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Study says financial adviser role expanding

A Massachusetts Institute of Technology study shows the role of financial advisers is moving beyond simply recommending investments, said John Diehl, senior vice president of The Hartford Mutual Funds.

Diehl spoke Tuesday at a financial leadership summit for accounting and financial professionals in Charleston.

In an interview prior to his presentation, Diehl said a division of MIT's school of engineering systems is studying aging. It's known as the Age Lab.

"They're studying aging not just in the U.S. but around the world and not just as it applies to financial services but as it applies to a wide range of industries," he said.

"The Hartford was a founding sponsor of the Age Lab around 1999," he said. "Our initial work focused on aging drivers and safety concerns, such as, 'How do we encourage participation between parents and their children about when the parents should give up the car keys?'

"About six years ago we focused on trust and advice, specifically as it applies to the financial services industry, trying to understand consumer behavior and decision-making, and the demographics that are impacting the way people do business with financial services and use financial advice."

He said the Age Lab mined social sites where people were discussing how they would choose a financial adviser, their views on retirement and their future lifestyle.

"What they discovered was the word 'retirement' is disappearing from the American dialogue and maybe not for the reasons you might expect," Diehl said.

"While it's true that many people don't know if they'll ever have enough money for retirement, many others describe their vocation as a very important part of their identity.

"In other words, what's the typical question after someone asks your name? It is, 'What do you do?' Just because we hit age 62, 67 or 72 does not mean we're ready to back out of society.

"It may very well mean that we leverage our experience and talents in a different way than we did n the first 25 years of our career."

Another finding, he said, was that although investors desire a level of competency in their financial adviser, they desire one who understands their individual needs more than one who claims to be an investment expert.

"They're telling us it is important their adviser does more than just give investment recommendations - that their adviser understand family dynamics, small business needs, and help clients envision what that longer-term lifestyle looks like," Diehl said.

Diehl said if you ask people for the first step in working a jigsaw puzzle, some would say it's turning all of the pieces right side up or finding the corners.

"But the most important first step is looking at the picture on the box," he said. "Once you do that, you can begin. The financial adviser of the future will aid the client in understanding what the picture looks like and then recommend the appropriate strategy."

Diehl said the Age Lab found that scare tactics aren't very effective with aging consumers "because their life experience tells them they'll deal with it when they come to it. We're better off helping people understand how to make the most out of what they have; to be smarter consumers and smarter investors.

"The other thing the Age Lab says is we cannot ignore the importance of health care questions. Whether I'll be caring for a spouse or an aging parent, which has tremendous lifestyle implications. I may need to cut down on employment or exit the workforce entirely for a period of time. I may need to understand where the money to pay for needed expenses will come from.

"This is especially true if we're talking to the eldest daughter in the family because the Age Lab tells us she will likely be responsible for the care of her parents.

"Understanding the very different models of care as well as the monetary and emotional needs of the caregiver will be paramount," Diehl said. "The point being, it may take the traditional financial adviser outside of where they used to feel comfortable, which was simply recommending investments. They'll now be asked their opinion on a wide range of topics."

The Smart529 College Savings Program, the state Society of Certified Public Accountants and the state Treasurer's Office sponsored the financial leadership summit, which was at The Summit Conference Center on Summers Street.

Contact writer George Hohmann at or 304-348-4836.



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