How advisors can reshape the retirement landscape by acting as behavioural coaches

In our recent Retirement Readiness Survey 2023, it struck me how retirement carries a cloud of negativity in India. Perhaps it's because we've witnessed our elders grappling with health issues, boredom, loneliness, and financial dependency on their children. It's like we've collectively decided not to talk or even think about retirement – a classic case of what psychologists call "optimism bias." We naturally lean towards planning for positive outcomes and avoid dwelling on the negative possibilities.

However, as financial advisors, we have a unique opportunity to change this mindset in how our investors perceive retirement.

But before that, I believe this only can happen if we as financial advisors transcend from our traditional roles and become behavioural coaches. Beyond merely managing portfolios, financial advisors need to empower their clients to embrace financial freedom as a positive, lifelong journey. And a key aspect of this transformation involves instigating a shift in mindset, steering clients away from the conventional notion of retirement as an endpoint and towards viewing it as an opportunity for renewed purpose and engagement.

However, its easy said than done, transforming a mindset isn’t a simple feat, it requires a shift in perspectives. To truly change the way we think, it involves cultivating new viewpoints, embracing diverse experiences and actively seeking out alternative ways of looking at situations. Thus, to promote a thought of “being financially free” replacing with “retirement” – advisors need to instil their clients with a unique perspective i.e.—

Our money doesn’t simply flow from our ‘jobs’ or ‘professions’; it emanates from our unique skills and talents:

Dr. James Grubman, a psychologist and a financial expert who had spent several years counselling people through challenges of managing great wealth, stresses that those who sustain wealth, they transition from considering money in terms of income to viewing it as ‘assets’.

This means your skills and talents are the true generators of income. When one lends his/her skilled labour to their employer— their time, energy, and intelligence— in amalgamation creates value. Moreover, possessing specialised knowledge or experience amplifies the value of their assets, offering substantial potential for income generation.

Thus an effective approach is advising clients to learn and master multiple skills aligned with their interests. By diversifying their skill set, individuals are better positioned to capitalize on various opportunities, creating a robust foundation for financial security. It not only mitigates risks associated with a singular income stream or losing income in case they lose their jobs for some unfortunate reasons but also transforms the retirement narrative into one focused on continuous growth and adaptation, when they stop working.

Financial advisors can play a pivotal role in guiding clients towards identifying marketable skills and turning hobbies into income-generating ventures. Whether it's freelance work, consulting, or entrepreneurship, the key is to leverage skills for financial gain. It could be like a well-rounded chef who blends diverse ingredients to create a flavourful dish. In the same vein, financial advisors can guide clients in blending various skills that resonates with purpose and fulfilment and allow them to savour the richness of multiple income streams.

Let me narrate a few stories to that illustrate how, when advisors choose to, they can shift perspectives and the significant impact it can create for their clients.

The Tale of Rahul’s Early Financial Freedom

Rahul Mehrotra, a trailblazer who defied traditional notions and achieved financial freedom well before the typical retirement age. A software engineer by profession, harboured a passion for graphic design. Recognizing the demand for quality designs in the digital realm, he decided to monetize his artistic prowess. With strategic guidance from a forward-thinking financial advisor, Suresh Golpala chandan, Rahul established a lucrative side business that not only supplemented his income but also laid the foundation for early financial freedom. His story is an inspiration, illustrating the power of skill monetization as a catalyst for shaping one's financial destiny.

The Inspiring Journey of Renu Mahajan

Now, let's turn our attention to Renu Mahajan, a retiree who, inspired by Rahul’s story, narrated by her financial advisor Suresh, embarked on her own journey towards financial empowerment. In her mid-60s, she found her passion with guidance of her financial advisor— recognizing her love for crafting, encouraged her to turn this hobby into a thriving business. By monetizing her creative talents, Renu not only generated an alternative income stream but also discovered a renewed sense of purpose and engagement in her golden years. This impactful story serves as an inspiration again, illustrating the potential for a paradigm shift in retirement planning.

Sharing Rahul's story with Renu and witnessing how Renu drew inspiration from it, her financial advisor harnessed the potency of vicarious learning—a psychological phenomenon where individuals learn and are influenced by the experiences of others. This powerful tool enables advisors to shape perspectives effectively and make a meaningful impact on their clients' lives.

Now coming back to where we were,

In the recent Retirement Readiness survey, a noteworthy 44% recognized the importance of generating a secondary source of income through their unique skills, surpassing percentage of participants preferring generating income from financial investments. Additionally, out of 36% of respondents, who reported to have secondary source of income, a significant percentage of respondents (on an average around 70%), also reported that they are prepared towards retirement, enjoy their profession/work, feel financially free and secure and have a secured job. Now, this highlights a significant opportunity for financial advisors to integrate these two aspects for their clients, which has the potential to contribute to a positive shift in mindset, transforming retirement from a traditionally negative perception to a stage marked by happy and independent financial freedom.

Access PGIM India Retirement Readiness Survey 2023 here.

Bearing the above thought and insights in mind, PGIM has curated a comprehensive compendium of 50 gigs- a practical guidebook for those seeking secondary income sources pre and post-retirement. This book delves into a myriad of enjoyable gigs that offer a regular income, ranging from landscaping to call specialists, from on hire CXO’s to launching advisory services or event management companies. It outlines the steps one needs to venture into these fields, associated costs, where to learn and more, serving as a valuable resource. This serves as an investor’s toolkit for achieving financial freedom, providing advisors with a valuable resource to initiate conversations and reassure about the potential for generating a secondary income source.

Access these 50 gigs here.

In conclusion, financial advisors can reshape the retirement landscape by acting as behavioural coaches, inspiring clients to embrace a positive outlook on financial freedom. Moreover, emphasizing the importance of staying mentally and physically active post-retirement is integral to this new narrative. Financial advisors can advocate for a holistic approach to retirement planning that encompasses not only financial aspects but also well-being and fulfilment. Be mindful, we're not suggesting a covert side hustle, but rather encouraging the cultivation of skills, nurturing hobbies, or strategically planning for additional income-generating gigs. Perhaps even establishing ventures that family members can manage to bolster household finances. It's all about making deliberate and holistic choices for a more secure financial future.