Managing retirement risk for clients with less than $5 million in assets is quite possibly the most difficult job faced by a financial advisor. It calls for the combined skills of a portfolio manager, an actuary, a behavioral psychologist, a financial planner and sometimes even a career counselor. Many of these are viewed as "soft" skills that are time consuming distractions from what clients really want from their advisors, namely help with managing their money. I would submit that this is too narrow a view and, consequently, misses some of the professional and economic benefit of broader thinking.

To be honest, no one is getting this 100% right, but growing your practice is about providing relative value against the marketplace. The greater the positive gap the faster you should grow. (The reverse is also true.) Executing your current process with a consistent zeal will make you successful; avoiding complacency and reinvesting in your skills will make your client successful as well.

As you address your skills in this area, be aware that retirement income risk management is a process that ideally should start 15 years or more before your client's anticipated retirement date. While most marketers will tell you that the period three to five years before retirement is when you really have to be in front of your clients and prospects to win the mandate as their retirement advisor, by that point many of their options in terms of mid-course career and investing decisions may have dramatically less impact.

To break down this challenge into manageable pieces I would divide it up into four interrelated elements: 1) Discovery; 2) Analysis and Planning; 3) Portfolio Construction, 4) Performance Monitoring and Behavior Modification. But keep in mind, the delivery of excellence in some of the more investment-oriented aspects is sometimes the root cause of the others being partially or completely neglected.

Let's take the elements in order:

1) Discovery. This is simply the art of helping your client articulate both to you and themselves just what makes them tick. You should learn what motivates them, what they're afraid of and realize the difference between what they truly can't live without versus what they just really, really want. This seems simple, and if your definition of success is mailing clients a well crafted questionnaire that asks about goals and priorities and getting it back mostly completed, then this definitely is the easiest phase to execute.

And just doing this much with 100% consistency might move you up into the top quartile of practitioners. What separates top-flight advisors in this space is the amount of time spent probing for differences between the client's real needs, wants and wishes. Remember your most valuable asset that you are bringing to your client should be your experience. Each individual client only turns 50, 60 and 70, once.

But if you are even a moderately successful advisor with five-plus years of experience, you will have had dozens of clients pass these milestones. Anticipating the events yet to unfold and asking good open-ended questions about how those will affect them will make your clients appreciate that you understand that it's about them, not you.

Also, in the Internet age, advisors are constantly battling to show clients that what they know and can do is not commoditized. (Remember the 1970s and 1980s when bulge bracket advisors would tout better execution because of their firm's share of Big Board order flow?)

The root of an advisor's value proposition must naturally change over time. So far, the "do-it-yourself" client skill can't replace a good financial advisor's accumulated experience when it comes to anticipating life's many twists and turns.

2) Analysis. This is the phase that most advisors would say they use desktop tools to assess gaps between a client's current state and some desired outcome. That asset allocation is a part of this step is a given. But if asset allocation is the sole focus of this phase, you will likely end up missing, or worse yet, creating a problem.

First, you may ignore that even a superior allocation with market-beating results won't get the job done if there is not sufficient capital to be invested or if spending is not carefully controlled. Second, if you focus on asset allocation alone you may be inclined to measure your value in market return benchmarks and use words like alpha, beta and correlation and forget how hard it is to match, much less beat, the market over long periods. If the client is talking in terms of goals and outcomes you might impress them with jargon in the short term, but you will frustrate them in the long term.