client and you look at their numbers or financial plan? They are so dialed in and good to go for retirement. But the client just can't get themselves to do it. They can't pull the trigger. They keep coming up with excuses. And you as your advisor are trying to figure out what gives here? Why can I not help my client see this path to retirement and get them to do so? This episode of the Root Ready Podcast is designed to cover just that. How do you get your client to take action when you know it's the right thing to do, but they're held up by something that goes beyond just the numbers. And as we do this, I think the right place to start is to acknowledge the fact there is not a formula for this. There's not some do this, then this action will happen on the client's end. But having an understanding of why is it that clients are fearful of this decision? Why is it people hesitate to make moves like that? Deeply understanding the why behind that. And then having some general tactics that you can use to help guide them in that conversation is the way you need to approach this. So don't think that you're going to get the magic phrase, the magic bullet from anywhere of how to make this happen, but come at this from the standpoint of understanding deeply why is it that the client is struggling to make this decision and what can you do as their advisor to guide them in the direction you think they should be going. The first thing that comes to mind when I think about this question is to me, the challenge clients have is they're looking at the wrong scorecard. And what I mean by this, I'll use an example of a client I was working with one time. This client came to me. He had sold a business, he had lots of money in his portfolio, and he was ready to retire. And we're getting ready to retire, and the time's getting close, it's coming time for him to give his notice. And then he wanted to rerun some projections. And James, what if we do this for some tax strategies? And James, what if we do this for some other savings strategies? And James, what if we do this? And we just kept running and running and running projections. And at first I took it as, oh, he's just, he wants to be responsible. He wants to make sure we've looked at every angle before he makes his decision. But after a while, it became very clear to me he is just procrastinating. This runs scenarios and run more scenarios and do more and do more. That's not actually building any security here. He is doing something that he knows how to do, which is continuing to work and continue to run financial projections to avoid what he doesn't know how to do, which is to step into retirement, which is to take on that new identity. So one of the things that helped me with this is, and Sahil Bloom's got a great book called The Five Types of Wealth, helping clients to frame the right scorecard. Read that book if you've not done so already. I've talked about it, I think, in a previous episode. But what it helps to do is it helps to frame the different types of wealth. Put yourself in your client's shoes for a second. They've worked their whole life. They've worked their whole life to prepare for this moment to retire and they're running projections. So they're looking at your right capital projection and they're saying, James, well, what if I work one more year? Look what that does to my odds of success. Look that what that does to my overall portfolio balance. Man, that's one more year of maxing out my 401k. That's one more year of paying into Social Security and having a higher benefit for the rest of my life. That's one more year of receiving a big bonus because I'm in my peak earnings years. Everything looks better when all you're doing is looking at the financial scorecard. And by the way, the right capital projections, we look at that and say, yeah, that's comprehensive. We're looking at everything. We're looking at taxes, we're looking at cash flows, we're looking at estate planning, whatever it is. It's not really comprehensive. It's comprehensive financially, but that's just the very visible aspect of what we're doing. What's invisible in this? What about the remaining time the client has? What about their health? What about their relationships? What about their purpose? And so you can start to see that yes, your finances matter, but that is only one aspect of your overall wealth. And that's why I mentioned the book, The Five Types of Wealth, I recommend everyone read that, because it helps you to reframe how you view wealth. If you view wealth as just money in your portfolio balance, and if your clients view it that way, and by the way, of course they will, everyone views it this way. Well, why wouldn't you keep working? Why wouldn't you keep doing the thing that is continuing to improve the scorecard? This very tangible benefit that they're getting. I can uh move the dial to say I'm gonna work one more year, two more years, three more years. Why wouldn't I do that when my Monte Carlo success number just keeps going up and up and up? And my portfolio balance goes up and up and up. And we can get sucked in to viewing that as success. Your job as the advisor is to make the invisible visible. What's invisible on that right capital projection or that e-money projection or that money guide pro projection, whatever software you're using? What's invisible is what's the cost of that extra year of work on your health? What's the cost of that extra year of work on your ability to spend time with the people you care about