'Holistic' approach a shrewd strategy!
Dr. Amy D'Aprix, a Gerontologist has been hired by BMO as the new face of its retirement planning strategy to coach clients on retirement planning with a 'reality check'.
RBC's Lee Anne Davies is a PhD candidate, studying aging, health and wellness with a focus on "the economic determinants of of wel-being in retirment.
A personal note:
This puts BMO and RBC ahead of the Boomer financial retirement planning curve. Each of the lifestyle issues described by Dr.Amy including matters of health and long term care require money. Our need for capital requires a secure lifetime career. We are living a very long time - longer than ever.
Dr. Amy D'Aprix wants you to know that she is not a banker.
But she is an expert on both the emotional and financial costs of getting old.
The 48-year-old gerontologist says baby boomers need a swift reality check-on what life is rea1y like after retirement.
"We have this myth that you have sort of entered nirvana and you are forever happy', D'Aprix said. "The truth is, a lot of people struggle with this."
That's why Bank of Montreal has taken the unusual step of hiring D'Aprix as a life-transition consultant to coach clients on retirement planning from a "holistic" lifestyle perspective.
D'Aprix - or Dr. Amy as she's known - does not flog financial products or investment strategies.
Instead, she hosts seminars across Canada and the United States urging clients to "take charge" of their retirement by visualizing their futures with a healthy dose of reality.
Other banks are also taking a new look at how they deal with the enormous population of baby boomers - as many as one in three Canadians - who are fast approaching retirement age. And it's no wonder: the boomer gene:ration is expected to inherit a staggering $1 trillion between 2009 and 2029, according to one estimate.
No wonder the banks are looking for new ways to serve them.
Royal Bank of Canada, for one, has taken a similar approach with Lee Anne Davies, who holds a master's degree in gerontology as well as an Executive MBA, as head of retirement strategies.
The banks know that money issues are just one set of problems that retirees face.
Health problems, including depression, are often a reality for many retired people. If they are not sick themselves, many end up caring for a family member who is.
Then there are tough end-of-life choices, such as funeral arrangements and life support.
While all these issues take a financial toll, they are not top-of-mind for most non-retirees - a staggering 81 percent of whom have no retirement savings, according to BMO.
D'Aprix, an author and public speaker with multimedia charisma, doesn't try to present herself as a financial guru.
''I'm not a banker, no. Absolutely not a banker, believe me," D'Aprix said with a chuckle. "It is weird, isn't it - in the best way possible. It's fascinating because clients love it."
We have this myth that you ... are forever happy. The truth is, a lot of people struggle with retirement.
She may not be a banker, but ''Dr Amy" is arguably a brand of her own. She holds a PhD in social work with a specialty in gerontology. She
also has her Certified Senior Advisor designation.
The yonngest of five, D'Aprix grew up outside of Albany, NY, and says her passion for gerontology is rooted in her childhood
"My parents were older parents for the time, and I had neighbours who were in their 90s and other neighbours who were in their late 80s,' she said.
During the SARS crisis, she came to Toronto as a consultant for Nortel Networks and began her love affair with the city. She now lives in Leslieville.
"I would definitely say it was a Canadian first for a bank to hire a gerontologist and a life transition coach to run these types of workshops and to design an approach to retirement that, I believe, is very unique;' said Caroline Dabu, vicepresident, head of retirement, financial planning strategy, BMO Financial Group.
At RBC, Lee Anne Davies has been heading up retirement client strategy since late 2007. She is also currently a PhD candidate, studying aging, health and wellness with a focus on "the economic determinants of well-being in retirement".
Holistic retirement planning may sound new age but it's a shrewd strategy shift for banks, which have traditionally used a stodgy, numbers-based approach.
Most people, though, have difficulty visualizing the future, Dabu said. That makes them reluctant to give, up short-term rewards for long-term gain.
An amiable personality, like a Dr. Amy or a Lee Anne Davies, can make that planning exercise seem less tedious.
Given that most baby boomers will retire over the next 20 years, there is heightened competition for those clients.
"I would say the traditional approach has been looking at retirement though a rose-coloured view. Like, 'Gee, I am going to golf six months of the year;" Dabu said.
"Even if you can afford to golf every day, we get them to realize that maybe that's not going to be so doable even from a fulfilment perspective".
D'Aprix also trains BMO's staff on having retirement conversations with clients. That includes broaching sensitive topics such as the financial realities of aging.
BMO's strategy has already resulted in a "significant increase" in assets and new clients, Dabu said, declining to provide specifics.
D'Aprix has held about 40 seminars so far this year. At least 50 more are booked for 20ll Up to 300 people attend a session.
"The financial and non-financial are hand in glove. You can't separate them," she said
In explaining her approach, D'Aprix notes retirement finances largely hinge on basics like who clients plan to spend their time with.
She also asks them to assess whether they will have sufficient social support, such as help with errands and medical appointments.
"We know that if you have good social support as you age, research shows that you live longer and you live healthier both mentally and physically;' observed D'Aprix. "And you are less likely to end up in a nursing home."
Next, clients are asked to think about what they plan to do to "sustain meaning" in their daily lives. One exercise involves filling out a blank 30-day calendar.
Other considerations include where a person plans to live. Snowbirds, for instance, have real-estate issues, tax implications and health insurance costs.
She also asks people to develop a backup plan should they or a loved one run into health problems.
That includes a frank discussion of taboo subjects like depression, which is particularly a concern for men who leave the workforce, D'Aprix said.
Alcoholism is another key health concern. "We know that a third of seniors who drink abusively didn't start doing so until retirement," she added.
According to the Certified General Accountants Association of Canada, more than half of a person's lifetime health care expenses arise after 65.
People, however, also drastically underestimate the possibility that they might end up as caregivers to a sick parent, D'Aprix said.
Providing care is often overwhelming. In fact, a recent study by the Canadian Institute for Health Information found that one in six caregivers experiences "distress:'
D'Aprix knows how hard it can be.
She spent nearly a decade looking after her ailing parents before they died.
"My mother was quite disabled for almost eight years before she passed," she said. ''It has emotional, practical and financial implications
in people's lives. And people don't understand that"
Business & Careers
COMMON BELIEFS ABOUT RETIREMENT
Experts warn these assumptions don't apply to everyone:
- I need $1 million to retire
- I can rely on my company's pension plan
- CPP will be enough
- I'll need 70-80 per cent of my pre-retirement income
- I'll use 4-5 per cent of my savings each year when retired
- I need to work long past age 65
Source: Bank of Montreal
The above assumptions reflect an outdated model.
The original model did not include a 30 - 40 year retirement horizon.
The assumptions must be validated on an individual basis.
Dan Zwicker, CFP