Business and financial advisers are pointing to the swelling ranks of baby boomers currently in retirement as an accelerating trend impacting the world of wealth management, seeing growing demand for ongoing guidance from an aging population that largely views that transition in the context of the recent recession.
[caption id="attachment_92506" align="alignright" width="431"] Loren Kertz, Richard Stone, Jim Petray. David Waitrovich[/caption]
Among the issues emerging as defining that cohort of retirees is unease over the rapid market fluctuations that have become commonplace in recent years, bolstered further by fresh memories of a recent economic downturn that still reverberates throughout the national economy. And for the newly retired former business owners who guided their companies through that tumultuous period, adjusting to the relatively hands-off nature of retirement income can be a particularly trying process, those advisers said.
"Everybody has emotional issues with investing money," said Loren Kertz, senior financial consultant at the Corte Madera branch of Charles Schwab. "The hard part for these business owners is checking out for a little bit of time and letting the investments work."Shaken from recession
It was in September of 2008 that news of the unfolding mortgage and financial crisis contributed to a widespread market decline that included the largest-ever 778-point slide in the highly watched Dow Industrial Average in a single day. It was considered a pivotal moment in an ongoing economic downturn that impact countless investors, including many baby boomers on the cusp of retirement.
Yet many have noted that those who remained in the market have largely been rewarded -- that same index, which hit 6,594 in March of 2009, broke a record 15,000 in May of 2013 and has spent the majority of 2014 above 16,000.
While that uptick has provided a recent example of the longer-term gains for most investors, it is still the day-to-day oscillations that pull hardest on the heartstrings of former business owners, Mr. Kertz said.
"The Internet is a big piece of that. In the past 15 years, you have a daily, up-to-the-minute balance change," he said.'Bulge' retiring amid low interest rates
Many advisers described an uptick in the time and resources they have devoted to helping former business owners come to terms with that new source of income, and emphasized that the millions of baby boomers entering retirement is no small phenomenon in the world of financial planning. The oldest of that large generation, defined by the U.S. Census Bureau as the nearly 80 million people born between 1946 and 1964, turned 65 in 2011.
“It’s very simple – a lot of them are getting older at the same time,” said Richard Stone, founder and chairman at San Rafael-based wealth management and advising firm Private Ocean. “We’ve always done succession planning for business. But the volume and velocity is increasing.”
Prudent investors among that “bulge” of Americans are collectively facing distinctly challenging economics: that the current low interest environment stands to negatively impact the yield of bonds and other lower-risk investments that traditionally make up a larger proportion of an individual’s portfolio into retirement, Mr. Stone said. It is a situation that stands to reward careful and ongoing portfolio management, particularly as interest rates start to rise, he said.Connection lingers for former owners
Mr. Stone and others also noted that larger companies seeking growth in an improving economy are increasingly looking to acquire smaller firms, meaning many entrepreneurial baby boomers are facing a greater opportunities for a third-party sale. Yet those situations come with their own continuing concerns, as financial success for the former owner frequently hinges on the ongoing survival of the business.