Financial advisors struggle to gain attention in the marketplace because so many financial advisors offer exactly the same services at exactly the same price for basically the same results.
But there is a growing opportunity that I think is underserved in today’s marketplace. It’s a great opportunity because there is a pressing need for very specific services, the target market is quite responsive, and I believe this target market will grow in time.
For years, people have heard about the importance of putting money aside for retirement. They have diligently socked money into a 401K (or some other retirement investment vehicle). Even though most people haven’t saved enough, they at least saved something.
But the market crashed. People saw their portfolios cut in half while the value of their homes evaporated, too.
For those who have several working years before retirement, it’s difficult but not devastating. They can rebuild (and the market is coming back slowly).
But then there are people who are basically a year or two from retirement. They have three options:
- Keep working for as long as they legally and physically can
- Rely on family to help them financially
- Become hobos
None of these options are ideal (although I suspect that all three will be contemplated at some point!). So if you’re a financial advisor, what can you do to “own” this market? Here’s what I suggest:
- Throw out some of the trusted money management models you’ve relied on in the past (of putting more and more of your retired clients’ assets into bonds). These investors may be older but they are much more willing to explore new (and riskier) investments.
- Become an expert in financial instruments like reverse mortgages, home equity lines of credit, etc., that you might not have considered before because most of your clients didn’t need them… but your new target market might need to rely on them.
- Make a huge list of ways that your clients can make additional money — things that they might not have considered before but now have the time and money to do. Starting a small business or investing in real estate are two possibilities. Retired people have accumulated a lot of stuff and, with the financial meltdown still fresh on their minds, they might be willing to sell some of their stuff that they don’t need anymore. (That sounds drastic but some clients will need to accept drastic measures, or will at least want to know what their options are). So understand how they can sell stuff they don’t need.
- Help your clients access resources to change the way they live so they can stretch what little money they have left in their retirement accounts.
- Provide the emotional support that will come with helping these clients redefine what their retirement will look like.
As a financial advisor to a target market of “retiring-but-broke” clients, you would need to rethink what you advise. But this market is highly motivated and rethinking what they can do to rebuild their retirement fund, which includes retinterpreting how they perceive risk, reward, and what their retirement will look like.