spending time with? What's the cost of that projection when you have no idea how much time you actually have left on this earth? Do you want to spend it working? And this, again, I have to mention this all the time in the videos I do on YouTube. The goal is not to say don't work. If you love work, by all means keep working. Work can be a wonderful thing to do. I love what I do for work. I don't have any thoughts or desires to stop working. So I'm talking specifically about that client that you know doesn't love work. It's not that work is benefiting them in any way other than continuing to move the financial scorecard higher. So how can you help your client to reframe that? Hey, Mr. and Mrs. Client, look at this. Every single year you work longer, you are absolutely going to increase your probability of success. You're absolutely building a better financial picture. Heck, let's take that to the extreme. I recommend you never stop working. Don't ever stop working because if you don't, your odds of success are going to be 100%. Your portfolio is going to keep growing so large and be so big, it's going to be incredible. Now, if I say that, obviously I'm saying that tongue in cheek, you would start to see the absurdity of that. Why would we always keep doing that? Well, what you're doing is taking the thing that they are seeing, take that to the extreme, and obviously you see the absurdity, the shortcomings of that. That's why you need to reframe to them, this is a part of your overall wealth picture that matters, but so too does everything else. You don't have all the time in the world left to do the things that you shared with me you want to do. You don't have the luxury of even if you have a long life expectancy, having the health that you have today, that's not guaranteed forever. What about the people who matter most to you? What about the grandchildren you have of the ages they are? You're never going to get those years back. You don't have the ability to, you can fill in the blank. So start by reframing what wealth is to clients because sometimes we can get so caught up into the thing that is visible and tangible, which is the scorecard going up, the financial scorecard via the financial plan going up, we lose sight of the invisible. So you can say, Mr. and Mrs. Client, you can see this plan. Every year you work longer, there's a financial benefit to your social security, to your portfolio, to your odds of success. All of that is absolutely true. But look what doesn't show up on this: your time, your energy, your health, your relationships, the things you actually care about. So I would hate for you to get so caught up in one version of success that we end up sacrificing everything else. What we've already done is built a great plan for your financial wealth. Now, what I want to do with you is make sure we're incorporating the other aspects of your wealth too. The next tip that I would give you as advisors as you're having this conversation is tell a story. Make it concrete, make it feel more human. Numbers never motivate people to action. Stories do. I mentioned this on a previous episode I recorded a few weeks back of facts tell, but stories sell. The facts are going to tell the client that they're ready to go. The facts are going to tell the client that yes, you can do this, but they very rarely motivate action. That's where a story can be very powerful. For root advisors listening to this, Jeff has a really awesome example of doing this. Ask him if you're hearing this to send you the clip he recorded, Jeff, I hope you still have it, of a children's book story that he used. There's a book called The Awesome Book by Dallas Clayton. And he read a little excerpt of it and perfectly positioned it as being something super relevant and impactful for the journey or the stage of the journey that his clients were in as they were stepping into retirement. And the reaction to that that he got was priceless. He took a children's story and in a very indirect, disarming way, shared that with him, and it really made a big difference. So ask him to share that with you, root advisors. One that I've done before is there's a poem by Shaw Silverstein. And I'm gonna read the poem to you and then show you how I might get you gotta make sure the timing is right, you gotta make sure the client that you're doing this to is right. This isn't just a magic formula, like I said at the beginning, of say these words, say this poem, and boom, all of a sudden things are better. But I'll share this poem, or I have shared this poem, I should say, with clients before. Here's the poem. This is called Smart by Shaw Silverstein. My dad gave me one dollar bill, because I'm his smartest son. And I swapped it for two shiny quarters, because two is more than one. And then I took the quarters and traded them to Lou for three dimes. I guess he didn't know that three is more than two. Just then along came old blind baits, and just cause he can't see, he gave me four nickels for my three dimes, and four is more than three. And then I took the nickels to hear him coombs and at the seed feed store. And the fool gave me five pennies for them, and five is more than four. And then I went and showed my dad, and he got red in the cheeks, and closed his eyes and shook his head, too proud of me to speak. So what's the point of that poem? Well, there's this little boy, and because he's young, we can say, yes, how cute, but how foolish. He is trading something of value for something that's of increasingly