How an advisor focused on retirement income wins over his clients

David Little has built his practice to deal specifically with his clients’ retirements. The Senior Wealth Advisor at Blue Oceans Private Wealth of iA Private Wealth in Burlington sets parameters for his client base, focusing exclusively on clients who are within seven years of starting their retirement, or already retired. He has chosen that focus because, as he puts it, “there are no similarities, whatsoever, between retirement savings and retirement income planning.”

Little explained why retirement income planning is so different, and how he’s incorporated that approach into a wider service offering that includes estate plans and behavioural management. He outlined why that approach has won clients over to his practice and how he has worked to maintain a steady stream of referrals. At the core of his practice, he says, lies an emphasis on assuaging any retirees’ biggest fear: that they will outlive their savings.

“Lifestyle should not outlive your retirement assets. So when, when people come to me after 30 years of dealing with somebody, I tell them, ‘we really are very focused on that final chapter to make sure you don’t run out of money before you run out of lifetime,’” Little says. “The real issue is how do I provide them with the peace of mind that they know that they’re going to be okay when they retire.”

Building a plan for longevity

Little has branded his approach the ‘Wealth Legacy Retirement Income Plan’ and it’s specifically designed to tackle the existential crisis that can come when someone stops getting a paycheque from their employer. That initial real moment after retirement can prompt some serious questions and challenges as to whether they might outlive their savings.

Little’s approach begins with a plan and a discovery stage. He notes that there are examples of clients who have been at serious risk of outliving their savings, especially if they retire with mortgage debt or look set to take on debt as they try to help their children get a head start in life. In the case of those clients, Little will show them what kind of outlays make their retirement unsustainable.

Little’s approach also involves some education. He will explain in great detail what happens to RRSPs as they convert into Registered Retirement Income Funds (RRIFs). He outlines how government mandated drawdowns on RRIFs will eventually lead to a point where no amount of return generated can outpace the required withdrawals.

Those drawdowns get built into the plan, as does an extremely conservative estimate on returns to ensure that a client’s retirement income works even in dire markets. The plan also involves aspects of psychological preparation for the unexpected. Little will talk to his clients about the risk of sudden losses and what that can mean for their retirement as well, including the potential realities of downsizing and lifestyle changes as people age. It also involves a fulsome estate plan, with Little’s commitment to help manage client estates if and when they pass on so they leave a legacy that their heirs can enjoy.

Allocating assets to serve retirement income

The way Little puts it, his focus on retirement income operates in much the same way that a cardiologist focuses on the human heart. Clients accumulating assets can be well served by an advisor who operates more as a general practitioner, but he tells clients that if they want to retire successfully, they need someone with a real focus on their retirement income.  

In addition to his planning and estate work, Little’s approach also demands a clear asset allocation strategy. Income generation is at the core of how he allocates for clients, with roughly 80 per cent of the portfolio dedicated to income generating investments. He adds, though, that to ensure his clients don’t outlive their savings they need “gas on the fire.” The remaining 20 per cent therefore is put into more growth-oriented investments, be they equities, commodities, or other sectors that look likely to grow.

For other advisors looking at his approach, Little insists that today’s demographic and investment realities demand specialization. He argues that advisors should pick one side of the retirement line to focus on and serve clients in that segment to the utmost of their ability.

“I don’t personally believe that you can focus on a clientele that’s saving for retirement and a clientele that’s in the retirement phase,” Little says. “Either pick the lane where you’re trying to help people save or pick your lane where you’re helping people spend. And we elected to pick the lane where we help people spend.”