Page 12 - Newcom

12 | INVESTMENT EXECUTIVE NEWS The longevity
February 2020
NEWSMAKER
advisor
Joseph Coughlin, founder of MIT’s AgeLab, recommends a new approach to helping your clients prepare for retirement
BY GREG DALGETTY
a client’s idea of retire-
ment often is vastly different from the reality of retired life — something Joseph Coughlin knows well from his research into global demographic change.
Coughlin, founder and direc- tor of the Massachusetts Institute of Technology’s AgeLab, is one of the world’s foremost author- ities on aging. He has conducted extensive research on retirees around the world and is the author of The Longevity Economy: Inside the World’s Fastest-Growing, Most Misunderstood Market.
In December, Toronto-based CI Financial Corp. announced that it had partnered with Coughlin, who will advise CI’s advisors on how to prepare cli- ents for retired life; according to Coughlin, retirement lasts approximately 8,000 days — one- third of an average adult’s life.
“I don’t think advisors are prepared at this point to be able to help [clients] anticipate just how long that is,” says Coughlin, who is also behavioural sciences fellow of the Gerontological Society of America and a fellow of Switzerland’s World Demographics & Ageing Forum. Through his research, he has found that retirees often say the same thing about life after work: “I had no idea how long it was going to be.”
Kurt MacAlpine, CEO of CI Financial, says Coughlin will be “actively involved” with CI in several ways.
Coughlin will offer his insights to CI’s advisors and portfolio-management teams, MacAlpine says, and also appear at CI educational forums to “help clients understand what [retire- ment] means and what it looks like as you navigate the complex- ities of retirement.”
With Canadian seniors liv- ing longer than ever before, Coughlin suggests advisors will need to shift their focus from financial advice to longevity advice.
“I would suggest that the new business of financial advice is being a longevity advisor,” Coughlin says. “Managing money is certainly valuable, but increasingly, that kind of quanti- tative management can be done by algorithms.”
Advisors, Coughlin notes, typically ask clients about their objectives in retirement. But most clients “don’t have a clue what those objectives are,” he says. These clients may say they want to travel or spend more time with their grandchildren, but such activities will consume only a frac- tion of their time in retirement.
“While grandchildren are
cute, at eight, nine or 10 years old, they start to get involved in soccer practice and all kinds of things,” Coughlin says. “Unless you’re there to provide transportation, those kids need an appointment secretary to be seen.”
Coughlin recommends advi- sors focus on helping their cli- ents anticipate issues they’ll face in retirement, such as deciding where to live. Clients may be tempted to choose a remote locale with beautiful scenery, but such choices can be impractical.
According to Coughlin, cli- ents should ask themselves: “Where are the doctors I’m going to need? Where are the emer- gency services? More important, what are the social connections I’m going to have on a daily basis?”
Social isolation is one of the biggest issues retirees can face. Coughlin suggests advisors play a role in helping clients establish social connections before clients retire: “Can we imagine the next generation of financial advisory teams being one that doesn’t just hold a seminar on your pension plan, but also holds events to socially connect clients?”
In choosing a place to live, Coughlin recommends advisors ask clients to consider whether a location has enough activities to keep them engaged and excited in retirement. Other important considerations are population density and accessibility — par- ticularly when a retiree’s mobil- ity becomes an issue.
Men, Coughlin says, can find the transition to retired life par- ticularly challenging because they often let their work define them.
“Women tend to be far more social and more prepared,” Coughlin says. “As soon as I know a man’s name, the second ques- tion I will ask is ‘What do you do?’ Well, on Friday, you have an answer. On Monday, you might say, ‘I was...’ and on Tuesday you start looking at your spouse and saying, ‘What are we doing?’”
One thing retired couples are doing more frequently is getting divorced, Coughlin says. Men who have few social connec- tions or plans about what they’ll do with themselves in retire- ment may find their wives grow- ing tired of them — particularly when men have nothing to do but putter around the house all day.
“Advisors can start to engage with clients in their early 50s to ask the question: ‘Have you identified things you want to be involved in in retirement?’” Coughlin says, emphasizing the importance of establishing social connections before retiring.
CI Financial Corp. has partnered with Joseph Coughlin (above), founder and director of the Massa­ chusetts Institute of Technology’s AgeLab. Coughlin says our concept of retirement has to change.
Men can find the transition to retired life particularly challenging because they often let their work define them
“Ultimately, [has the client] made that connection well before that last paycheque comes?”
Another way clients can avoid feeling rudderless later in life is to continue working — even if it isn’t out of financial necessity.
“There are very few of us who are disciplined enough to have a highly structured life, Coughlin says. “Work does not only pro- vide a paycheque; it also provides structure and, for many of us, it provides meaning. Retirement is a very long time, and until society and individuals can find a way to structure it so it’s engaging and exciting and meaningful, work- ing longer may be a good idea.”
Coughlin also will play a role in product development at CI, MacAlpine says.
“He’s going to be critical to
our product-development pro- cess as we think about build- ing ‘in retirement’ solutions for clients that really reflect how people live in retirement,” MacAlpine says.
When CI announced its part- nership with Coughlin, the firm stated in a release that it planned to launch its CI Vantage Managed Payout Portfolios in early 2020. The new offerings are designed to “provide investors with pen- sion-style risk management and a steady and predictable retire- ment cash flow,” according to the release.
“When you look at the asset-management industry, the [retirement-related] prod- ucts and solutions that are being offered are too simplistic in nature,” MacAlpine says.
MacAlpine adds that he expects Coughlin’s involve- ment with CI to address a need expressed by advisors.
“When I talk to advisors, I ask them: ‘What’s the single biggest challenge you’re facing in your business today?’ Most people would say it’s helping their cli- ents navigate the complex- ities of retirement,” MacAlpine says. “What [Coughlin] brings to the table is the single best point of view globally and the most in-depth research on how people age and how they live in retirement.”
Part of Coughlin’s view is that our concept of retirement will have to change as the next wave of Canadians prepares to settle into their golden years.
“We’re living in a world where we’re using our grandparents’ and parents’ idea of retirement for an entirely new lifestyle that no one has ever written a script for,” Coughlin says. Helping cli- ents navigate this new lifestyle, he adds, is the “new necessity to provide lasting value.” IE
©2019 JOSEPH COUGHLIN