lesser value, to the point that by the end of the poem he took his one dollar and he's traded that for five pennies, so proud of himself because he has more of something, but it's worth far less. So, how would I frame that to a client? I might go back to that client example that I gave before, of the client that wanted to update his plan, update his plan, update his plan, rerun projections. And I wouldn't say directly, no, we're not gonna do that. You're good to go, just retire. That's not going to be helpful. If what we're trying to do is inspire action or influence action, the direct approach in that case is not gonna be most effective. But what if I did this instead? I showed him the plan. I said, hey, Mr. Client, here's the plan. You know, you said you wanted to work two more years, you wanted to implement this tax strategy, you think you can save this much. Look at this. Your plan is so much better off financially because of exactly what you just did. But would it be okay if I read this poem to you? Okay. I'm gonna read the poem. Read the poem to them, go through that, and say, here's why I wanted to read that. I wanted to read that because as we can look at this from an objective standpoint and say, why would you trade something of greater value for something of lesser value? My concern is that's exactly what you're doing. Yes, the numbers look great, but what you are doing is you're now trading the best years of your life, the healthiest years of your life for money you're never even going to spend. So I don't want you to be like that little boy that has more of something, but just because it's more doesn't mean it's of greater value. What I would love to see as your advisor is I would love to see you live the life that you've dreamed of. And so, how can we start moving in that direction? I feel very confident in your financial projections. I know you worry about those. Trust me, I worry even more about those. I really want to make sure I'm never advising somebody to step into retirement if we're not fully confident that the plan we have for you is solid. But at this point, the greatest risk to your plan isn't you not working another year or not saving to your 401k one more time. It's you not ever getting around to using this money that you've worked so hard for. So that's of course using a poem, a child's story to get the point across. Jeff has a great example of using another children's book to get a great point across, but it doesn't have to be that. There's something that's disarming about a children's book. There's something that's disarming about a book that tells a really core truth that we can see very clearly when the story is read, but sometimes struggle to apply directly to our own lives. The second thing you can do is just tell a real story. How many of us have a real story of someone we know, whether it was a client, a family member, a friend, a friend of a friend who worked their whole lives, they're more than prepared, and then they passed away on the job. They passed away a month into retirement, two months into retirement, six months into retirement. When you tell that story, what you are doing is you are taking your client out of the rational, the worried side of their mind, saying, I gotta prepare, prepare, prepare, keep pushing this thing off into the realization that, geez, I need to take a big step back. I need to actually get around to living. I need to actually get around to understanding what's the point of all this. So telling a story helps to get your point across far better than simply rerunning right capital projections over and over and over ever will. The next piece of advice I would give you as advisors is to slow down a little bit. Understand that we need to lead with empathy. Lead with empathy, understanding this is very challenging for your client. There's a reason so many people struggle with this. And you can help them by giving words to the reason they're feeling this way. Help them understand why they're feeling this way. Because they're gonna be thinking, why on earth is it so difficult for me to do this? You have to explain to them. You have to help show them this. Show them, look, from the day you were born. In middle school, your job was to prepare for what's next, which was high school. In high school, your job was to prepare for what's next, which is college. In college, your job was to prepare for what's next, which is get an entry-level job. From there, you were supposed to get promoted. From there, you were supposed to get married, from there you're supposed to buy a house, from there you're supposed to start a family, from there you're so supposed to, supposed to, supposed to. Now, Mr. and Mrs. Client, you're at this point where there's no more supposeds. You've been preparing for something your whole life. It's very different to be preparing for something than it is to actually arrive. And by the way, in that preparation phase, what are you doing? You are saving, you are investing, you're putting money away. That becomes part of your identity. So your identity, whether this is conscious or unconscious, it has been shaped by what you have done for the past 20, 30, 40 plus years. So it is perfectly normal that it's not easy for you just to flip a switch and all of a sudden be okay with this concept of retirement. You are where you are because you are who you are, meaning that has served you very well up until this point. But my job as your advisor is to help you see and help you understand when are the