Shafik Hirani outlines some of the more existential questions he will ask clients about retirement, just as he ensures they don’t outlive their savings
On any given week Shafik Hirani will probably attend the funeral of one client, celebrate a different client’s new child, see another client’s kids go off to university, and finalize several clients’ retirement plans. The Senior Investment Advisor at Shafik Hirani’s Private Wealth Management Practice of Aligned Capital Partners in Calgary, appreciates that immediate cross-section of life that his position gives him, and the perspective it allows him to offer on questions that his clients may encounter.
That perspective, he says, can help as he guides clients in their transition to retirement. Hirani explains that he will often see his clients build identities tied to their work and their careers. The end of that time can become something of an identity crisis, one that he believes advisors can help their clients prepare for. Hirani’s approach begins with an understanding that while retirement is a near-universal goal, it represents a huge step into the unknown.
“When we’re going into retirement, it’s like or driving into like a snowstorm. And if you can’t see with clarity, you get stressed. Your body will even release cortisol. So to prepare for that, what we do is we go through an idea of what life is like,” Hirani says. “a lot of it boils down to the person’s introversion, extroversion, perspective. And the way to overcome that is to sort of paint a picture of what the other side of that snowstorm looks like. You end up motivationally interviewing them. Asking questions, like what does life look like?, what is your time spent?, where’s your money going to be spent? Because you can’t travel every day, you can’t golf every day. Some people misinterpret retirement as a vacation.”
Reconciling retirement realities
As an advisor, Hirani’s approach begins with an understanding of client cash flow and tax planning. He’ll outline what the client needs to live within their chosen budget, working with them to make sure they have the greatest room possible to absorb potential unexpected shocks or the risks that come with a longer lifespan. He helps them outline when they will draw from each retirement income stream, and how that may line up with what they want to do in their earlier and later years of retirement.
There will be instances where Hirani and his clients have to have a conversation about extending their working years or returning to work. In those conversations he tries to present them with a series of options around budgeting and expense that could be exercised instead of a return to work. However, there can be instances where returning to some form of work is beneficial from their a financial or a psychological perspective.
Canadians, on the whole, are finding themselves working after retirement. According to Statistics Canada, 10 per cent of Canadians in 2023 were working after they had retired, up from seven per cent in 2019. Some of that comes down to financial necessity, but for others there was a degree of purpose and fulfillment that motivated the decision to return to work.
For Hirani, any positioning of a return to work occurs in the context of a holistic retirement plan, one that accounts for needs at age 90 as much as it does for desires at age 60. The conversation can sometimes be challenging, but a clear focus on financial realities can help create the necessary clarity.
Advisors’ role in retirement preparation
Just as he works to ensure his clients are ready to retire financially, Hirani pulls from his cross-section of client-facing experience to educate those clients on how they can prepare themselves. He likens the approach to teaching someone how to swim. He begins with theory and stories that can help them reconcile their idea of retirement with the reality they might encounter. From there he recommends trial periods, longer leaves, and even full-year sabbaticals where possible to give a client a sense of what they might be stepping into.
All the while, Hirani uses the wealth of financial tools at his disposal to show clients what their goals and dreams will cost them, where they can afford to spend and what they might risk if they ignore the financial constraints of their plan. That optical view into cash flow and budget in each year of retirement can start to set the table for a successful transition.
“In order to get to a certain point,” Hirani says, “you need to practice it in theory and in action.”
Shafik Hirani is a Senior Investment Advisor with Aligned Capital Partners Inc. (“ACPI”). The opinions expressed are those of the author and not necessarily those of ACPI. This material is provided for general information and the opinions expressed and information provided herein are subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on the information presented, please seek professional financial advice based on your personal circumstances.
