Annuities

More – Longer – Less


Annuities

In my talks around the country, I frequently speak on retirement income and trying to make the income stream more efficient. Often this means having to discuss taxation and overall income disbursement. There are a lot of major hurdles that today’s advisors will encounter while helping clients plan for retirement income.

  • Low Savings Rates: Comparatively, the United States savings rate is painfully low. With the exceptions of high inflationary periods or market corrections, our personal savings rates have been on a steady decline in the last four decades. The end result is the average baby boomer born in the 1960s only has $131,900 saved for retirement1.
  • Misuse of Social Security: Less than 5 percent of Americans choose to defer their Social Security benefits until they are 702. The benefits of the primary wage earner waiting until then typically outweigh taking income early. The spousal and inflation protection gained with this strategy relieves pressure from many portfolios. 
  • Defined Benefit Plan Changes: Older generations used to look to guaranteed income as a staple in their retirement plans. Today, more accountability is placed in the employee’s hands, but they are given little information about how to convert those assets into income. The default distribution is usually a simple, systematic withdrawal plan that does not account for longevity.
  • Longevity: People are living longer than ever before. It’s more difficult to plan for an unknown ending as the date moves further away from us each year. Extended life expectancies mean we need to plan for more income – and income disbursements – when we need more care.

 

The end result is this: advisors are going to have to work out how to generate more income, for longer periods of time, with less assets than ever before.

This generation of advisors has more challenges to face than have been seen in the financial industry for the last twenty years. This means we have to think, act, and plan differently. Our world is changing, and we must adapt to the new world – or lose the client’s confidence.

 

Winning Strategy: Understand the new rules of retirement income planning. Think and act differently than you have previously in order to adapt to the new world of income planning. 

 

About the Author

Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. His latest book, “Free Throw for Financial Professionals,” is available now – learn more at www.freethrowsforpros.com.

 

1 LIMRA FactBook

2. SSA.gov

 

There’s Only One Way Up


Annuities

We have hit rock bottom.

The financial industry is experiencing the lowest level of trust it’s seen. Actually, we have been there for several years. Even after the scores rose somewhat in 2014, the industry is still facing a deep lack of trust – worse than any other industry. In a survey conducted by Edelman, participants in the top 25 percent of household income have spoken – our largest target market does not trust us.

So what do we do? We can’t ignore the stats anymore. We can’t keep shifting blame onto financial crises from a decade ago. In Free Throws for Financial Professionals, I talk about a few things for planners to keep in mind:

 

Integrity

During his tenure as coach for IU Basketball, Coach Knight won 902 games, three national championships, multiple conference titles, a National Invitational tournament, and an Olympic gold medal – and 98 percent of his players graduated. Coach didn’t just want good players – he knew basketball would be a temporary part of these kid’s lives, and they’d need a plan for afterwards.

What would our clients’ lives look like if we focused on them as much as Coach focused on the holistic outcome? Too often, we are looking to capture assets under management or make a sale. We need to get back to basics and focus on the outcome – getting the client to their goal of a sustainable income during retirement.

 

Self-Awareness

In the 1987 national championships, Daryl Thomas could have been made immortal: he could have made the winning shot. But he would have had to make a jump shot against good blockers to do it. As a freshman, he may have forced up a shot. But, with experience he knew what his strengths were. Instead, he did the smart thing. He passed to Keith Smart, who got the winning score.

As we witness the largest shift in the workforce in American history, we have to take stock of our own weaknesses and biases toward products that mitigate longevity. Or, we have to surround ourselves with other professionals who can view the income portfolio with a different set of eyes. Either way, we must increase our knowledge base of longevity-related risks as the population continues to age and needs income for longer periods of time. 

 

Prepare to Win

“Everyone has a will to win; few have a will to prepare to win.”  - Coach Knight

Coach took copious notes during each practice. Managers filmed every moment and took down stats regarding each specific offensive set we ran. We’d look at the numbers and ask “why?” It took looking at the film to see why we were having success against one defense versus another.

In our business, we must ask why more often. There’s a lot of talk about being a fiduciary and setting standards. We can meet those standards by asking simple questions focused on the client, then shift the current standards to focus on the client. Not practices. Not disclosures, fees or conflict of interest. The client. We must understand our clients as well as Coach understood his players – their strengths, their weaknesses and other team’s qualities.

If we don’t change, we’ll continue to be at the bottom. So how do we improve trust? It doesn’t come down to simple regulation. Instead, it’s about changing our behaviors toward clients and our techniques that demonstrate a total focus on the client. Think about how you can work with integrity, play to your strengths and maintain curiosity on how we improve the client’s situation. That will build trust faster than any regulation.

 

Winning Strategy: Build trust with a focus on the other person. Do what is best for them and our industry will gain respect.

 


About the Author

Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. His latest book, “Free Throw for Financial Professionals,” is available now – learn more at www.freethrowsforpros.com.

Seeking Greatness


Annuities

I was dreading the two-and-a-half-hour flight.

After focusing on the industry for five days at a meeting, I didn’t feel like my normal writing habit while in flight. I rarely watch movies while traveling, but this time I made an exception: In Search of Greatness, a documentary interview of successful athletes asking what made them different than the competition.

In his segment, Wayne Gretzky made an observation that jumped out to me: he spoke about the loss of creativity in today’s world, especially with younger athletes. Several of the interviewees told stories about playing multiple sports when they were kids.

