The Annuity Industry’s Next Possession


While serving as a student manager for the men’s basketball team at Indiana University, I learned a lot from Coach Bob Knight. Many of those lessons can be applied to the financial industry, and I’ve written about a few before. Today, as we’re on the cusp of what could be a game-changer for our industry, I wanted to share another.


Missing the Long Shot

Once, during a practice, a star player took an open three-point shot and missed. Like most long shots, it resulted in a long rebound and a fast break for the opponents. That’s embarrassing enough, but, to make matters worse, the player (like many college athletes) stopped and hung his head. His delayed reaction gave his opponents an advantage on the fast break, resulting in a layup.

Coach Knight immediately stopped practice. “What just happened?” he asked. Well first of all, the shot was missed for a variety of reasons. But, that was in the past – there was nothing the play could have done to change the shot after it left his hands. He could have reacted to the rebound, however.

You see, after a missed shot, the shooter actually has an advantage – more than anyone else on the court, he has the best feel for where the rebound is heading. If he’s paying attention, he can get in position to stop the ensuing fast break. Unfortunately, if he chooses to dwell on his missed shot, even for a second, it can result in an easy bucket for the other team. And we know one bucket can win or lose a game.


Getting Back on Defense

Today, our industry is in the same position as a player who misses a long shot. Over the last several years, we have successfully fought several pieces of legislation that would have affected the annuity industry. However, with the pending U.S. Department of Labor (DOL) ruling, it appears more likely than not that we will be required to maintain a fiduciary standard for every qualified client.

Sure, there will be litigation and other efforts to change the DOL’s proposed ruling, but it’s a long shot (pun intended). Regardless, it’s clear we will need to change in the annuity industry.

That’s OK. We can’t hang our heads for a split second, allowing litigators to attack our individual businesses under the fiduciary rule. Instead, we have to get back on defense and get ready for the next possession. 

Defense means changing how we DOCUMENT business, not how we DO business. I’ve heard many financial planners planning to discontinue the use of certain financial vehicles because of the commission structure. But if a product or service is in the best interest of a client, we should be obligated implement the recommendation, regardless of our compensation structure.


Setting Up the Offense

We simply have to explain how the product works and how we get paid. Our clients want us to succeed as much as we do They will understand the need for compensation if they understand how the product benefits them and their financial situation. Once we document and explain, we can move toward implementation – which means we’re back on offense. 


Bottom Line:

Don’t hang your head and let regulation and changes to the industry affect how you do business. Get to the next possession so you can continue to help your clients.


Learn More

Annuities and Sports: What I learned from Coach Knight:


About the Author

Mike McGlothlin is the Executive Vice President of Annuities at Ash Brokerage. His strength is helping advisors become more efficient and effective in their businesses. He and his team provide income-planning solutions focused on longevity and tax efficiency, and they also assist advisors with entering defined-benefit termination planning and structured settlement markets.


annuities coach knight

Look Beyond the Numbers for Pension Risk Transfer


No doubt, pension risk transfer activity is growing. Companies of all sizes, sectors and locations are shifting risk off their books to eliminate pension obligations. According to a study by the Pension Benefit Guaranty Corporation, between 2009 and 2013, more than 500 defined benefit plans transferred $67 billion of risk through lump-sum distributions and annuity purchases. 

If you have clients who are business owners, executives or professionals, e.g., doctors, dentists or lawyers, chances are they have a defined benefit pension plan. Although many of these plans have been replaced in recent years by 401(k) or other contributory plans, defined benefit plans remain a liability on a company’s books. Plan sponsors face important decisions to address rising costs, increased regulation and uncertain market conditions.

Pension risk transfer can make sense for both parties – plan sponsors typically want to strengthen their balance sheet and ensure employees receive their retirement benefits, and insurance companies are in the business of investing and administering retiree liabilities. 

This solution may not work for every situation, however. Many frozen pension plans lack sufficient assets to complete a transfer. These underfunded plans need help adjusting their investment strategy to close the gap between asset value and pension benefit obligation. 

When selecting an annuity provider for pension risk transfer, plan sponsors have more to consider than corporate financial and competitive pricing. They should also factor in whether the provider: 

  • Will provide comprehensive customer service during and after plan transfer
  • Offers retirement education for employees
  • Responds to participant concerns


Bottom Line:

Now is an excellent time for you to offer pension risk transfer solutions that meet your clients’ needs and fulfill commitments made to plan participants. Need help getting started? Drop me a line or call any time. I’m happy to help you identify prospects and provide expertise to help you generate revenue in this growing market. 


