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By Steven Wallman

CEO

The Future of Financial Planning

We’ve All Heard “The Numbers About the Future”

But to remind us:75 million people (Baby Boomers)

will be approaching retirement over the next 25 years

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20.00%Male Population -Age 65-84

Female Population- Age 65-84

Male - Age 65-84

Female - Age 65-84

Growth in Retirement Population (Age 65-84)

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Male Population - Age 85+

Female Population - Age 85+

Male - Age 85+

Female - Age 85+

Growth in Retirement Population Over Age 85

But, Older Age and Retirement -- Is Not the Same as It Was

• Not only is life expectancy getting longer, it’s getting longer faster– So expectations about getting older need to be reset more

swiftly• Older Americans are also healthier

– No longer does retiring at age 65 hold the promise of only a few more good years

– now it’s 20 -25 years instead of 10 -15, as it was as recent as 1980

– It holds the promise of a second career, of extensive travel, of continued vitality, and continued expense

And End Of Life Costs…

• Are accelerating as medical technology gets far better -- and far more expensive– Over one-quarter of total Medicare outlays are for care in

the last year of life – and this has been unchanged over the last 20 years

– More importantly, an individual’s medical expenditures in the last year of life are just under the annual median income for a U.S. family of four

– And overall, all spending on medical costs keeps rising• from over 15.4% of GDP in 2004, • growing to 18.7% of GDP in ten years

The Implications Obviously Are Enormous

• One-third of Americans appear to be on track for a reasonable retirement

• About a third more are, at best, playing catch-up– they can reduce expenses and lifestyle enough, and work

longer, to retire about as they would like– but they have to make those changes– will they?

• And a third are so far behind today that Social Security or friends and family are likely to be their only saviors– almost nothing they do will let them catch up

Does Anyone Care?

• Obviously, we all do – • But what are we doing about it?

– Governments debate how best to encourage savings

– Employers seek ways to assist– Financial services firms advertise products and

services– And future retirees fret

The Role of Government

• This is clearly a societal concern -- effecting all of us -- and having impact as to political policy making and social stability

• It goes to the core of what kind of a society we want to be

• But what can government do?

Employers

• There was a time when employers might have been expected to assist – or unions

• In 1985, almost 80% of all full-time workers were covered by a defined benefit plan

• Today, it’s closer to a third• Employers know the need is great

– they would like to help– but it’s not their core business

• And they have turned to DC plans because of lower responsibility and liability– that will not change unless the law does

Financial Services Firms

• The old adage is “securities are sold not bought”• Prospective retirees who see their future at risk are

wary of trusting their broker – the default financial advisor

• More easily accessed/trusted financial firms – banks and insurers – are not seen as experts

• Firms are perceived to exist to sell products and services

• Not to assist and help as honest problem solvers finding the best solution

• But what/who else is there?

And So, Individuals Fret Over Their Own Retirement Planning Considerations

• Income• Accumulation & Growth• Risk Management• Tax Considerations• Estate and Planning Considerations• Flexibility • Complexity• Uncertainty, and all leads to• Worry

What Can Be Done To Help?• Technology will help some

– The Internet provides an historic means to distribute information

– It’s inexpensive, it’s interactive, it’s pervasive• The pressure of the baby boomers will force

markets, firms, governments and others to provide some response

• But there needs to be a new professional that provides – leadership, assistance and advice

• In an – objective, – unbiased and – conflict-free manner

• To help people think about their future

This Needs A Broad Approach

• There is a real, and excruciatingly important, need to assist and provide help

• There is a need for a professional to pull together a number of different disciplines, and interact with the professionals in each– Medical– Legal– Insurance– Accounting– Spiritual, as well as– Investment and other Financial

It Requires

• Considering the total picture• Realizing today’s investor is more

knowledgeable and more involved• Revising assumptions about what a retiree

will look like• Revising assumptions about how to meet

their needs

Adapting to The Needs of The Market

• A percentage of the “retirement wave” will meet the traditional high net worth/advised client profile

• But many will not– Those that do not still need help/advice, and

many will be willing to pay some for it– Can advisors and providers adapt their

business models to meet the needs of this group?

The Financial Planner Is In The Best Position To Lead

• Doctors are highly focused on their profession and its complexities

• Lawyers are too focused on specific planning needs related to taxes and estates

• Spiritual leaders are not trained in this arena• Brokers sell products – and they can adapt – but

will they?• Financial planners are the best candidates

The Financial Planner As “The Future Planner”

• The job requires depth -- and breadth• The CFP® certificant could add significant

value by ensuring the ability of a professional who provides advice regarding future planning

• In concept, a “Certified Future Planner”

Expectations

• Assist clients in taking inventory– Housing– Healthcare– Lifestyle– Estate Planning– Etc.

• Assess needs• Manage the transition

– Rollovers and Distributions– Tax Consequences– What to do with the money– How to understand if it is enough

Solutions

• Manage to the needs of the client– Unified Approach– Transparency

• Fees• Investments

– Increased Diversity of Investment Selection• Managed Accounts• Annuities• Alternative Investments• Reverse Mortgage• Etc.

– Holistic advice encompassing the client’s whole life

Solutions

• Team Approach– CFP® professional as “team leader”– Involve other “expert” professionals

• Investment Management• Healthcare• Insurance• Attorney• CPA

• Technology – Enables this new approach– Tech friendly clients– Fee compression

Conclusion

• Greater retirement – future -- planning need than ever before

• Retirement needs to be redefined

• Is this an industry prepared to meet the needs of the market?

• There’s a need for a Certified Future Planner that can really, finally, bring this all together

• Who can rise to this challenge?