An experienced advisor is expanding his practice to better serve clients in an area he believes the industry is largely failing them – “The Final Chapter” of retirement.
David Little, of Little Wealth Management Group, is looking for new advisors to help grow this area of his business and has also founded the Retirement Income Planners of Canada, a website that invites people to ask questions about that vital stage of their life.
Little has seen a gap in the market and is frustrated at the emphasis on the accumulation side of the wealth management industry, while only a handful of advisors and firms focus on what he believes is the important part of our lifetime – retirement.
He spoke to WP on the same day he had what he called a typical meeting with a client, who has just been offered a package from his employer to retire. Little said he was in the office for two-and-a-half hours asking questions about his retirement income that no one has been able to answer effectively, including his employer.
People appear unsure how they are able to get the income they desire to have a comfortable retirement because they don’t understand where the money is coming from. Little believes there is a minimum of eight sources for each couple.
He said: “I feel that it’s actually an art every year to manage those sources of income for every client - not just for current income and current taxable income but also so you are not leaving a massive legacy that the government taxes on the death of both spouses.”
Each person typically has retirement income from an RRSP, Old-Age Security (OAS), the Canada Pension Plan (CPP) and usually a TFSA, while many now have a non-registered cash account. Little said that in 20 years, no client has been able to tell him the right number of income sources and believes that it’s because the larger financial institutions lean so heavily towards saving money.
“In my personal opinion, they charge fees for it so they want money coming into the coffers. But really what the client is asking is how do I actually retire? What do I need to retire and how do I get my income?
“What the larger institutions say, in my own personal experience when I worked there, is well, nothing really changes. Before you turn 71, at the latest you have to turn your RRSP to a RIFF and we just send you a monthly income.”
He argues that while everything you do up to retirement is finite and mathematical, “The Final Chapter” is harder to present because you don’t know the annual return, inflation rate or even when you are going to die. Therefore, the retirement spending stage is simply not the same as the retirement savings phase.
Little explained that his practice tries to educate people that there are these eight sources of income and that they need managing. He has made a conscious decision to target this area in a way that’s most accessible and has invested in new audio equipment to create a series of videos people can engage in.
The RIPOC web presence ties into that and acts as an education part of the office. He believes it will not only drive people to his business but also help address a knowledge gap many in the industry are inadvertently encouraging.
He said: “I truly believe it’s because nobody likes to see assets going down and people taking money out. Everybody wants people to put more money in because in some ways it does two things: it accomplishes the goals of how much do I need and it also accomplishes the goal that new businesses grow by new money coming in, they don’t grow by money going out.
“One might put forward the argument that there’s not been a lot of training on the spending side of the retirement picture - it’s all been geared towards the savings side.”
Figures on how many Canadians actually have a financial plan suggest a swath of advisors have dropped the ball and Little is adamant that if his practice shows a deep-seated empathy to help people navigate the “Final Chapter”, it will grow.
He said: “I’m not trying to build this thing to see if it works. I’ve been in the business long enough now and I’ve had clients from 65 to the grave. I know what we do works because I’ve done it. It’s not a philosophy, it’s not an ideology, it’s practical application of what I’ve experienced in helping people go from that day of retirement until the day they walk off the earth.”
James Burton is a journalist and news editor with Wealth Professional Canada.