Annuities

Initial Thoughts on the DOL Ruling


Annuities

First of all, I want to applaud the efforts of U.S. Secretary of Labor Tom Perez and the entire staff at the U.S. Department of Labor (DOL), as well as countless industry advocates for today’s announcement. I hope our industry does not view the DOL’s Fiduciary Rule and Conflicts of Interest as a finish line, but rather a starting point for improving the distribution of our products and services. 

Improvements were clearly made through the comment and discovery phase of this rule. I commend the DOL for following such an encompassing due-diligence process. However, concerns remain about how the rule will be interpreted and put into practice throughout our financial services system. Its vague language will create avenues for conflicts among firms, not just advisors. Advocates for our industry need to continue working to educate our congressional leaders on this rule’s impact and direction of our financial distribution system. 

Without a doubt, our distribution methodologies have become outdated and flawed.

Today’s rule should be seen as an awakening to our industry that technology, innovation and client experiences have to improve. We must define our own future distribution rather than allow someone else to level the playing field.

Our products provide a great benefit to consumers who already seem lost in a myriad of products. Expert advice should, and will, prevail over product commoditization and cost-cutting fundamentals. Those skill sets are not level; instead, they require investment and should be rewarded for the expertise that is delivered.  

During today’s announcement, Secretary Perez spoke of giving our clients the “best chance to win.” I agree. We owe it to our clients, our firms, our industry and ourselves to make sure we put our clients in the best position to win. I have written numerous times about the importance of following a structured sales process that is repeatable and measurable, creating an environment where we can complete a thorough and exhaustive discovery process, make recommendations that improve the probability of client success, and provide routine and consistent reviews.  

Our value proposition is simple and does not need to be complicated with regulation. However, quality advisors are separated from the masses by providing clients with quality education and ideas. If we do, everyone wins. 

Winning Strategy

Look at today’s DOL announcement as an opportunity to evaluate your business.  Focus on the client experience and how you can improve your financial planning process.  

More Information

Watch this webinar replay from April 11, 2016.

DOL Annuities

The 3 Traits You Need to be a Leader


Annuities

In a recent post, I mentioned I had the pleasure of listening to Robbie Bach, the former president of entertainment and devices at Microsoft, speak at a meeting. As an accomplished leader, he provided several key points that translate to any business, including financial services. In addition to his thoughts on innovation, he describe three key traits to being an effective leader.

 

1. Self-awareness.

In order to be successful, you not only need to have high self-awareness of your own strengths and weaknesses, but also the strengths and weaknesses of your team. For example, during my freshman year at Indiana University, the basketball team had a 7’2” center. Being so tall, he was not good at dribbling the ball to the basket. His best move was a hook shot or a short turn-around jumper. So, we scored quicker and easier when we gave him the ball in the right location on the floor. He was self-aware of his limitations, and his teammates also knew where he could help them win.  

2.Humility.

I think most financial professionals work with a great deal of humility. In a service industry, you have to be thinking of your clients, knowing that without their trust, you wouldn’t have a business. In a lot of cases, we reinvest in our own communities through volunteer work or monetary investments. We know we can’t be successful without keeping others in the front our mind. 

3.Grit.

Grit isn’t easy to define. You might classify it as mental toughness, competitiveness, a willingness to improve or something else along those lines. Essentially, at some point we all must dig deep and believe that all the things we are doing will get us past the difficult times in business. Some people have financial issues, while others might have mental roadblocks. Whatever your obstacle, you must determine the path that will correct the problem and work toward the goal, knowing you will reach it – maybe not as quickly as you’d like, but eventually if you have enough grit. 

 

Leveraging your strengths and making your clients feel important are both critical to long-term success.  And, you’ll need determination to stick to it and get through the rough times. I hope you remain self-aware and humble, and develop grit along the way. 

 

Bottom Line:

Having self-awareness, humility and grit are critical factors to being an effective, successful leader.    


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. 

leadership

Are You Asking the Right Question?


Annuities

Have you seen the TV commercial where a client asks her financial advisor some questions? The advertisement focuses on consumers asking better questions. To that point, advisors need to ask better questions, too.

I often hear advisors ask our sales people, “What’s the highest or best income rider you have?” But, maybe the better question is: 

“What’s the highest income I can get my client over their entire lifetime?”

Longevity remains the largest retirement risk – and the greatest multiplier of other risks. It should be every advisor’s goal to make sure Americans have a portion of their income (beyond the income provided by government entitlement programs) guaranteed for the remainder of their lives. 

