A new report from MetLife suggests that financial advisers need to do a better job of educating their clients about the importance of managing their emotions as well as their spending and investing behavior during and close to retirement just as they did — presumably — when they were younger and saving up for their golden years.

The report, titled Engaging Clients in a New Way: Putting the Findings of Behavioral Strategies to Work encourages financial advisers to gradually shift the conversation and clients' investment strategies from accumulation of assets to the distribution of those assets into income as they near retirement.

The advice comes at a time when more and more Americans admit they're panicked about whether or not they'll have enough savings and -- more important -- income when the time comes to retire.

In March, a sobering survey of 1,260 pre-retirees by the Employee Benefit Research Institute found that more than half of all respondents acknowledged that they're "not all confident" or "not too confident" that they have the nest egg and income sources they need to afford a decent retirement — the highest level of investors uncertainty in the survey's 21-year history.

However, according to the most recent data collected by the Investment Company Institute, Americans by the end of the fourth quarter collectively socked away more than $17.5 trillion for their retirements — up 9.1% year over year — and retirement savings now account for 37% of all U.S. households' financial assets.

That's a good start, but the MetLife report cautions that saving for retirement and, more to the point, convincing clients that this crucial step is only a part of the process is just as important.

"Financial advisers need to help clients understand that the financial mindset they possessed while saving for retirement, does not translate when they have to become their own income provider during retirement," Joseph Jordan, MetLife's senior vice president of behavioral finance strategies, said in the report. "There’s a delicate balance of logic, emotions, experience and intuition that advisers today must incorporate into their practices to inspire action and confidence in their clients so they can act."

Delving deeper into the typical investor's psyche, the report concludes that while almost every investor saving for his or her retirement grasps and fundamentally believes in the strategy of "buying low and selling high," the recent economic tumult — and subsequent deterioration of their portfolios — compelled way too many pre-retirees to panic and sell large chunks of their retirement investments based on the irrational fear that the bottom would never come.

Walking that fine line between being compassionate to investors' current and understandable fear and rage while simultaneously reassuring them that the cyclical nature of the market over decades and decades of performance dictates that they should stay the course or, better, invest more becomes advisers' most daunting challenge.

"It becomes the task of the financial adviser to help understand and manage such behaviors, recognizing that their clients will base their decisions not only on what is sound, but also on how it makes them feel," Jordan added. "In short, to grow and develop their businesses, advisers need to understand the clients’ emotions, help them come to decisions on their own terms, and inspire confidence so their clients can act on their best intensions."

To help advisers and clients walk that emotional tightrope together, MetLife has developed something it calls the MetLife Income Selector. The tool takes investors through the paces through a series of questions that really uncovers their attitudes towards traditional investments and guaranteed sources of income and lets them see, from their own answers, what products and strategies might be appropriate for their unique situation.

Results from the Income Selector can then be printed and shared with each investor's financial advisor and, for the more web-savvy pre-retiree, provides a link to contact advisors offering insights on specific investment products and strategies.

"Our research and industry research shows that when consumers are part of the process, they are much more likely to feel informed and empowered to take action to address their retirement income needs," Jordan said.

According to a 2009 LIMRA report, a sales approach where the client’s feelings were addressed first and then followed up with facts, as opposed to the so-called "fact-find and analyze" method, led to a 29% higher likelihood that investors would begin or augment their retirement investments.

— Larry Barrett writes for Financial Planning, a SourceMedia publication.

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