Transformative experiences are an interesting problem for financial advisors. How do you prepare a client for needs and wants they can’t entirely anticipate?A-Digit/iStockPhoto / Getty Images
A major problem in retirement planning is the difficulty of imagining one’s future self.
To overcome present bias – the tendency to prioritize spending on yourself, today – experts have recommended techniques such as writing a letter from your future self or looking at a digitally aged photograph to build a connection with an older you whose needs will one day be as important as yours right now.
But what if the desires of that future person have changed so dramatically as to be unrecognizable?
L.A. Paul, professor of philosophy and cognitive science at Yale University, has written about “transformative experiences,” or situations that fundamentally change who we are: our preferences, values, relationships and self-perception.
These experiences, such as having a child, challenge conventional decision-making because the person choosing to undergo the transformation isn’t the same person as the one who experiences it.
Ms. Paul’s idea got my attention last year when I was thinking about having a child. But transformative experiences are an interesting problem for financial advisors. How do you prepare a client for needs and wants they can’t entirely anticipate?
For new parents, a lot of the box-checking is obvious: a will, life insurance, emergency funds, registered education savings plans. For me, now a couple of months into my “transformation,” the change has been the level of urgency around such administrative matters.
But other priorities and goals – around spending, certainly – will not survive the transformation.
I also started thinking about retirement in the context of transformative experiences. You spend most of your life working, and then you stop abruptly. How can you anticipate how and where to spend this sudden abundance of free time when you’re accustomed to having so little of it?
Globe Advisor’s ongoing Tales from the Golden Age series is full of people who don’t enjoy the golf course, the cruise lines or even the grandparenting as much as they had anticipated.
That may be because retirement isn’t as transformative as many believe it will be. After years of dreaming about the end of work, some people find that a large part of their identity is tied up with the job they were eager to leave.
As author Morgan Housel put it in his interview with Deanne Gage this week, retirement can lead to “identity issues.” And that’s likely because, far from being transformative, retirement can feel more like a continuation of normal existence – only with a void right in the middle of it.
To prevent this situation, Mr. Housel recommends trying new things to help retirees understand what they might want.
“Backfilling your life with new hobbies is very important, and the idea of doing little experiments to figure out what those things might be is part of that,” he says.
I’m interested in how advisors approach transformative experiences, and whether you think retirement qualifies. Let me know.
– Mark Burgess, Globe Advisor assistant editor
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