Nag Odekar, Vice President and Head of Marketing at Great-West Financial, examined how the role of the financial advisor has evolved over the years in his keynote presentation to Argyle's CFO membership at the 2017 Financial Services Forum: Marketing & Technology Innovation in San Francisco on September 14. In his presentation, "The Evolution of the Financial Advisor," Odekar explored the past, present and future of the financial services industry.
According to Odekar, data plays a pivotal role in the financial services market. As such, understanding the data behind the factors that lead people to retire – as well as the costs associated with retirement – can help financial advisors teach clients about retirement.
Roughly 10,000 people turn 65 years old every day, Odekar stated, and financial advisors are responsible for ensuring these individuals are ready for retirement.
"We provide retirement to ensure people have lives with independence and dignity," Odekar noted.
Although retirement planning is paramount, few people allocate the necessary time and resources to prepare for retirement.
"Retirement is going away for most people. Companies don't provide pensions. And all of this means that the role of the financial advisor is more important than ever."
Odekar pointed out that only about one-third of people put aside money for retirement. Instead, most people put their trust in Social Security, but doing so could prove to be problematic.
"The [Social Security] system is unsustainable, and 95 percent of the people in this country depend on it, even the wealthy ones," Odekar said. "Social Security is something we depend on, and it's going away. We need to do more to educate people so that they can save more for retirement."
People are living longer than ever before as well, Odekar indicated. At the same time, the retirement age has remained intact, and most people expect to retire in their mid-60s.
"Age is not a bad thing," Odekar said. "People are doing amazing things as they get older. … We're extending middle age, but we still want to retire at 62 or 65 like we did in the past. People don't really understand longevity and how that's going to impact them."
Ultimately, companies are eliminating pensions, which makes financial advisors exceedingly valuable. If financial advisors embrace the opportunity to teach people how to prepare for all aspects of retirement, they can ensure that individuals can streamline their retirement planning.
"Retirement is going away for most people. Companies don't provide pensions. And all of this means that the role of the financial advisor is more important than ever," Odekar stated.
A wealth of data is available to financial advisors, but many of these professionals fail to look at all of the information at their disposal. This sometimes can make it tough for financial advisors to provide clients with the support they deserve.
"We are using data to build our business, but people aren't actually using it to change their lives," Odekar indicated.
A three-tier approach to retirement planning is ideal, Odekar said. The approach should emphasize mind, mobility and money.
"Social Security is something we depend on, and it's going away. We need to do more to educate people so that they can save more for retirement."
Money has been a staple of retirement planning for many years. Mind and mobility are new components to retirement planning, but they can have a significant impact on an individual's finances during retirement.
"If you have bad mobility, it directly impacts your healthcare costs. If you have a don't think too much, you might get Alzheimer's disease or dementia, and your money," Odekar said. "And if [these problems] don't impact your money, they will impact your children's."
When it comes to mobility, it pays to be active, Odekar stated. An active lifestyle empowers a person to remain healthy and reduce the risk of illness later in life. Thanks to wearables, individuals can take a data-driven approach to physical activity too.
Furthermore, a rich social life can make a world of difference for individuals of all ages, Odekar pointed out. If a person volunteers and connects with family members and friends, this person can keep his or her mind sharp.
Retirement planning also requires a person to consider unplanned healthcare expenses. There is no telling when severe health problems may arise, but a person who takes a proactive approach to planning ahead can prepare for long-term care expenses and other medical costs.
"When you plan for retirement, you need to make sure there's enough money for healthcare expenses as well as unpaid healthcare," Odekar pointed out. "You don't know what's going to happen, and healthcare is a huge expense."
The role of the financial advisor needs to evolve, Odekar stated. No longer are financial advisors expected to focus exclusively on helping a person save money for retirement. Conversely, today's financial advisor must ensure individuals can remain healthy, connect with others and save money to limit risk over an extended period of time.
Nag Odekar is Vice President and Head of Marketing for individual markets for Great-West Financial. Nag began his financial services career at Fidelity Investments in 1999. From there, he held leadership roles in brand management, market research, advertising and marketing strategy at The Hartford and Northwestern Mutual. Nag also has prior experience as the cofounder and COO at ForeverCar.com, an online retailer that enabled consumers to purchase and finance automobile warranties. Prior to ForeverCar, Nag was Vice President of Consumer Marketing at Aviva (now Athene), a leader in indexed life and annuities, where he led the company’s innovation pipeline and brand strategy.
Nag holds a bachelor’s degree in music from Oberlin Conservatory and an advanced certificate from the Juilliard School. He also earned a double master’s in composition and conducting at the University of Michigan. Nag currently maintains FINRA Series 6, 26 and 63 securities registrations.