Today, kids are focused on a single sport, often working with specialists and trainers to give them an edge on the playing field. Gretzky played baseball as a child and loved it before he found hockey. He talked about decisions made on pure metrics – something we do in the financial industry all the time.

But metrics are only part of the story. Both Gretzky and Jerry Rice both said that while they weren’t the fastest person in their sport, they made up for it through practice, better fundamentals and creative thinking.

Why should our profession be different?

For the last several decades, financial advisors have been told to focus on growing recurring revenue and assets under management. We’ve attended seminars and mentored others on how to build a successful business. But we’ve lacked the creativity to shift according to changing demographic needs.

Our clients are faced with their biggest financial challenge– making their income last through retirement. We can’t simply manage assets the same way we did twenty years ago. Instead, we have to get creative in order to address our clients’ needs. Different solutions. Different products. Different models.

Which brings us back to self-awareness. It may be the greatest characteristic of any good salesperson. Understanding where your weakness lies and how to leverage your strengths can take you to great heights, but you can’t execute unless you’re self-aware.

Are you learning and using a full range of solutions to meet your clients’ needs? Or are you stuck in a model that doesn’t work? If so, develop more creativity in your planning and find ways to address the risks associated with longevity.

 

Winning Strategy: Learn and practice creativity. Kids excel when they learn multiple sports. Professionals excel when we learn and deploy multiple solutions for changing client needs.

 

About the Author

Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. His latest book, “Free Throw for Financial Professionals,” is available now – learn more at www.freethrowsforpros.com.

 

retirement winning strategy creativity

A Box of Crayons


Annuities

What’s your favorite color? The correct answer is blue, because that’s my favorite.

Warped thinking? Absolutely. But this is exactly how many of us are planning for our clients’ retirement.

At a recent speaking engagement, I was reminded that in order to serve, we need to use the tools that fit those we are serving. Another speaker had been a member of the Swiss Guard, an elite team that serves as the Pope’s security detail. He told stories of his time with the pontiff, but the one that stuck with me was about a gift he had purchased for his son during one of his trips abroad: a box of crayons.

His son had asked what he should draw, and in which colors. The speaker told his son to draw what was important to him and in his favorite colors.

The Pope, he said, was the same way: he believed that everyone had the tools they needed to tell their own story, paint their own picture – and to do so for a greater purpose.

The metaphor works nicely for the insurance industry, too. We may have plenty of crayons to choose from, but in order to draw the best pictures, we have to make sure that we’re using all of them – not just our favorite. Put another way, we have to make sure we’re using all of the tools at our disposal. At the end of the day, every person we serve is unique, with their own needs and plans. They deserve their specific crayon.

We must paint the clients’ picture, not ours. It’s easy to get caught up in what practice and expertise can give to a client. Instead, we have to use their eyes and ears to deliver the value that’s important to them – and at the right time. Our clients are the heroes of their own story. Our role is to provide them the tools they need to create a happy ending.

Winning Strategy

Think about having a box of Crayons as your toolkit. Leverage the tools for your clients that make the greatest difference.

About the Author

Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. His latest book, “Free Throw for Financial Professionals,” is available now – learn more at http://www.freethrowsforpros.com.

Why Your Digital Assets Will Outlast Your Retirement


Annuities

In the insurance industry, we spend a lot of time working to make sure that our clients don’t run out of money in retirement. We talk with our clients about their assets. Then we plan around them.

But longevity creates other assets that aren't always part of the planning process – digital assets. The longer we live, the larger the digital footprint we leave behind.

It’s both an asset and a risk – and few planners are talking about this risk with their clients.

I recently attended the Society of Financial Service Professionals 2019 FSP Institute. During the conference, an attorney specializing in digital assets talked about common issues with estate planning. Digital assets, he said, usually aren’t properly valued on balance sheets. They’re hard to value because there isn’t really a market.

But digital assets can be monetized if we help our clients think that way. Americans are living longer, and investing patterns are changing. Today’s technologies should be encouraging us to think differently.

First, there are digital assets with tangible value, like cryptocurrency, where individuals assume the risk of safeguarding those assets. One individual lost almost $60 million in assets because their cryptocurrency could not be liquidated in a timely fashion. A little risk mitigation would have gone a long way.

Beyond that, we often hear stories of deceased authors and musicians with memoirs or other works on their computers, locked forever because nobody has their password. What great ideas, what contributions to literature and the arts might never see the light of day? Or even personal memories – photos, videos and documents from a life well-lived. More than ever, this is the legacy individuals want to leave for the next generation.

The insurance industry needs to test the risks and rewards of managing a client’s digital assets. If they haven't already, your clients’ power of attorney or executor should have access to their social media and online financial accounts. Your client will need to give explicit authorization and direction to that person what to do with those accounts if the worst happens. Estate planning documents need to reflect the new world of technology and our reliance on it.

Retirement income planning is more than just a systematic withdrawal. It engulfs the need to have guaranteed income to mitigate longevity. But, it also requires us to look at other risks – health care, long term care, taxes, legacy planning, and now digital assets.

 

Winning Strategy

Consider adding digital assets to your financial planning and retirement discussions. Digital assets will last longer than any of us and our money. Plan to make sure they are controlled and disposed of properly.


About the Author

Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. His latest book, “Free Throw for Financial Professionals,” is available now – learn more at www.freethrowsforpros.com.

Retirement Planning Digital Assets Winning Strategies