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Retirement income strategist unpacks evolution of financial solutions and the expanding role of advisors in clients’ lives

What's changed in the retirement income planning space?

With 35 years of experience in the industry, Daryl Diamond knows as well as anyone how pivotal retirement is to Canadians’ financial journeys – and how important it is for advisors to support them.

“It’s a pretty critical time, because they’re not going to necessarily jump up and go back out to work somewhere if this doesn’t work,” says Diamond, who’s now the chief retirement income strategist at Dynamic Funds. “That puts a heavy onus and responsibility on advisors to support clients as they approach and enter this juncture in their life.”

The changing face of retirement income planning

As a veteran of the business, Diamond has seen firsthand how retirement income planning has evolved over the decades.

In the ‘90s, he helped pioneer the adoption of cash wedges as part of an overall investment approach for clients in retirement; since then, they’ve grown into a mainstay strategy among advisors working with retired clients.

“Even though they’re labour-intensive and take a lot of maintenance, they do a good job for people who are making withdrawals in retirement,” Diamond says.

Over the years, Diamond says there’s been an increased use of target-distribution strategies – which Dynamic refers to as “paycheck portfolios” – as an approach to investing for income.

“Investment solutions that are complementary to the cash wedge strategy have become more prevalent in the last 13 years,” he says. “We’re seeing more solutions that distribute income on a consistent monthly basis, many of which were put forward by Dynamic.”

Target-distribution strategies have proven very effective for clients. Aside from not being overly complex, Diamond says they have been a source of confidence for countless clients even through periods of turbulence in the markets.

“That strategy has helped them weather market downturns … They continue to have income without selling any of their investments, which helps them stay the course,” he says.

Going beyond the financial frontier

In developing a formal retirement plan, Diamond encourages advisors to start by finding out their clients’ life goals, their financial objectives, and the expenditures they’ll be facing. That helps determine what kind of strategies would make sense for their situation – but that’s not where it should end.

“It’s not that we plug everything together for someone at age 65, and then they’ll pass away at 95 in a linear fashion,” he says. “There’s all these ups and downs, and there’s navigation that has to happen along the way to adjust for life and the issues that happen to people in retirement.”

While retirement planning advice has traditionally focused on the financial side, Diamond says that’s changed. Today, advisors working with clients in retirement provide support in areas that might seem non-financial but have implications on how clients spend the rest of their lives.

“Now we have a magnified understanding towards some of those issues around time and health,” he says. “I think advisors would really see a benefit for themselves, their business, and their clients from understanding and embracing the mindset of someone who’s out there on the age curve.”

Over the years, several studies have revealed today’s retirees aren’t just concerned about financial freedom and relaxation in their sunset years. Beyond finances, a truly fulfilling retirement for them also includes focusing on the things that make life meaningful like health, family, and purpose.

Against that backdrop of growing expectations, Diamond is encouraging more advisors and planning professionals to embrace the opportunity to incorporate retirement income planning into their practices.

“I’m not telling anyone to drop everything you’re doing as an advisor and focus solely on this new area. Nobody’s going to do that and have it work out well,” he says. “It’s a gradual progression, and we’re trying to help advisors make this adjustment step by step in a way that would make sense both to the advisor and the people they serve.”

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