Learn More

Risk Transfer Study, Pension Benefit Guaranty Corporation, December 2015:


About the Author

At Ash Brokerage, Steve Pilger helps clients design and execute cost-effective risk transfer strategies for their pension plans. He is dedicated to finding solutions that meet the needs of plan sponsors and fulfill the commitments made to plan participants. Contact him at or (800) 589-3000 ext. 6828. 

pension risk transfer steve pilger retirement

Shaping our Business for Success


In the annuity industry, 2016 continues to shape up as a year of change and challenge. With the proposed U.S. Department of Labor (DOL) ruling anticipated to be announced this spring, many are wondering how they should set their goals, transition their business to advisory platforms, or build out separate units for Middle America. In reality, we need to focus on some of the basic tenants of goal planning. 

You probably know you need to keep goals SMART – Specific, Measurable, Attainable, Realistic and Timely. In times of significant change, we must keep those guidelines in mind as we set a new course for many of our businesses in the annuity industry. 

Specific – We need to have a vision of what our financial planning practices will do for clients.  Even under a fiduciary standard, it’s hard to imagine being all things to all clients. We must get specific about what services we want to provide to clients at an exceptional level. 

Measurable – There are many metrics that will allow you to keep score and stay on track throughout the year. In times of change, we might have several parallel goals. Of course, we need to have a total sales or revenue goal. But, you might want to think about how much of your business you want to transition before the end of the year, or have another metric in mind. 

Attainable – Because we are looking into a muddy crystal ball with a new regulator and unannounced rule, it is difficult to judge attainability. Clearly, we must set a course for a fiduciary standard sometime in 2017. I think it’s important to keep in mind that the sooner we shift our planning to this standard, the more attainable our goals will be once the ruling is finalized this spring. 

Realistic – Realistic goals begin with action – early and often. We can no longer sit and wait for a legislative bailout in the 11th hour. Setting realistic expectations with clients and staff begins immediately. Slowly, we’ll start learning to have transparent conversations with clients; by year end, we’ll transition into deeper conversations about how our industry earns revenue for our expert advice. 

Timely – We must set our goals with an end date in mind. With so much in flux with regulatory change, you should consider setting your goals at 90-day increments. We should know the final ruling by spring 2016. This allows the industry to set goals for the transition to a fiduciary standard by Jan. 1, 2017.  


Bottom Line: Goals are important, but we just can’t focus on sales this year. In order to create long-term success in our industry, we must focus on our written policies and procedures to create meaningful goals that will transform our practices. By working on transparency and planning in 2016, we’ll provide ourselves with a jumpstart on our new post-DOL world. 


DOL Goals

Buying Income on Sale


Last Sunday, my wife asked me to go to the grocery store. She was studying and writing papers as she continues her education to become an ultrasound technician, so I agreed to shop if she provided me with a list. Having been recently married, it was different for me to buy more than hot dogs, Eggo waffles and bread. But I figured it out, and I found myself shopping the way most Americans do.   

As I went methodically down the list, I wheeled my cart from aisle to aisle searching for each item. Once I found the paper towels, I looked at the brands and designs, then I made my decision. However, I found myself looking at the cost. It was clearly a better deal to purchase 12 rolls of paper towels instead of four. Without hesitation, I purchased the dozen – even though I didn’t need all of them now and the total cost was more. 

Next, I found the facial tissue and repeated the same decision process: brand, design, cost per box. I’m now the proud owner of a dozen Kleenex boxes.  

Here’s my question: Why aren’t we using the same process with our clients when it comes to retirement income? When you look at the options, the most efficient way to purchase income is to take advantage of discounted dollars and mortality credits. And, only one type of vehicle provides the advantage of mortality credits and tax-advantaged income distribution rules. Even though that purchase may be more in today’s dollars, it will likely outperform many traditional vehicles that possess volatility, sequence of return risk, longevity risk, and gain-first taxation.  

It’s time to have a conversation about buying basics. If we’re willing to pay more for a larger supply of paper towels and Kleenex because we know we’ll need them later, there’s no reason we shouldn’t be doing the same with our income products. Most people are willing to spend a few extra dollars now to save more in the long run. 

Ask your clients how they shop at the grocery store. If they’re willing to purchase additional items when they’re on sale, they’re likely to be receptive to buying income at a discount as well.  


Bottom Line

Buying income at a discount is no different than buying basic necessities. And, our income floor is a necessity that should be guaranteed. Make sure you’re showing your clients how they can buy in discounted dollars. 


Mike McGlothlin is the Executive Vice President of Annuities at Ash Brokerage. His strength is helping advisors become more efficient and effective in their businesses. He and his team provide income-planning solutions focused on longevity and tax efficiency, and they also assist advisors with entering defined-benefit termination planning and structured settlement markets.