behaviors and the things that you're doing serving what you're trying to accomplish and at what point are they actually detracting from what you're trying to accomplish. So I'm very glad you've had this mindset because it's helped you to get where you are. And it's challenging to flip the switch. But I'm telling you it's worth it. And my job is to walk with you through that. Not to say that you're gonna walk away from this meeting, being totally convinced that now's the time to do it because you saw a financial plan or you heard me tell a story. This is going to be a transition, but we need to start working towards it. It's going to be uncomfortable, but at some point it's gonna be second nature, and you're gonna look back on the work that you did to get through that and say, thank goodness I did. Because now I'm actually able to fully enjoy what I worked for and I'm not stuck in that trap of saying one more year, one more year, one more year. So sit in that moment with them. Give them permission to feel like, yes, this is hard. Acknowledge that yes, this is hard, and we're gonna walk together out of this so you can live the best possible retirement you've dreamed of. Then the final piece of this all is give them a little bit of a homework. Don't just tell them, yes, this is what needs to happen. How can you start reshaping that identity with them? Your client has that identity of being a saver, of being an investor, of being an attorney, of being a teacher, of being a you fill in the blank. They have that identity because they've repeatedly done it over and over and over. So let's start building the new identity. Build that new identity of someone who can spend, someone who can spend and enjoy what they've worked for. So, what are some practical things you can do? Well, if you know they're already at the point where they're good to retire today, but they're struggling to actually make that decision, some practical things you can do. Tell them to stop saving to your 401k. You no longer need to keep saving. We save for future consumption. If you've already arrived, let's start practicing that now. Maybe you don't need to retire on the spot right now because that's a little bit scary. But what if we stopped saving to your 401k in your homework was to say whatever that increase in your monthly spending is, spend it. That money can't go to savings. That money can't go to investments. You need to learn how to spend that money. What this is gonna do is it's gonna gradually get you comfortable so that when you do retire, you've started to break that mindset of save, save, save, invest, invest, invest. You're a little bit more comfortable spending it. On top of that, there's a good chance you're struggling to retire because you don't actually know what you want to do yet. Use that money to find out. Use that money to go take a trip. Maybe you love it, maybe you hate it. Use that money to go play golf in an expensive golf course. Maybe you love it, maybe you hate it. Use that money to donate it to a cause you care about. Maybe you find meaning and purpose in that, maybe you don't. But as you start trying these things, in order for you to maximize your retirement, you're gonna need to try a whole bunch of things. Unless you feel like you've already got it all figured out, which by the way, nobody does. This is the perfect opportunity to try before you buy. Try out what it's gonna feel like. Learn what you actually enjoy doing. Start breaking that mindset of being a saver and start living into your retirement vision before you actually do so. And in the same way, we've taken this approach of gradually landing your plane with your portfolio, gradually landing the plane with your cash flows. We're now gonna gradually land the plane with your identity and the mindset shift that it's gonna take to enjoy your retirement years. So as we start to close advisors, remember this. You cannot make this decision for your client. You can encourage them, but the best way to encourage is to take a step back, help them expand their view of what does wealth actually mean beyond just the financial wealth. Tell stories that you know are gonna connect with them to help them see the bigger picture. The stories are gonna be the things that sell, the facts are only the things that tell. And then finally, give them some homework, some very simple things. Stop saving, start spending, define what your retirement looks like. Not just broadly speaking, you want to travel and play golf, but what are you doing Tuesday morning? Walk through that specifically and how can we start living into that? And in doing so, you're gently nudging your client the right direction. You're gently pushing them towards the thing that they fear. And as they get more and more comfortable with this, they will gain the confidence to actually retire. That is it for today's episode. If you are enjoying the podcast, share it with someone who you think you could help, whether it's a coworker, maybe someone from your FPA event, anyone that you think would benefit from this, please share this so that other growth-minded advisors can start to learn the tools to be the highest performing advisor they can actually be. If you're enjoying the podcast as well, please leave a review. Spotify, Apple Podcasts, you can leave a review there. If you're not already watching on YouTube, check this out on the Root Ready YouTube channel. Subscribe and like if you're there. Thank you as always, though, for listening, and I'll see you next time.