Retirement management may be a classic win-win scenario.A fast-growing segment of the population urgently needs sound retirement advice and related services, while the accountants who provide them can derive considerable economic (and emotional) rewards for doing so.

That Baby Boomers are on the verge of exiting the workforce or winding down their careers is hardly news. But the fact that the Baby Boomer cohort includes an abundance of CPAs who will be leaving the scene creates opportunities for their younger colleagues.

“A lot of these Baby Boomers are going to look up and say, ‘Where did my [advisor] go?’” said Michael J. Fitzgerald, CPA/PFS, CFP and a member of Generation X who runs Fitzgerald Financial Partners, a Houston-based wealth advisory firm. Fitzgerald’s focus is on helping people make the transition to retirement.

And Bradley Smegal, CFP, a Minneapolis-based financial services veteran and a managing director of Wachovia Securities, has zeroed in on the opportunity to guide clients through what he termed major “liquidity events” in their lives. Such events can include the sale of a business or receiving an inheritance, but almost always occur at retirement, he said, when people need to redeploy substantial assets.

Often, Smegal said, “Individuals wake up and say, ‘I need a higher level of advice than I’ve been receiving in the past.’ ... We want to be sure we’re there, not after the fact, helping them the whole way.”


Although clients’ needs at this stage often are varied and complex, they don’t expect advisors personally to have all the answers. But CPAs’ educational grounding in accounting and tax matters, when supplemented by expertise in investments and insurance, often are well-suited to serving as the primary professional resource to help clients make the transition to retirement, and to secure needed estate planning or other specialized technical expertise they cannot provide directly.

Among many other things, said Jack Oujo, CPA/PFS, CFP, a good accountant can come up with a retirement plan distribution strategy that’s very tax-efficient. Oujo, based in Wall, N.J., said that financial advisors who lack the accountant’s number-crunching orientation may be disinclined to help clients with the essential detailed-oriented analysis of their expenditure patterns before mapping out a retirement strategy.

Oujo rejected the rule-of-thumb shortcuts suggesting that retirees need a fixed percentage of their pre-retirement income to sustain themselves. He and others stress that there’s more to helping your clients achieve a successful retirement at the front end than mere financial analysis, tax and investment planning.

“We’ve got all the quant tools. But what we really try to do is to marry those with the qualitative aspects, bring the lifestyle discussions into the mix,” said Smegal.

And how does he do that? “It gets down to starting the conversation,” he said, “encouraging clients to question and create, until we have a sense of exactly what they’re trying to accomplish in their lifestyle.”

Such conversations encourage client couples to think about how they’re going to spend their time, opined Bert Whitehead, a fee-only financial advisor based in Bloomfield Hills, Mich.

Sensitivity to those emotional issues is critical, he maintained. For many clients, Whitehead said, their self-esteem is wrapped up in their business card. They wonder what they’re going to do in retirement. He has referred client couples to specialized seminars that help them explore all the personal ramifications of retirement.


And the sooner couples begin sorting out the personal and lifestyle dimensions of retirement, the better.

Fitzgerald uses a multi-year, systematic approach. “I built my program to mirror a five-year degree plan,” he explained. “Just like in college, you sit down with an advisor who helps you plan your future.”

The goal is for clients to replace 100 percent of their earned income through building a highly diversified asset pool. The program, whose timetable can be customized, is intended to be “long enough to be strategic, but short enough to respond to changes in the market,” Fitzgerald said.

The time not to start planning was vividly illustrated to Smegal three years ago, when a newly retired client couple came in to discuss the redeployment of their investment portfolios. The husband said that he needed some cash to purchase a second home in Florida. “She said, ‘Wait a minute, we’re not buying a home in Florida.’ They had a domestic incident right there. I had to walk out of the room and let them calm down and talk it through. They had been living together 30 years, but had never had the discussion about what their retirement was going to be like,” Smegal recalled.

Spousal communication issues aside, a big challenge for many clients is not becoming overly conservative in their investment and spending posture. It’s a natural consequence of the tectonic adjustment from accumulating assets to liquidating them, Smegal said. “It’s a huge mind-shift.”

Paul M. Guerney, CFA, a private portfolio manager for Rochdale Investment Management in New York, noted, “Many people assume that on the day they retire, everything changes, and that they need to be 100 percent conservative.”

Ideally, an ongoing conversation with the client would lead to a phased shift in investment strategy for such clients, factoring in both their risk tolerance and cash-flow needs, as well as financial market and economic cycle parameters.

