Talking With Clients in Different Phases of Life

Oct 22, 2019 Share This 

Phases_of_LifeAs we age, it’s easier to reflect back on the phases of life and appreciate the role each played in forming who we are today. There were the awkward teen years, the aspirational college years, then a career, family and maybe even a dream home. Before you know it, retirement approaches and you wonder where the time went.

There are financial phases in life, too, and it’s important to encourage your clients to participate in markets during each stage to help ensure fiscal stability along the way.

Not only are solid financial plans important for investors to sustain comfortable lifestyles, studies show that when people are stressed about their financial health, their physical and mental health can suffer, too. Conditions linked to financial stress include depression, migraines, high blood pressure, heart attacks, ulcers, sleep deprivation and more.1

You’re helping clients live life more fully in more ways than one when you help them build strong investment portfolios that align with their financial life cycles. Here are tips on how to start the conversation during each one.

Strategies for the Three Financial Life Cycles of Life 

Accumulation Phase. Typically occurring early in a person’s career, the accumulation phase focuses on building a solid foundation; this is often easier said than done. People just starting out in the workforce may struggle to balance their expenses and savings due to income restraints, student debt and a general lack of financial savvy.

Advisors may need to spend more time helping clients establish a budget, finding ways to set up an emergency fund and tackling debt. But talking about investing needs to be part of the conversation, too. Some young people believe they need to wait to start investing until they can “afford” it. It can be a challenge to convince them that even a small amount each month is better than none. Using examples of compounding returns can clearly illustrate why starting sooner than later is a good idea and motivate younger clients to enter the market.

Conversations should also include taking full advantage of an employer’s 401(k) plan, setting up an IRA and establishing a savings account, plus strategies for avoiding poor financial habits like impulse buying and overspending.

Consolidation Phase. Those in this stage of life are more likely to have purchased a home, have a family and are settled into a career with peak earnings. Some of life’s bigger expenses may be out of the way, while others such as a higher car payment or child’s college tuition have emerged.

In general, however, a larger portion of a person’s annual wage is available for investments. Clients may be tempted to put their investments on autopilot, or they may consider withdrawing from their retirement plans to pay for expenses or splurge on the finer things in life. Talking with them about early withdrawal fees and loss of future earnings growth may help dissuade them from these financial blunders.

Now is typically the time to increase contributions to their portfolio, not downsize. Talk with clients in the consolidation phase about asset allocations that match their risk tolerance and the benefits of increasing their presence in the market. Also help them ensure their family is protected from the unexpected, such as retiree healthcare costs, and review their life insurance and estate planning.

Spending Phase. During retirement, investors ideally get to reap the rewards from the wise investment decisions they made earlier in life. The spending phase can be the most fulfilling and provide the freedom to travel, enjoy hobbies or simply spend more time spoiling grandchildren.

Some investors become more risk averse as retirement approaches, especially if they’ve lived through market downturns. And once they do retire, knowing how much to withdraw without exhausting their nest egg too soon may become a concern.

Lifespans are increasing, and clients who retire at age 65, for example, may need to rely on investment withdrawals that can sustain them for 20, 30 or more years.2 Add to that potential inflation and market volatility and investors in the spending phase may have a difficult time understanding the boundaries of their newfound freedom.

Talking with these clients about preserving their portfolio and managing risk is crucial. For those who’ve entered retirement, help them establish a sustainable withdrawal rate to know how much they can take out without running out of money. Making adjustments along the way should be expected, especially in response to market conditions or various life circumstances.

As an advisor, help put your investors’ minds at ease by explaining the tools available to help them to manage risk while still benefiting from the ROI the market provides. No matter where your clients are in life, they need an advisor they can trust—one who can teach them about investing and address the evolving fears, anxieties and aspirations they experience during each phase.

Need more resources to help your clients control risk? Access our guide, Risk Control Accounts: Limiting the Downside, Providing Potential for Higher Returns.



1 MarketWatch, This is the No. 1 Reason Americans Are so Stressed Out, Dec. 17, 2018

2 World Health Organization (WHO), Global Health Observatory (GHO) Data — Life Expectancy, no date cited


Topics: Client Relationships, Risk Control