Annuities

How You Can Find Safety in Guaranteed Income


Annuities

Our headquarters is at the heart of Fort Wayne, Indiana, a city that was severely hurt by the downturn of the automobile and manufacturing sectors. But today, it’s seeing a resurgence, especially downtown. Our building, the Ash Skyline Plaza, is about 18 months old, and 15-story complex, Skyline Tower, is being built adjacent to us – just across the rooftop park. 

 

I can see all the construction activity from my office – many times, I have to turn and look away so I can concentrate. There’s nothing like a portable toilet flying up on a crane to make you lose your train of thought. 

 

But, I admire those workers. They’re on site before I arrive and still there long after I leave, even on the weekends. It’s tough work, for sure. And, it’s dangerous, plain and simple. But the crew members all wear safety harnesses, hard hats and boots to protect themselves. It’s part of their everyday habits. 

 

That makes me think … 

 

What safety habits are you instilling in your clients?

 

As they build their portfolios and retirement income, your clients are taking risks. Many of those risks are associated with longevity or outliving their income: 

  • Market returns
  • Sequence of returns
  • Inflation
  • Long-term care events
  • Legacy planning constraints 
  • Taxes

 

Regardless of what happens with all those risks, the safety harness is income. As long as a client has income, they will likely feel more comfortable, regardless of what risks arise. Now, those risks still have to be addressed. But, if your client can feel confident that their income is secure from market drops and inflation, you have a good chance at addressing the other risks. 

 

We have to instill safe habits when it comes to retirement income planning. Nearly everyone can benefit from having guaranteed income as part of their retirement plan. Whether it’s from defined benefit plans, Social Security or insurance company annuities, guaranteed income shifts the risks of longevity. However, only one of those sources has embedded inflation protection, so you must address inflation with your client. Income serves as a great safety harness for those taking investment risks. 

 

Winning Strategy

Focus on the risks that longevity creates for your clients. If you address their fears and concerns, you are likely to win a client for life, as well as many quality referrals. 

 

About the Author

Mike McGlothlin is a tireless advocate for the retirement planning industry. As executive vice president of retirement at Ash Brokerage, he heads a team providing income planning solutions focused on longevity and efficiency. He’s also a thought leader who provides guidance and assistance for advisors and broker-dealers navigating marketplace and regulatory changes. You can find a collection of his blog posts in his book, “Above the Clouds … Winning Strategies from 30,000 Feet.”

Retirement Guaranteed Income Longevity

Why Your Clients Really Care About Guaranteed Income


Annuities

Recently, our division sponsored Wendy Boglioli as a speaker for one of our partner firms. I always enjoy being around Wendy. She is an Olympic champion swimmer, a long-term care advocate and a genuine professional. If you need a great, motivating speaker, I highly encourage you to consider Wendy.

 

During the event, Wendy spoke about how her swim coaches prepared her team for races. They were ready for anything to go wrong. And, a lot of things can go wrong:

  • The starting block might be slippery and you can get off the block awkwardly
  • Your goggles can fill up with water
  • You can be off a few inches on your turn at the wall
  • You can miss a breath due to the waves in the water 

 

The list goes on ... The same goes for financial planning. You have to plan for the unexpected. 

 

Personal Case Study

Guaranteed income creates a safety net for many unexpected events and economic conditions. I offer my own parents as an example. 

 

Over the last four decades, my parents have endured several cardiac events. Medical advances since my father’s first heart attack have lengthened his life expectancy, but possibly at the risk of the quality of his last years. Guaranteed income sources have allowed them to establish reserve funds for their escalating care need. 

 

I don’t think my parents thought my dad would live to age 88 when he retired before the age of 62. Dad’s company helped him bridge the gap between his retirement date and early Social Security income. Additionally, both my parents had pension plans they use to receive regular, guaranteed income. They wrap their government and pension payments with selected annuity payments from annuities purchased decades ago. Finally, they have a portion invested in equities and bonds to provide growth. But, Dad has received multiples of the cash balance in his pension plan with no care in the world about its rate of return or upside potential. 

 

That’s why annuities and guaranteed income are so important to Americans today. The use of mortality credits in annuities provides guaranteed income without concern for rates, market corrections and managing assets. 

 

Through the years, my mom and dad have been able to travel the world, manage their medical expenses and create a healthy standard of living. While their health care is largely an unknown in the future, the reality is that guaranteed income gives them an avenue for stability in a world filled with uncertainty. 

 

Winning Strategy

Take the time to look at how guaranteed income can fit into the portfolio for your next client. We find that 15-25 percent of a portfolio should generate guaranteed income to make it efficient. But, talk to your clients about what it will mean to them to be assured they have a consistent income regardless of portfolio performance. I think they will appreciate the value of guaranteed income.  

 

About the Author

Mike McGlothlin is a tireless advocate for the retirement planning industry. As executive vice president of annuities at Ash Brokerage, he heads a team providing income planning solutions focused on longevity and efficiency. He’s also a thought leader who provides guidance and assistance for advisors and broker-dealers navigating marketplace and regulatory changes. You can find a collection of his blog posts in his book, “Above the Clouds … Winning Strategies from 30,000 Feet.”

Retirement Guaranteed Income Annuities