Sunday 3rd July, 2005

 

Licence to help retirees

 
 
 
 
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Speaking at the Million Dollar Round Table, Court of the Table Session, in New Orleans last Sunday, foremost US authority on lifestyle, Ken Dychtwald, referred to the longevity patterns that have emerged in modern society as the “age wave.”

He developed a “new adulthood” construct showing how the number of years spent in retirement have increased dramatically.

His statistics show that currently, adults spend some 20 to 25 years in retirement; that 22 per cent of them are almost broke, and 32 per cent of them are actually low net worth individuals; and that 40 per cent all retirees are financially involved in caring for aged parents.

He urged financial advisers to focus on that age group, since they are most in need of help, saying that our job is “to help people envision dreams and see to it that the dreams are funded.”

He cited that 70 per cent of the US population die without a will, so they die without leaving behind a family legacy. But, perhaps the most significant statistic was that the 54 per cent who are broke or almost broke were headed in that direction from the age of 30 years.

He said that those who seek out a good financial adviser are likely to end up two-and-one-half times wealthier than those who did not!

Copy cat society

The reason is that financial advisers are professionals. A professional is a person who has spent a significant number of years studying the subject. She would have passed several written examinations after the first year in the business.

Locally, insurance agents enter the business with a provisional licence, which is valid from one year. During that year, state exams must be passed, in order to renew the licence. But that doesn’t make a professional. The profession actually begins when the agent begins to pursue courses in financial planning.

Currently, the T&T Association of Insurance and Financial Advisors administers courses and examinations for the American College, in the US. The American College is an established institution, which delivers courses in insurance and financial planning. These courses include subjects such as the theory of life and health insurance, contract law, business practices and ethics.

It takes about three years of part-time study to complete all six courses that constitute the basic programme of education necessary for the insurance sector. After that, further courses must be pursued in order to gain designations such as the Chartered Life Underwriter Diploma, the Certified Financial Planner, or Registered Financial Consultant. This may require another three years of part-time study, on average.

These qualifications, together with a practice characterised by sound ethical conduct constitute the hallmarks of the professional.

Dychtwald made the point that 42 per cent of all retirees needed a “new blend of work and pleasure,” simply because they now have more time in their retirement years.

He said that 74 per cent of the US population is likely to be in the 55-64 age group within a few short years, and that would climb to an alarming 53 per cent of US population over the age of 65 in a few more years.

I do not know that our life style is dramatically different from the US lifestyle, in terms of eating habits, alcohol consumption, and modern medicine, to name just a few factors that are relevant to longevity, but our copy-cat society is bound to bear some stark relation so the US scenario.

They call New Orleans the Big Easy, and as I write while overlooking the Mississippi River, I fear that the implication for our workforce, and the savings ethics they must adopt, is big but certainly not easy!

To be continued next week.

n Raziah Ahmed is a registered financial consultant

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