To marketers, especially to marketers of financial products and services (not least of all those dealing with retirement), most of us are "middle market" consumers. We're not poor, and most of us are not wealthy or even really "affluent" -- except for those with maybe a million dollars in financial assets, or annual incomes of perhaps $200,000 a year or more.
Those of us in the middle are not the target market for most financial companies (or most financial advisors) concerned with retirement. This is ironic, really, since we're the ones who need the help. Wealthy people are very unlikely to run out of money in retirement, unless they are extremely unlucky or extremely foolish. For the rest of us, insolvency is just one or two bad breaks away. Most of us will find a way to live decently in retirement, and not die broke, but for many of us it will be a struggle, and for some of us it will be an impossibility.
So why do the financial companies focus on the wealthy? Naturally, because that's where the money is. But even for those that do want to focus on the middle market, it's a challenge. Frankly, it's hard for them to make money on us - once we get to retirement age, anyway.
When we're younger, and saving for retirement, it's easy money for them, even if we save only a modest amount every month, and regardless of whether we do it through an employer or on our own. But once we retire, and our incomes are significantly reduced, we're more likely to be withdrawing money from savings than we are to be adding more. And in the middle market, our asset balances aren't that big, so even if we want professional help managing them, there's not much in it for an advisor.
Sure, if you have, say, $200,000 for someone to manage it might be worth it to help you. But it might not be worth it for him or her to perform all the marketing and sales activity it takes to find you in the haystack of other middle market people who don't have that much, or don't want to pay someone to handle it for them.
So if you have a middling need, and you find them, most will take your business. But they are not going to seek you out, because they can't afford to.
And so most of the people who need help, and who would benefit from it, don't get it -- whether it's financial management, financial advice, or financial products.
This problem has been on my own mind for over 20 years, when I worked as a marketing person in an insurance company where I was responsible for retirement planning. This was the very early 1990s, and it struck me that for all the effort that my company and others were putting into getting young people to save for retirement, there was almost no help for people who were actually going through the retirement process and had crucial decisions to make, or for people who were already retired and needed help adjusting to the new reality.
I quickly came to understand the issue that I have been describing above: no one could afford to help the people who needed it the most. So what was the solution?
To me, the only solution that was really going to work was to get the job done without relying on a lot of effort by a professional financial person. In fact, the job could be done even better without relying on someone like that, because there were so many financial factors and decisions to take into account at that stage of life, they were individually complex enough, and they interacted with each other in so many ways, that very few if any human minds could juggle all relationships and numbers. So what was really needed was some very good software, which could be built to do just that job. And even better if it could be built so that middle class consumers could answer all the questions themselves. They might need professional help implementing some of the answers, but that would be the easy part.
It took over ten years before I had the chance to begin creating that kind of software tool, and then several more years to actually do it. Now, over 20 years and two million dollars after the original idea, the thing exists, and if you can afford $109, you can try it out (the website is www.RetirementWorks2.com, and if you use discount count RRR109 you get $80 off the $189 list price).
Are there other solutions? The next best is the do-it-yourself model. But you can read every book, article, and website on personal finance you can find, and you still won’t know how to put all the pieces together. And there is no other tool or service I know of that will do it for you adequately, if you’re retired or close to it.
Of course, maybe you will find the right professional to help you. I do some of this myself, on a part-time basis, and because it's a sideline for me rather than a career, I don't charge very much. It's not that I've figured out how to make money on it where others have not. It's that I don't care that much whether I make money on it. But most advisors aren't in that position.
My own dream is not that everyone in Harvard will come to me for retirement advice. Rather, it's that I can get some of the big financial companies to adopt my software, which they could then provide cheaply, or even for free, and let people all over the country figure out for themselves what their financial needs are. Then if they need a financial product or service, they can go back to the company that sponsored the analysis and get it. It's a practical, economical solution, and everyone wins.
Especially those of us who are stuck in the middle.
Don't hold your breath, though.
Chuck Yanikoski is a part-time retirement adviser who lives and works in Harvard. For more about him, or to contact him directly, visit www.ChuckYRetirement.com.