With longevity comes retirees’ second largest risk, inflation. We have to help clients keep pace with rising costs. Because the longer they live, the more expensive it will be to maintain their standard of living. Without precautions, inflation may eventually erode their ability to buy things 20 years from now that they could easily afford when they first retired. 

So, instead of looking at which income rider provides the highest guarantee, we should be focusing on the overall income received throughout retirement. It’s easy to get sucked into looking at illustrations and competitor comparisons. However, we need to have a deeper conversation with our clients about their true risks in retirement.  

Few Americans really think about how they’ll manage their finances 20 years from now – it’s our duty to think about that for them. Just like the TV commercial makes consumers rethink their questions, we have to ask better questions, too. We need to think about retirement in its entirety, not just the first year or two. 

Bottom Line

Don’t ask about the highest retirement income possible; ask about how you can help clients achieve the highest income over their lifetime. They’ll appreciate a longer term focus.    

 

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.

 

Always Room to Improve


Annuities

One of the great motivators of our time is Mike Krzyzewski, head men’s basketball coach at Duke University. Not only is he a great tactician, but he also teaches his players and assistant coaches many life lessons. Recently, I stumbled on a repeat episode of his Sirius XM radio show. His comments made me think.  

At the time of the recording, the Blue Devils had just come off a three-game losing streak – a losing streak is unheard of with Duke Basketball. But, Coach K remained positive. He pointed out how they still had a lot going for them: 

  • His teams had more national championships than losing streaks 
  • All three losses were by one possession, and not all of them were the last possession
  • They had great players, and his staff was excellent

Though most coaches wouldn’t be able to eat during a losing streak like this, he really didn’t have anything to complain about. 

So, instead of being down and angry with his team (as many coaches would have been), he encouraged the assistant coaches to think about some little area where they could improve, then use that improvement to better the team. “There is always somewhere to improve,” Coach K emphasized. He challenged everyone to look at their body of work and find a spot where they could get better – even in the slightest way. 

Improving Your Practice

Using Coach K’s methodology, we always have room to improve as financial professionals. In the coming months, the fiduciary standard will force us to look at our business differently. We will all have to look at ourselves and ask the same question: “Where can I improve?”  

Best interest standards will mean that we must look at things we might not have considered in the past, or collaborate with other professionals who possess the expertise to fulfill a client need. At the end of the day, we are fortunate to be in this business. Just like Coach K’s teams had more success than not, there are so many positives to the financial services profession. 

In the same light, there will always be room for us to improve. I’m looking forward to looking in the mirror and improving with the fiduciary standards.  

 

Bottom Line

There is always room for improvement. Coach K turned a perceived negative into a positive for his team. Use the pending fiduciary standards to make improvements in your business and enhance the client experience.  

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.

 

The Key to Success is Simple


Annuities

Simplicity seems to be hitting me in the face with a two-by-four. After attending a conference with a speaker focusing on simplicity, on my flight home I read some recaps of college basketball games I had missed. Again, simplicity was identified as the theme for success. 

As many of you know, I follow the Indiana Hoosiers – especially their basketball program. This season started with high hopes, followed by a lot of doubt after the team lost two games in the Maui Classic. Then, the Hoosiers were completely run out of the gym when they played the Duke Blue Devils at Cameron Indoor Arena. Before they even played a conference game, their season of hope turned into a season of frustration. 

Even worse, our second-leading scorer is out for the season after a non-contact injury in practice around Christmas. So younger, less experienced players have been inserted into the line-up. In order to give them a better chance for success, their offensive scheme has been made simpler. The players were told to focus on passing, moving without the ball, and rebounding. All are very simplistic aspects in the game of basketball. 

It worked. Indiana won its first seven conference games and was one game away from Coach Tom Crean’s longest winning streak at IU. They were also one game away from the team’s longest winning streak since Bob Knight left in 2000. Coach Crean listed simplicity as the largest reason for their success.  

That’s great for IU, obviously, but what’s this mean for financial professionals like us? Too often, we complicate our business. We try to emulate the success of businesses or teams who have won lately. It doesn’t work. However, time and time again, we find success when we get back to basics. 

In any business, “blocking and tackling” won’t make the highlight reel, but I assure you those smaller victories will garner success. Take a few minutes and ask yourself, “Am I executing on the basics that drive the core revenues for my business?” If not, it’s time to change your game plan. 

Bottom Line

Simplicity wins – in basketball and business. 

 

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.