Retirement planning is a matter of dollars and sense. Of course financial advisors need to help clients with wealth accumulation. But they also need to have a sense of the correlation between financial planning and changing family dynamics, health care concerns and various lifecycle events, says Neal Cutler, Ph.D., dean of The American Institute of Financial Gerontology and associate director of the gerontology program at the University of North Carolina-Greensboro.

In his book, Advising Mature Clients: The New Science of Wealth Span Planning, Professor Cutler acquaints readers with trends in retirement, longevity, health and long-term care, and other key issues to help advisors better understand their clients, and help them plan for and comfortably live out retirement.

TRI: What is wealth span planning?
Cutler: It’s the recognition that there are different kinds of planning that are connected with the various stages of a person’s life. You could look at wealth span as one horizontal line running from young to old. You also have the lifespan line that includes life stage or lifecycle events related to a person’s employment, family and health. Understanding the life stage events makes the financial side easier to comprehend and plan.

TRI: How should advisors look at aging and related trends?
Cutler: Financial advisors need to know about their client’s individual aging. They also need to understand populating aging trends in the country. The obvious trend nowadays is the baby boomer generation is moving into their 60s and they are affecting everything about finance in the same way they affected everything throughout their lives from delivery rooms and schools to the job market.

There’s also family aging. It’s critical for financial professionals to recognize that nowadays a 55- or 65-year-old is likely to have aging parents as well as children at home. The changing family structure greatly impacts financial planning.

TRI: How has wealth span planning changed over the years?
Cutler: There’s been a big change in the balance of the wealth span. Financial advisors need to emphasize to their clients the fact that nowadays, compared to previous generations, people have fewer years to accumulate wealth and it has to last a longer amount of time. This is especially dramatic for women who typically don’t work as many years, earn less and live longer than men.

TRI: What is the most critical component of wealth span planning?
Cutler: Health care is the most critical component for mature clients. People are more worried about the cost of health care than they are concerned about funding their lifestyle. They know they can adjust their spending; it’s the fear of the unknown that’s most troubling.

TRI: Do financial advisors need to become health care and insurance experts?
Cutler: They need to become health care knowledgeable and understand where the client is going to get coverage when they retire for themselves, their spouse and possibly their children. It’s amazing how many planners don’t realize that age eligibility for Social Security and Medicare isn’t the same any longer. Many also don’t understand the complexities of Medicare, Medicaid and long-term care insurance. Even if they don’t know the details of every plan, they need to know what’s available and understand alternatives such as medigap insurance and affinity health plans.

TRI: How does wealth span planning benefit advisors?
Cutler: They need to understand a whole range of non-financial variables or factors that are intimately connected to financial planning. If they don’t, then they should work with others who understand family, health and aging issues. They then become invaluable and a trusted part of the family team.

Resources
To learn more about Wealth Span Planning, read Cutler’s book, Advising Mature Clients, or visit The American Institute of Financial Gerontology website.