At that point I has a delicate fence to walk. How to describe to these potential clients that their advisor/friend wasn’t really taking care of them, without seeming to be too critical of their advisor/friend?
I noticed the husband and two 401ks from previous jobs that were still with his old employers. I also noticed that even though they were both on 2nd marriages they had no wills, durable powers of attorney or medical directives. I also noticed that even though they were both eligible for Medicare that they were still on a high-deductible employer plan that was good enough if they were not on medicare. but didn’t offer the kind of less expensive coverage under a medicare health plan.
The most apparent danger was their lack of appropriate documents. I addressed that, pointing out their options on getting those done and the expected costs of each course of action. They said they would ‘look in to it and discuss it’. (Meaning = no action).
The second point of risk was this: had they thought about how much income they would need in retirement, and where it would come from? They hadn’t thought about it. Their advisor/friend was taking care of that. I asked them about the plans for the old 401ks. They said ‘we can just leave them there, they are OK.’ I told them what to expect from social security and what their options were. The discussion froze.
I asked one last question. ‘Are you concerned about your income running out?’ ‘Yes’ they both answered. I followed up ‘do you have any idea what your current IRAs and 401Ks can generate for income?’
‘No” they answered. “Did your friend/advisor ever discuss this with you and give you a picture of this so you can make informed decisions? Aside from the legal stuff we need to focus on products that will give you lifetime income, avoid probate, have some income enhancements if you need skilled nursing care, and be protected from a market crash. Has this ever come up in conversation since you were getting close to retirement?’ ‘We already told you, no’.
‘What do you want me to do next?
“We want to take your ideas to our advisor/friend and see what he has to offer. We’ll get back to you with what he has to say about your ideas.’
I should have saved the gas money.