It’s not completely true to say that the older generation of financial advisors is wiser when it comes to wealth management – but in most cases, they are.
“Yes, I’d agree that advisors tend to improve with age,” says Lyle Langlois, a Senior Investment Advisor with iA Private Wealth in Vancouver. “Because there’s no replacing the lessons of working with clients over the course of decades, managing their portfolios, to the point of knowing their priorities and goals as well as your own.”
Many financial advisors like Langlois work with clients throughout their entire working lives. They’ve navigated through success and regrets together, and they’ve formed an invaluable trust.
“Investing is just like anything else – as you get older, you need to take a lot less risks.”
Lyle Langlois recommends a foundational change in strategy as you get closer to retirement age.
“Many of my clients have been successful because they’ve been aggressive with pursuing opportunities their whole lives. But as they near their sixties, we have to work together to rein in that instinct and shift to a more conservative strategy that leaves them less vulnerable to market downturns.”
There are many ways in which this risk-shifting behavior can manifest itself. The driving force behind most decisions is the income-generating factor. Your portfolio will act as the primary paycheck replacer for the rest of your life. You want to be sure you’ve made the right choices to set up your investments for success in the long term.
Usually, this leads to more exposure to fixed-income securities like bonds or annuities,
which have much less variation than the stock market. There is also a focus on the preservation of capital, ensuring that your principal savings are enough to last you throughout your retirement.
Advisors are having to plan for longer life spans as well. There’s now a 53% chance that a 65-year-old woman will live to at least 85 years of age.
“I advise my clients to prepare for up to thirty years of retirement. That’s a long time to live the fixed-income lifestyle. So we try to strike a balance between long-term security and maintaining some level of growth in the portfolio.
Langlois stresses to his clients to keep a portion of their portfolio in liquid assets in case of unexpected expenses, as well as to minimize tax liabilities.
Of course, most advisors also stress that you should never be foolish enough to make all these decisions on your own.
“Wealth management is an esteemed profession for a reason – people need it,” says Langlois. “ Without guidance through the financial maze and the wisdom of our experience, most people would struggle with maintaining a leisurely lifestyle through retirement.”
With the variations in interest rates as well as inflation rates, it’s more valuable than ever to have the benefit of experience.
So when it comes to forming long-term strategies for retirement, it turns out that age may not be just a number.
Disclaimer:
iA Private Wealth Inc. is a member of the Canadian Investor Protection Funds and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.