But whatever a rational, phased-in allocation of retirement assets might be, CPAs are urged not to push too hard in encouraging their clients to assume an investment posture they’re uncomfortable with — or even to urge that important decisions be made immediately.

An approach Whitehead uses to maximize his clients’ financial comfort level at retirement is to encourage them to “save” 10 percent of the income they take from their varied income sources. “They’re frightened they’ll run out of money,” he explained. “That’s why having them save 10 percent every year is very appealing to them. They’re used to saving 10 percent every year.”


Whitehead, author of Why Smart People Do Stupid Things with Money, believes that many Americans suffer from financial dysfunction because they don’t understand their financial “personality.” When clients lack that insight, their advisors need to try to draw it out so that they can give clients financial advice they will act upon.

Meanwhile, Oujo remains sensitive to the desire of many clients — especially widows — not to be pushed to make investment decisions. “There are big differences,” he said, between the way men and women, particularly in retirement, view their financial picture. “Senior women like to have a lot of money in cash.” He warned that if you proceed too fast in shifting their assets around, they’re going to let you go.

Indeed, a focus on cash flow is often the cornerstone of the strategies employed by advisors who focus on retirement financial management. It begins with the detailed spending projection built upon both a detailed review of pre-retirement spending patterns, and an analysis of lifestyle changes that will occur at retirement.

Once a cash-flow goal is set, Whitehead stressed that advisors focus on the distinction between a general projected yield on a portfolio, and the actual cash flow that it will generate. Advisors must ensure that the mix of interest and dividend income, capital gains, and retirement plan distributions is optimized for tax and portfolio management purposes to produce the cash clients need.

Tax considerations should not, however, outweigh prudent fiscal management. Noted Oujo: “I don’t like my seniors to have mortgages, so they won’t wind up like Ed McMahon,” referring to the 85-year-old former Tonight Show figure who was recently threatened with foreclosure on a $4.8 million mortgage. “Some accountant was probably trying to get him a big tax deduction.”

Oujo is similarly cautious in his approach to helping clients configure investment portfolios for retirement. Building an asset allocation simply by looking at historic average rates of return on a broad category of stocks is not an adequate approach, he says. “There are lots of long periods when the stock market does nothing,” he explained. “For someone who retires at 62, there’s a good chance the stock market will take a big hit” during that individual’s retirement.

Added Smegal: “There’s this randomness of returns in the market. In the whole retirement, there is an element of luck involved.”

Those who had the bad luck of retiring in 2000, he said, had seen their assets blossom in the 1990s, and many made overly optimistic assumptions about the continued growth of their portfolios. “Those people marched right into retirement in the face of three of the ugliest years I have ever seen,” Smegal recalled.

And while the periodic dramatic reminder of the stock market’s capacity to imperil retirees’ financial security cannot be ignored, advisors must also protect clients from “the pernicious effect of inflation over time,” warned John Burns, CFP, of the Burns Advisory Group in Oklahoma City, Okla. Although the recent spike in gas and food prices has brought inflation back into the public consciousness, it often isn’t accorded the attention it deserves. “During their working lives,” Burns said, “clients’ incomes have risen commensurate with and beyond inflation growth. When they quit, they’re more susceptible to inflation than ever, and their money has got to take that into consideration.”

Naturally, how advisors redeploy client assets to address inflation and equity market volatility as they approach or reach retirement will vary. Burns, for example, helps clients capture the market potential of various market segments with low-cost institutional-grade funds.

Fitzgerald, meanwhile, emphasizes the importance of broad asset-class diversification, including real estate and commodities.

Many see a large role for insured annuity contracts, to address both investment volatility and the risk that clients will outlive their assets. Advisors agree that annuity contracts, particularly variable annuities, used to be overpriced. But more flexible provisions and leaner fee structures now available from many carriers render many annuities an attractive option for retirees.

Smegal found some variable annuities particularly helpful in encouraging clients traumatized by the market’s recent crash to return to equities in 2002, because of minimum benefit guarantees. “It worked beautifully, and people were thrilled” when they participated in the stock market’s rebound.

Also, low-cost fixed annuities may be suitable for some clients.

Chris O’Flinn, chief executive of ELM Income Group, an online annuity agency in Washington D.C., said that he saw a gap in the annuity market during his career as a corporate human resource executive. His most popular offering is an immediate annuity with an inflation rider; his Web site,, acts as an educational resource on annuities and a conduit to the carriers he represents.

Whether annuity contracts, or any other financial tool or asset class, will be appropriate tomorrow, or to what degree, is unknowable today. Said Smegal, “We can do all the planning, but you still have to adapt and adjust to whatever environment we find ourselves in.”

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