Is a Retirement Coach Right For You?
You can get somebody to coach you in just about anything – athletics, getting into college, or how to navigate your career, for example. These days, you'll even find specialists who call themselves retirement coaches. Do you need one?
“A retirement coach can get you on track to meet your goals and life's dreams,” says Zack Shepard a financial coach and managing director at Matson Money. “From a simple investment standpoint, the average investor for the last 20 years has earned 3.49% in their investments versus just owning the S&P 500 at 7.81%. That's over a 4% difference. A coach, through education and discipline can help an investor close that gap,” says Shepard.
How a coach can help
Maybe you already have an accountant and a financial advisor, what can a retirement coach do that's different? Matson Money's website makes the case for a coach.
"Coaching is different from traditional financial advice. An investment coach is a financial professional who goes beyond typical financial planning and advice to help you identify your investment philosophy, understand your investment strategy, and provide discipline throughout your investment experience. A coach will not only help you identify the right strategy for you, but help you keep your decisions and behavior regarding your investments on track for achieving the results you want."
It's promising, tempting for sure. Retirement is about more than just knowing how much money you'll need and figuring out what type of investments will likely get you there. Retirement is not just about money. It's much deeper than that. It's a time of great transition and emotion. What the heck will you do with yourself now that you're out of excuses? You have all the time in the world, how will you fill your days? Can you stand being home all day, or will you work part-time in retirement whether you need the money or not, just because you need the social interaction? It's the touchy-feeling stuff that a retirement coach can serve as an objective sounding board, in addition to keeping you track with the hard core financials.
People are looking for guidance. Ameriprise Financial's New Retirement Mindscape II study in 2010, revealed that just 45% of retirees surveyed said they were living their dream in retirement, compared with 68% in 2005. Even more telling, 57% said retirement had worked out the way they planned, compared to 77% in 2005.
Then too, there's nothing like someone keeping you accountable. “A financial advisor can tell you that you're spending too much and that you need to save more toward your future retired. If you're already retired, they can let you know whether you're spending too much in retirement and talk to you about cutting back. A financial advisor can help you take action toward retirement planning instead of procrastinating and help you overcome the urge to panic and make bad choices during times of market volatility,” says Dan Keady, director of financial planning at TIAA-CREF. A coach, as a neutral third party, can also help couples work through the personal dynamics to help them reach a compromise on an overall plan.
Choose your coach carefully
Once you decide you want a retirement coach the big question is where to find good help? You want to focus on those who have not only training in coaching, but a specialty in retirement. If your inner circle doesn't have any recommendations, you can find pros through organizations like the International Coach Federation, the Life Planning Network and 2Young2Retire. Like with any advisor, ask about their credentials and experience. The International Coach Federation has a mid-level certification, the Professional Certified coach, which lets you know that the individual have at least 750 hours of coaching experience, 25 clients, among other criteria.
Know that prices are all over the map. You could be charged between $250-$1,000 to come up with a comprehensive plan and then $250 a year. How much you pay, says Shepard, “Really depends on a number of variables or complexity but for the most part, on average, you can expect to pay less than 1%.”
Some coaches may want a 3-6 month contract, but how much coaching you want and for how long is generally negotiable.
Like with any professional, all coaches are not created equal. “You want someone who has experience with working with clients similar to you,” says Keady. Ask for several references and don't be shy in interviewing them. You want to get a sense of what the coach did and didn't do. How did they help them the most? What were any short comings? Was the coaching experience worth the money?
Your initial consultation with the coach should be free. Don't dismiss intangibles like chemistry and their style. “You must feel comfortable. Avoid anyone who looks like they are offering a generic solution. Retirement is a different animal for everyone. The coach should be asking you what are your priorities, like whether you want to work part-time in retirement or if you would like to spend time volunteering, for example,” says Ron Mizell, vice president at Wright Wealth Management Group.
Bottom line: if your initial impression is not impressive, walk away before putting up any cash.
Edit 1/14/2013: Quote corrections made in paragraph 7.