Mark McGrath knows how difficult it can be to arrange for retirement. Almost ten years ago, he saw his father struggle with losing his identity as a business owner after selling his store and retiring.
It culminated in tragedy.
McGrath, a certified financial planner with Sweeney Bride in Squamish, Canada, wrote about his father’s passing on Twitter weeks ago, with the thread garnering more than five million views. VettaFi caught up with him to talk about how the experience has changed his outlook on how financial advisors can support their clients beyond their portfolios.
This interview has been edited for clarity and brevity.
Dan Mika, VettaFi: it’s been almost ten years since your father passed away, and I will let your story on Twitter stand on its own. But how has that experience changed how you approach talking with clients about retirement? In particular, you work with doctors, people that really dedicate their lives to their work.
Mark McGrath: This would have been back in 2013, so I was really just getting started as an advisor. I had been an advisor for a little while, but it was more of an administrative position at that time. And it wasn’t until about eight months after that I kind of took on my first full-course advisor role. It still would have been fresh in my mind. It was probably a couple of years later, really, when I started to do kind of more serious retirement planning for clients.
This story is obviously something that I’ve carried with me for a long, long time. And to be quite honest, it’s difficult because, as financial planners and advisors, we don’t have training in this generally speaking (in) how to have, how to approach these conversations, and how to look outside of people’s finances when trying to help them with that transition into retirement. It’s something I’ve honestly really only scratched the surface on. I’ve chatted with many advisors who do have some training; they intentionally went out and sought training in this area. Some of the things that they like to focus on are, what is that safety net that you have outside of work? In my dad’s case, it was the “title guy,” but if you were a firefighter or a police officer, whatever it is, are you okay giving that up? Are you comfortable knowing that people aren’t going to come to you for the same reasons that they did during your working life? It’s asking what other hobbies and activities you are doing outside of the workplace, how much time you are spending in these places, and… trying to help them visualize what life is really going to be like.
In some cases, and this is certainly not possible for a large swath of the population, but can you give it a test run? Can you take a sabbatical? Can you take three months off, go throw your phone in a lake, and fully disconnect from work? I think where people can at least give that a shot, it might give them a taste of what it looks like.
Since I posted that Twitter thread, I’ve been flooded with people sending me resources, books, workshops, and organizations involved in these types of conversation. So I’m trying to get a little bit deeper into it myself.
VettaFi: How has it been trying to broach that topic? As an advisor, you spend a lot of your time talking with clients about their portfolio, their estate, and taxes, talking primarily about their financial life. How do you make that transition into talking about things outside of their financial lives?
McGrath: Part of this depends on the depth and the quality of the relationship you have with that person. Most of the people I’ve worked with that are transitioning into retirement are people I’ve worked with for many years now. We’ve been having casual conversations all the time. We’re talking about their kids, their grandkids in some cases, and their vacations. That type of conversation is a little bit easier to have with clients (like that) because we know each other well… It’s a lot more complicated with someone you’ve only been working with for a short period of time or with somebody that’s coming to you at that transition point where maybe they just need to switch something up, they’re not happy with their current advisor, or they don’t have an advisor, and they’re coming to you specifically for retirement planning. That’s a more difficult conversation.
In the former situation, that’s a lot easier to be off-script and just be really open and heartfelt in those conversations. In the latter, you have to go off-script. But for me, it becomes part of my discovery process with clients… Before we engage in financial planning, I have to collect all the quantitative stuff to draw up the financial aspects of their financial plan. But then there’s a whole list of qualitative questions about their values and experiences and their upbringing with money, what they’re retiring to, and what are their goals and their dreams. It’s a little bit more on-script in those scenarios. But the alternative is not having these conversations with these people. And I think that can lead to a much worse outcome.
VettaFi: I can imagine it might be difficult for some advisors to jump from mainly being involved in a client’s financial well-being to being part of their emotional and personal well-being, mainly because the advisor-client relationship is usually structured as a business agreement. How do you kind of approach that dynamic?
McGrath: I think those expectations need to be set very, very early. In my very first meeting with a new prospective client, what I call the engagement or the fit meeting, I lay out my process to them. (I already explained) that the financial stuff is the boring stuff, but we’ve got to collect it, and it’s important. We’re going to give you a set of projections that we know will be wrong, and we can provide you with recommendations to improve your situation and help you towards your goals. But really, the more important of the two is the qualitative conversation we will have. This is why financial planning is so unique and so personal. Everybody’s different. Everybody has different goals and ambitions and concerns, and fears. If you aren’t getting to the heart of those people, then they may as well just go to a robo-advisor… or find a blog post that they like to answer that specific financial question. So in that very first meeting with people, we’re telling them, this is what we’re doing, we’re doing this for you and your family, and your spouse needs to be involved in the conversation, or I’m not going to move forward. Because it’s not just about the financial aspect of it, right?
I think once you set people up that way to understand what type of experience they can expect, you then give yourself and your client’s permission to spend a lot less time talking about the markets and portfolio performance and that type of thing in subsequent meetings. So now, I barely speak about markets at meetings, we barely talk about performance. Clients are barely even asking you about performance anymore because the conversations are so much more centered on whether are we moving in the right direction for you and your family.
VettaFi: What are some warning signs that you recommend other advisors look for amongst clients who may be at risk of this identity loss that your father had to go through? And what would you recommend they do?
McGrath: That’s tough. In my dad’s case, I didn’t really see it coming. Maybe it’s because I was naive and didn’t have much experience in this realm at that point.
But I’ll give you an example. There’s a client I know that’s retiring soon. He won’t take a meeting with me except for after work hours. He’s in control of his calendar and pretty high up within his role, but he won’t meet with me during working hours. It kind of tells me that he’s prioritizing his workday towards his work as he feels mentally or emotionally that he can’t step away from his job even for an hour to have a meeting during my working hours. We end up meeting at 4 p.m. or 5 p.m. at night after he’s off work. So that’s kind of a concern. Because, I mean, if he can’t step away for an hour from his own job, which he has control of, to have an important conversation about this other aspect of his life, how difficult will it be to give up that job completely?
Then you kind of get a gauge of what people’s activities are as you’re talking to them. Many people will say that as soon as I retire, I’m going to travel. But you’ll know from working with someone that that’s really going to happen. Another client I’m working with, they want to spend a whole bunch of money on travel in the first ten years, but in the years that I’ve worked with them, I think they’ve taken one vacation. And people don’t generally change all that much. Once you’re in your forties or fifties, you know what you like and what you want to do. They could be taking vacations now, and they’re not. So I think they’re going to face this situation where they retire: they travel for a few weeks, and then come back and go, “Yeah, that’s not really us.”… And now what are we going to do with ourselves?
So I think there’s some, there are some cues that you can pick up just through the relationship, trying to think if there’s anything else that kind of jumps out as being a concern.
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