Why clients should treat COVID-19 as a retirement drill

Raymond James advisor says smart clients can learn emotional and financial lessons from current situation

Why clients should treat COVID-19 as a retirement drill

Smart clients can learn from the COVID-19 quarantine if they treat it as a retirement drill, according to one portfolio manager.

Darren Coleman, of Coleman Wealth, Raymond James, told WP that the situation is a chance for people to see what life is like when they don’t have to work every day. In the first of two articles with WP, Coleman explained how this is a test on both a personal and financial level and an opportunity to learn lessons for when retirement actually arrives. In part two, Coleman, who leads the largest cross-border wealth management team within Raymond James in North America, will reveal the tasks he has advised clients to do while housebound to prepare themselves for a better financial future.

For many, the additional time they now have on their hands is a valuable - and often scary - glimpse into the future.

He said: “There's a whole daily discipline, a daily routine that all of us go through when we're working. When you retire, that all stops and it changes very quickly.”

The new day-to-day reality does not take long to sink in. The first phase, Coleman said, can feel like a vacation, with lie-ins and extended mornings in your pajamas. This then turns into a reverse camping trip at home before you realise that your routine has undergone a more fundamental change.

A number of questions might hit home: How do I occupy those hours? How do I find things that are interesting to me? How do I cope with my spouse and my family when we're spending vastly more time together than I'm ever used to? Part of the issue is whether clients are actually ready for retirement in a practical sense. Who will do the manual tasks around the house as you get older? Is there a care plan in place? Are there family members close by or will they have to undertake a five-hour round trip, for example?

Coleman said: “Suddenly, what may have just been an academic thought for many people is now a reality that's today. This is a fire drill; it's an experiment for how ready you are to spend more time at home. How ready are you to change up your tasks? Many people are discovering that they're not ready - they don't know how to spend time alone, they don't have any hobbies and maybe sitting on the couch watching TV for hours a day isn't the best idea.”

Of course, to fill up your retirement diary with vacations, hobbies and activities requires capital. Golf clubs and air fares, for example, are not free hand outs. Clients must face up to living on a reduced income and living off savings. Coleman believes this is an emotional problem, especially when stock markets have dropped suddenly, as well as a math problem.

Coleman said: “This is a little science experiment; push yourself five, 10, 20 years into the future of your retirement and think, this is what it feels like in many ways. The wise ones will take lessons from this and say, 'you know what, maybe I need another hobby, maybe I also need to make sure I have more capital set aside for this' because after a 10-year bull market, many people thought they were more prepared than they really are.”