Your Retirement’s Been Cancelled but There’s a Bus Leaving Tomorrow

The spectacular reputational suicide of Southwest Airlines is a very public example of what happens when you promise and don’t deliver – and a warning to the retirement advice industry equally unprepared to ensure the safe retirement “arrival” of our best clients.  

Southwest is in trouble because it didn’t deliver what its customers paid it to do. The underlying causation of tech snarls, point-to-point routing and Mother Nature’s wrath provide no relief for the countless thousands left stranded without options – or for the employees taking the heat on the front lines. The scale of the failure makes headlines but the real pain was felt by real people counting on Southwest.

That expectation of success – of getting us where we want to go - is the common ground with retirement planning. Southwest takes us to cities, we take clients to “retirement” or their “next chapter”. If we fail to get clients to their destination, how are we different from the Southwest holiday fiasco?

Airline customers know where they want to go. Here’s what our clients ask us every day about their destination of “retirement”:

1. How much money do I need in retirement?
2. How much do I need for healthcare?
3. How will I pay for healthcare, especially as I get older?
4. Will I be able to age in my home?
5. Will I be able to help my family members?

Unfair, you say. There are so many “ifs…depends” in these questions.

• “How much money” depends on how long you live, how much you spend.
• Healthcare costs depend on your health and your location and your preferences.
• Aging in your home is a Rubik’s cube of issues including the location. Ask my homeless mother from Sanibel, Florida.

Complicated stuff, no easy answers. Kind of like running a national airline?

We Own the “How”

The solution is our problem. Our clients expect us to know and to manage the variables. The Southwest flier expects the airline to deal with weather, mechanical issues, baggage transport and scheduling the crew. Very few Southwest customers care about the details, like obsolete software. Both retirement clients and airline customers care most about the destination – the “what” of the service they are buying. They want to get there. We are responsible for the “how”, the “who” and any implications of variation in those capabilities or personnel, including the environment. Airlines have unions, airports and Mother Nature to contend with – we have Mr. Market and the Federal Reserve. And every one of our retiring clients is a first time flier.

We Own the Complexity

In neither the airline or the retirement worlds will the customers and clients be satisfied with anything less than safe arrival. “We got you close” does not work.

To be an airline is to take on the responsibility of the complex eco-system needed to make it reliable. One of the first business applications of the first supercomputers was for airline scheduling, including routes, gates and crew. It’s a mind numbing array of variables. Likewise, try managing a national labor force constantly on the move. And what about the hundreds of planes, thousands of mechanics, and millions of bags? Bring that all together for $99 one way and you have set high expectations for not much pay – but no one put a gun to your head. If you promise to make it simple, easy and inexpensive you still have to deliver. When a customer’s flight is cancelled on Christmas it no longer matters what they paid.

To be a provider of retirement planning, advice or solutions is to take on the responsibility of the complex eco-system needed to create effective and reliable retirement outcomes. We have to understand and include the value of benefits, the impact of taxes, the role of asset location and protected income. This is complex stuff and we are not embracing that complexity well enough as an industry to credibly claim we can get people to their expected destinations. We cannot expect the clients to appreciate or care about the effort or the cost of these capabilities – they are focused on the accuracy of the outcome.

It's also up to us to tell them when they cannot fly.

“Retirement” has been sold too often as a discount fare. It’s not simple, it’s not easy and it will change as we age. There are tools and capabilities to help plan, but too often both advisors and clients project and plan without stress testing the forecasted outcomes. Retirement is a journey filled with unwelcome events but most should be expected and planned for. Tossing guesstimates of your age and health and retirement spending into an online gonculator is not real planning. And it shouldn’t be advertised as such.

Don’t Wait for the Holidays to Upgrade Your Software

The Southwest beat down has included indictments of senior management for failing to invest in the capabilities needed to run the airline. Both Southwest customers and employees saw the trouble building. The lack of preparation was well known. Throughout the company, pilots and flight attendants struggled to find their assignments, customer service frayed, flights were scrapped in a couple of early warning incidents over the past couple of years that likely got a pandemic pass.

The parallel to FinServ has been called out by many people. And while we cannot know why Southwest’s leadership team did not heed the signs and the warnings, we can try to avoid their fate.

The real question may be – since we know they knew – did they not care? We can do better.

Related: What Are You Afraid Of?