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The multiverse of you: A new way of looking at retirement and life-stage planning

ARTICLE BY

  • Nosipho Nhleko
  • Lead specialist retail
  • Liberty

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The idea of retirement means different things to different people because all of our lives are so individually unique.

 

For some, retirement is a frightening and looming reality, plagued with worrying thoughts of not having enough saved up to be able to continue their current lifestyle. For others, especially those who are followers of the Financially Independent, Retire Early (FIRE) movement, it is something to aspire to – a time of your life where you no longer have to work to live, but where you can live and thrive and choose to work if you want. FIRE, which originated in the 1990s with the best-selling book Your Money or Your Life by authors Vicki Robin and Joe Dominguez, encourages followers to live frugally and save extensively when young, in order to retire earlier in life.

 

Traditional retirement conversations ignore or discount the complexities of our current reality. Financial advisers support clients who no longer function on a rigid and linear continuum of life from work to retirement. More and more, they are dropping in and out of this continuum, out of choice or necessity, revitalising and reviving themselves according to their attitudes and life stages, regardless of their age.

 

In a recent webinar hosted by Liberty Financial Services, focusing on the topic of retirement and how the concept has changed, prof. Gizelle Willows of Nudging Financial Behaviour, said that any individual’s picture of retirement and their attitudes towards it are shaped by a number of things. She listed their financial situation, their health, their level of financial dependence, their values and attitudes and dreams.

 

“Life events change you and your response to these events and other disruptions change you as well. The culmination of each of these creates what we call a multiverse of you,” she said, referencing the idea that your life can have different iterations depending on the decisions you make or the events that shape you.

 

In this new world, a financial adviser ultimately needs to understand that they would have to walk a hyper-personalised journey with every client, drafting financial plans that are suitable for a new landscape of retirement, said Willows.

 

Financial security vs Financial independence

 

Willows also highlights the existence of a new trend in life-stage planning: people who have a sabbatical approach to living.

 

“We are seeing some clients who want to work seven years and then take a year off, before returning to the workplace. Perhaps that next season is working in a different role with a different employer?” she said.

 

With the increasing acceptance of remote working due to the Covid-19 pandemic, this approach has become more prevalent. While this approach raises questions about the financial security of pausing income generating activities that could have added to your pool of retirement savings, Willows emphasises that financial advisers should be aware of this mindset and be prepared to address it with clients who want advice on how to make it a possibility.

 

It is here where the distinction between financial security and financial independence becomes important.

 

Feeling financially secure could mean having a plan in place to cover the necessities – being able to pay your bills, increase your savings, having a proper budget in place and insurance for those unforeseen events.

 

Being financially independent, according to Willows, evokes having sufficient wealth so that work is no longer a requirement, but a choice. To reach this point, many of the FIRE movement-followers live lives of frugality and simplicity.

 

The role of the adviser and the adaptability quotient

 

International speaker Bev Hancock also presented her ideas during the Liberty webinar. She highlighted the changing role of advisers in this rapidly evolving world with nuanced clients.

 

Hancock stated that if financial planners are going to remain purely transactional in their approach to investment planning, they will have to face the brutal truth that technology will do a better job than they can.

 

What customers are really asking for is a trusted guide to provide insight and to help the client navigate the uncertainty that they face on a daily basis, she said.

 

In order to be able to do this, advisers first have to address their own adaptability quotient – the ability to adapt when circumstances require it. The Covid-19 pandemic, however,  has left most people with a sense of numbing resilience fatigue.

 

Hancock encouraged anyone trapped in this area of fatigue who is perhaps clinging on to their comfort zone, to actively move towards learning and growth using the model originally created by psychologist Lev Vygotsky and popularised by German pedagogue Tom Senninger.

 

The model shows how anyone can move out of their comfort zone, a place of legacy systems, consistency and complacency, through to the fear zone where you have a fixed mindset and are overwhelmed by a sense of not-knowing. Then through the learning zone where change is driven by a growth mindset and you are upskilling yourself and guided by a sense of curiosity towards the growth zone characterised by dynamic processes, people who are life-long learners and cohesive systems.

 

“Once you are in the growth zone you can seek to amplify what you are achieving and take your business and your clients to a whole new level where retirement can become a real adventure,” said Hancock.

 

Invested together in your retirement goals

 

Liberty believes in the relevance of goal-based specific advice, especially if the context of this advice is constantly in flux.

 

“If we, as Liberty, promise that we are ‘in it with you,’ we strive to understand the context where this promise is brought to life,” said Nosipho Nhleko from Investment Propositions at Liberty.

 

“If we are truly invested together in our client’s investment goals, we need to face and weather the storms together with them, as well as engage with them more meaningfully as they live their lives, whatever those lives may look like,” she said. 

 

Disclaimer

This article does not constitute tax, legal, financial, regulatory, accounting, technical or other advice.  The material has been created for information purposes only and does not contain any personal recommendations. While every care has been taken in preparing this material, no member of Liberty gives any representation, warranty or undertaking and accepts no responsibility or liability as to the accuracy, or completeness, of the information presented.  

 

Please consult your Financial Adviser should you require advice of a financial nature and/or intermediary services.

 

Liberty Group Limited is a licensed Life Insurer and an Authorised Financial Services Provider (no. 2409).

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