Episode summary
Helping Clients Who Want A Retirement They Can't Afford - Kitces & Carl Ep 203
Financial Advisor Success (Kitces)
· · 30 min · Hosts: Michael Kitces, Carl Richards
Summary
The discussion centers on how an advisor should respond when a new client insists they can retire on a spending pattern that likely will not work, especially after a previous advisor implied everything was fine. The host argues the first job is not to prove the prior advisor wrong, but to have a candid, empathetic conversation about trade-offs and to ask for permission to be professionally direct about what the plan actually shows.
The guest suggests framing the issue as a probability of adjustment rather than a binary pass/fail. Instead of emphasizing a scary probability of failure, the advisor can show what would need to change if markets or spending do not cooperate: later retirement, part-time work, cutting discretionary spending, selling a second home, or tapping home equity. The goal is to make the client see concrete levers and own the plan, rather than simply arguing about whether they are “okay.”
They also stress that clients often underestimate their flexibility under pressure. A Monte Carlo result in the 60% to 80% range may feel alarming to an advisor, but many clients will see it as manageable if they understand the adjustments available and agree in advance how they would respond.
Key takeaways
- The host says the most useful opening is to ask, “do I have permission to be professionally candid?” before delivering hard news.
- The guest argues advisors should frame planning outcomes as a “probability of adjustment,” not just a probability of success.
- The guest says a projected shortfall is often manageable once clients see the specific lever to pull, such as cutting spending, working longer, or selling a lake house.
- The host argues the advisor should not spend the meeting attacking the prior advisor; the focus should be the current plan and its trade-offs.
- Both speakers say clients are often more flexible in practice than they first claim, especially when the downside is made concrete.
Notable quotes
“financial planning is all about There's no right or wrong answer. It's just about trade-offs”
“we're project I mean I I Sam didn't say what it is but just you know in general you get clients like this I'm going to assume he has some 6 7 8% withdrawal rate”
How the episode opens
Well, good afternoon, Carl. — Michael Kitces, tell me one thing that's new. It's got to be quick. One thing.
One thing that's new. Um we're playing with the new software business called Advisor Economics where we do benchmarking for advisory firms. And I have all new data to play with and I'm so excited.
We are now the phase where like firms are joining every day and so every morning I refresh the the like data dashboard so I can see all the new data on benchmarking of advisory firms because this is like literally my most exciting thing to do every morning is to look at updated aggregate anonymized data on advisory firms of how their financial performance is occurring. It's It's It's very It's very cool. I just saw um I've always had some gripes that I love industry benchmarking studies but like no one likes doing the spreadsheets that take hours to fill out and so I had this like passion thing for a while.
It's the 21st century. We should just do this with software and so we went and built it and
Very cool. So, that's your most exciting thing right now in the morning. — Yes. — All I want to All I want to — First thing I do is I refresh the data to look at all the all the new firms that have joined in the past day.
Amazing. Well, what are we talking about today? — Um not benchmarking data as much as I wish we we we could. Well, we're getting more data. Well, that'll be an episode in another another couple months as we have to.
Yeah. — Uh So, what are we talking about today? Um I had a really interesting outreach from an advisor for think a a version of a problem that a lot of us face where clients get hooked on a path that they're taking that we can see is probably not going to go well and it's hard to convince them otherwise.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- client communication
- retirement planning
- bad news delivery
- probability-based risk scenarios
- retirement spending adjustments
Watch the episode
Watch “Helping Clients Who Want A Retirement They Can't Afford - Kitces & Carl Ep 203” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Financial Advisor Success (Kitces), this episode and its artwork belong to Michael Kitces. Octagon is not affiliated with the show; this page is an independent summary.
