Perspectives: Walking the Path of the Client

The following “Perspectives” appears in the introduction to RIIA®’s new client book “What’s the Deal with the Retirement Management Analyst®.”

In 1999, I sold a company – a robo-advisor as we call them now – to a large financial institution. Even though I was 44 years old at the time, one morning a few months later as I sat down with a cup of coffee trying to wake up, I realized that I was no longer thinking like an investor but that I was thinking like a retiree and that there was a critical difference between the two.

My primary focus was no longer optimizing the performance of my financial assets but instead I was looking at my entire household balance sheet. As a son, husband, father and primary support for our household’s past, current and future generations my primary focus was balancing all of my assets and all of my liabilities. I was thinking like a retiree. As you can imagine, every advisor in town wanted to become my next best friend.

However, their presentations were focused on optimizing financial assets and thus did not address what was on my mind. It was the liabilities that kept me up at night. They were silent about the liabilities.

I started looking for information about building an income from savings that needed to last for an unknown period of time called “retirement.” I came up empty-handed. The industry’s focus was on accumulating assets and optimizing investment performance.

How could I ensure that my parents, wife and children would have the right amount of income if they were the ones who lived longer? How could I find the right balance between spending down my savings and leaving a legacy to my children?

Fortunately and a few short years later, in 2003, Professor Zvi Bodie asked me to teach his class “Principles of Finance” at Boston University’s Master of Science in Investment Management. This was a full semester of fourteen, three-hour classes reviewing the entire field of finance for entering students in this specialized MBA program. I taught that class for nearly ten years and discovered along the way a foundation answer to my retirement questions: Retirement is more than investment performance management it is about risk management across the lifecycle in general and the household balance sheet in particular.

During that time, I had started another company, Retirement Engineering, Inc., seeking to build a retirement product. This is when I met Al Turco, a lawyer specialized in insurance products called Stable Value. He and I started discussing the differences between investing and retiring. How would all of the pre-retirees of the new generation be able to survive successfully without professional, expert help?

We knew the answers would need to come from the financial services industry – they have the widest reach to the most people preparing for retirement, plus the products and infrastructure to implement solutions. But, there were so many different types of financial institutions, products and regulations. The distribution side of retirement is unlike anything we’ve faced before. Boomers weren’t ready. The financial system wasn’t ready.

What we were looking for in an advisor wasn’t all that obvious. What was clear was what we weren’t looking for – canned presentations disconnected from the realities of our circumstances.

Facing these realities, Al and I founded the Retirement Income Industry Association® (RIIA) in 2005. Gathering senior members from some of the largest and most influential financial firms, we set about creating a mission and a clear direction. RIIA was to become an association of members focused on asking the right questions, seeking the best answers, and creating a new standard for retirement income that financial advisors across the industry could follow. We needed to create a new framework, a new language, and help change the mindset of an established industry.

More than a decade later RIIA continues to offer an alternative framework, language and mindset for approaching retirement. Our View Across the Silos℠ approach is more valuable and relevant than ever. And our experience of walking the path of the client uniquely positions RIIA for the new Fiduciary Age.

Find out more about ways in which our experience can help your practice or organization navigate the new realities of the retirement landscape.  Contact me at [email protected].

Francois Gadenne
Co-Founder, Chairman & Executive Director

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