In focus: coaching for retirement clients

5 min read 15 Apr 21

Does the idea of ‘coaching’ retirement clients – still a fairly new concept for advisers in the UK – stretch the boundaries of traditional financial advice? Or is it a natural extension of the broader trend towards holistic financial planning and the growing retirement income market?

These are just some of the topics and questions we’ll explore in our latest In Focus mini-series on coaching for retirement clients. In upcoming articles, we’ll be hearing directly from adviser firms about their own experience of using these techniques. But first, there is one important question which still needs to be answered: what exactly is retirement coaching?

Coaching concepts

When you think of coaching, it’s probably sport that first comes to mind. And the origins of life coaching are in fact linked to using sports coaching techniques as a way of setting and achieving goals in other areas of our lives. The US-based community LifeCoachHub points to Timothy Gallwey's 1974 book the Inner Game of Tennis as a major influence on the development of the profession. It argued that, in tennis, our inner critic is as powerful an opponent as the one on the other side of the net.

Retirement coaching is a specific focus within life coaching that helps people think about the non-financial aspects of retiring, especially how they want to spend their time, which can have a huge baring on the financial plan. You won’t necessarily find a nice neat definition or crib sheet of retirement coaching techniques out there – not yet at least – but a great deal of academic work has been done around life coaching in general.

In a blog on Dutch psychology platform, Positive Psychology, Jeremy Sutton PhD summarises several general coaching models including one of the most popular, GROW, which he breaks down as “Goal – where do you want to be? Reality – where are you now? Options – what could you do to get there? Will – what will you do?”

Sutton outlines a number of other academic approaches when thinking about practical applications for retirement coaching. One of the most significant commonalities is the importance of conversations. The models highlight the power of asking open-ended questions to make the individual really think about what they want to achieve.

For retirement planning, understanding what the client wants to do in later life is crucial to calculating how much money they will need and how to fund it. But part of the problem is that many of us simply don’t know how we want to spend our retirement. We might imagine it being like a long holiday, but the day-to-day reality of life after work could be very different.

An EU funded research project to establish European guidelines for life after full-time employment goes as far as to say that we should all be training for retirement from the age of 50. Researcher Dr Concepción Bru from the project explains: “More and more people are living longer and in better health [and] the sudden stop in the activity you have spent your whole life engaged in can lead to depression and related mental health issues.” The research suggests that preparing early, physical activity and a sense of inclusion and purpose are key to a better retirement.

Retirement coaching meets financial planning

It’s clear that coaching clients to help work out how they want to pass their time in later life and prepare for the non-financial aspects of retirement goes hand in hand with the development of the financial plan. So it makes sense that an increasing number of financial advisers are providing this type of coaching as a complimentary service to traditional advice.

The Initiative for Financial Wellbeing (IFW) is a leading proponent of financial coaching in the UK. Speaking in a recent industry webinar with the lang cat consultancy, Chairman of the IFW, Chris Budd, explains why it’s important to look beyond some of the typical aspects of financial planning to find out what really drives a client’s fulfilment and happiness:

"There are five parts to wellbeing: career, financial, social, physical and community. Of those, social is the biggest contributor to wellbeing. Money itself doesn't make you happy. Why? Because it doesn't look at someone's intrinsic motivations. Life is all about purpose but if you look at a lot of financial plans, they are aimed around goals and once you've achieved these goals, what next? So instead of goals, I prefer motivations.”

So just how do you put some of these techniques and principals into practice? A good place to start is to have a framework or scenario that can spark this type of wide-ranging conversation with clients, particularly when you need to strike a careful balance between getting them to speak openly while also gently guiding them to focus on particular points. One such technique which we spoke directly to one adviser firm about as part of our retirement planning case study series, is the ‘Four freedoms’. And here’s what they told us about using it in practice:

"We are getting more involved with coaching clients around their approach to the period just after retirement. We want to get people thinking about retirement, their hobbies and what they're going to do with their time. And then, when they get even more elderly, to think about long-term care or slowing down."
"We build it around something called the 'Four Freedoms': money, time, relationships and health, and we ask clients to score themselves on that e.g. "Do you feel you have enough time?"
"They'll give us a score to describe where they see themselves and this really kicks off the conversation, e.g. "If you don't feel you have enough time, are there things you could do about that or could give up in favour of other things?"

Next up on the client coaching journey

We’re starting to build a clear sense of some of the ways that coaching can work for retirement clients but there is still a lot more to explore. Over the coming months, we’ll be speaking directly to more adviser firms to find out, amongst other things, if their own experience of coaching has required a cultural shift? Have their team undergone training in coaching techniques? And, most importantly, how has all this been received so far by their retirement clients? Watch out for next month’s In Focus article to hear what they have to say.

In the meantime, if you’re interested in finding out more about coaching and financial planning, you can visit the Initiative for Financial Wellbeing.