3 Reasons Retirees Should Work With Younger Advisors

Written by: Colin Hurst

Realizing that I am the same age as many of my clients' grandchildren was a profound moment. It made me understand the weight of my role, not just for my clients but for the generations that will follow. This realization has become a guiding light in my career, a beacon of the beautiful journey I am embarking on.

As a financial advisor in my 20s, I bring a unique perspective. While I may not have the same life experiences as my clients, I offer a different lens through which to view their financial planning. Retirees should consider working with a younger advisor who can bring time-tested strategies and up-to-date information to their retirement planning. Younger advisors should not be intimidated by working with retirees; they can enjoy a great career by embracing the opportunity to learn from their clients' experiences. Retirees have several advantages from working with a younger advisor.

Long-Term Relationships

According to Forbes, the average life expectancy for a 65-year-old retiree is an additional 20 years. Most people who are working with a financial advisor are working with someone close to their age. Many investors fail to consider that if they are close to retirement age and are working with an advisor around their age, their advisor is probably thinking about retirement too! This is where a younger advisor can step in and provide a stable, long-term relationship. Retirees need to ask themselves, "Do I want to go through the process of finding a new advisor partway through my retirement?" The answer for many is no.  This is an opportunity for young advisors to build a solid relationship of trust with their clients, which could potentially last for many years, and could contribute to the stability of their client's financial planning.

Impact Opportunities

So much of financial planning revolves around preparing for retirement. In retirement, people have opportunities available that are entirely different than during their working years. While someone is working, they don't have to navigate Medicare Income Related Monthly Adjustment Amount (IRMAA) or Required Minimum Distributions (RMDs) from qualified accounts. Yet, so much of what happens with one aspect of retirement has a ripple effect in other areas.

For example, let's say that a single person has to take out RMDs, has interest from a CD at the bank, and is receiving Social Security. Between all sources, their Modified Adjusted Gross Income (MAGI) was $103,100 in 2022. That would cause their annual Medicare Part B and Part D Premiums in 2024 to be $993.60 more than the base premium. Yet, if they had only $102,999 of MAGI, they wouldn't have had to pay the extra $993.60. The additional $101 of MAGI cost them $993.60 in extra Medicare premiums! Retirees need to be aware of these kinds of financial implications, and younger advisors can help navigate these complexities. Depending on the client, there are multiple strategies, such as Qualified Charitable Distributions, to help reduce MAGI and avoid unnecessary taxation. The impact of these strategies over a multi-decade retirement can be incredible, and it's our job as advisors to ensure our clients are well informed and empowered to make the right choices.

See Client Wishes Through

Unless something tragic happens, younger advisors will likely live longer than their clients. I've had several clients pass away, and it's by far the worst part of my job. The silver lining is that younger advisors can help see client wishes through. Most often, this happens when a couple is married, the husband passes away, and his wife is still living. Now, she not only has to deal with the emotional toll of losing her partner, but she also has to navigate all of the financial changes that come with being single. It's an honor to help support families during a difficult time and help make sure that the financial plan they laid out helps take care of the survivor. Their spouse isn't left picking up the pieces of their financial life. I can look them in the eye and say, "The only thing you need to do now is grieve. You and your spouse did a great job taking care of each other. Focus on what you need personally, and we'll continue to work the plan you laid out together."

In conclusion, the partnership between retirees and younger advisors can bring about long-term relationships and impactful strategies and help see client wishes through. By embracing the opportunity to learn from their clients' experiences, younger advisors can provide time-tested strategies and up-to-date information, ensuring a stable financial planning journey for retirees. It's not about being "the expert" but helping clients reach their goals and making a meaningful difference. This partnership creates a beautiful journey for advisors and clients, fostering trust and continuity of service that lasts for decades.

Related: Outsource or Keep In-House: That Is the Question

Investment Advisory Services offered through Alphastar Capital Management, LLC, a SEC registered Investment Adviser. Gray Hurst Wealth Advisors, INC and Alphastar Capital Management, LLC are separate and independent entities. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability.