Annuities

Strategies to Grow Your Client Base in 2019


Annuities

It’s hard to believe it’s time to plan for next year already. You might think it’s early, but completing the planning process now, at the start of the fourth quarter, gives you an advantage in a couple of ways. First, you can start changing your habits so you hit the ground running on Jan. 1. And, when you have more time to think about your business instead of work in your business, you tend to make better decisions.

 

One decision you should consider in 2019 is how you will grow your client base. Gaining clients is always a challenge for planners. It was a challenge at the start of this industry. It’s a challenge today. And it will be a challenge in the future. Why? Here are three reasons:

 

  1. Your competition is only growing. When prospective clients search Google for financial planning, they will find millions of wealth managers and online tools to help them make more informed decisions. Many of those resources are very inexpensive and easily accessible via technology.

 

  1. Consumers don’t wake up needing financial planning services. They have their sights on other tangible purchases and plan for retirement less than they plan for vacations.

 

  1. Our industry works on the most complex problems for our clients: retirement and longevity. There are so many potential solutions and changes during a 20 to 30-year retirement that clients become frustrated with the planning process. It doesn’t help that it’s very hard to do business in the insurance industry as a whole, due to regulations and paperwork.

 

No matter the challenge, acquiring new clients is the single most costly activity in your business. Which is why you should focus on ways to make it better.  

 

One of the more efficient ways to attract clients is to look deeper within their family – they have a higher trust factor because they know someone working with you. Marketing to family members might provide a better return than investing in mail campaigns, seminars or referral materials. Remember, billions of dollars will transfer from one generation to next over the next two decades, so you’ll want to follow those assets.

 

In order to connect with the next generation and start your relationship on a positive note, here are some ideas you should consider implementing as part of your marketing strategy next year:

 

  • Beneficiary reviews on all life insurance, annuities and Individual Retirement Accounts (IRAs). There are so many horror stories around the lack of a proper beneficiary designation that causes family strife, unintended tax consequences and funds going where they are not supposed to go.   

 

  • Harvest the cost basis on nonqualified annuities. While the tax law reduced the tax brackets, passing an annuity with embedded gains to the next generation forces the beneficiary to pay higher taxes at time of receipt. There are mechanisms to obtain the cost basis first and the gain second, which is completely opposite of most death claims in annuities.

 

  • Pass along family values with family wealth. Establish an income stream for the life of grandchildren that includes handwritten notes from the grandparents at special birthdays or events. You can gain a deeper understanding of the family dynamics by having this conversation.

 

So, if you want to increase your clients next year – and everybody does – consider looking within your existing base. Develop a specific marketing strategy to consistently and thematically talk with your clients about adding value for their family.

 

When you deliver value, relationships tend to follow – like lightning and thunder.

 

Winning Strategy

Look inward first. Your existing clients can provide the key to future growth through their children and grandchildren. Develop specific marketing strategies around the value you can bring to their entire family.

 

Winning Strategies

Craving More?

Face it. These days, your phone changes faster than you do. Continuous improvement is the name of the game. If you’re standing still, you might as well be walking backward.

Special guest Scott Fergusson joins us to talk all things innovation and how you can easily upgrade your business. Not just to keep up with the industry, but to get ahead of your competition

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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,” will be available in October.

Practice Enhancement Retirement Annuities

Distribution and Disappearance


Annuities

Annuity sales are shifting, and the direction is concerning.

 

At a recent industry event, where annuity sales executives came together to learn and share with each other, we went over a lot of statistics. One chart in particular was alarming.1

 

Annuity-Sales.jpg

 

Between 2015 and 2017, the annuity industry shrank by $29.3 billion in overall sales. The shocking part is that income annuity sales lost more than $34 billion. Some of that loss may have been due to many variable annuity carriers not issuing living income benefit riders, as rich as those riders were earlier in the decade. However, we’re still in the baby boom retirement era – the same 10,000 people per day transitioned from the workforce to retirement during that time.2

 

I have to ask …

  •         Have we forgotten the value of guaranteed income?
  •         Is the accumulation sale just easier for us to move assets?
  •         Why do we not sell the benefits of mortality credits on a regular basis?

 

The troubling part is that a corresponding influx of other income-producing assets does not exist. When I spoke with the research firm, they had no explanation where these assets have gone.

 

When looking at opportunities, I look to where the pendulum is likely to swing next. We have the largest transition from the workplace happening while life expectancies continue to grow. There has never been a greater need for guaranteed income that can’t be stopped until the retiree passes away. There has never been a better time to get ahead of the pendulum – talk to clients about the benefits of income riders and income annuities.

 

Winning Strategy

Fill a gap for your clients. Talk to them about the overall benefits of using guaranteed income products in their retirement portfolio. Statistics tell us that the competition isn’t talking about them.

Winning Strategies

Craving More?

In this episode, Mike McGlothlin shares not one, but five Winning Strategies to create a tax-efficient retirement portfolio. These strategies will set you apart from the competition by adding value to your clients.

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1Source: LIIMRA Secure Retirement Institute, U.S. Individual Annuities survey, VA GLB Election tracking survey and Indexed GLWB Election Tracking survey; analysis is of retail individual annuity market and excludes employer plan and structured settlements.

2Pew Research Center, “Baby Boomers Approach 65 – Glumly,” December 2010: http://pewrsr.ch/T4o2Hs

 

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. You can get his latest book, “Winning Strategies: The New Rules of Retirement Planning,” on Amazon.

Retirement Annuities Guaranteed Income

How to Double Your Clients and Double Your Business


Annuities

Everyone always asks my sales team if we support marketing initiatives like seminars, client events and mailing lists. We do in certain situations, but I’ve found those tactics to have limited upside and they are costly, even with sponsorship. 

 

To be honest, I think there’s a more effective way to grow your business – by capturing the next generation of your current clients. 

 

According to LIMRA, there are more than $489 billion of in-force annuity assets on the books of insurance carriers. These policies are not being annuitized for income and largely not being used for income rider usage. Many have accumulated for years and contain built-up gains that will be taxed at the beneficiary’s ordinary tax rate. We call that the ticking tax bomb. 

 

Defuse the Situation

You could wait for the IRS to strike as soon as your client is gone. Or you could take action to help their beneficiaries before it’s too late. 

 

One solution is to turn on tax-advantaged income for your clients who own these “untapped” annuities. The income stream is small and includes a return of basis, making part of their payment tax-free. When your client dies, the remaining cost basis may be stripped from the annuity in a lump sum or through payments. This allows their beneficiaries immediate access to tax-free cash. 

 

The remaining inheritance can be stretched over a beneficiary’s lifetime, which reduces the affect of taxation. Otherwise, a beneficiary would have to claim 100 percent of the remaining gain in the year of receipt or over five years from the date of the annuitant’s death. 

 

By putting the IRS in the back of the line, you will gain trust with your next generation of clients. This is a great way to grow your business. I encourage you to not only conduct regular reviews of your clients’ beneficiary designations, but also look at planning for the beneficiary’s inheritance. How they receive the money is equally important as the dollar amount. 

 

Winning Strategy

Double your business by doubling your clients through annuity reviews. If you look at how the distribution will affect the beneficiary and add value to their distribution, you will gain their trust and earn their business.

Retirement Webinar

Craving More?

We recently sat down with a few of our top Retirement Income Consultants to gather their perspective from the field. Watch how they helped their territory grow with tools and resources from Ash.

Watch the Replay

 

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. You can get his latest book, “Winning Strategies: The New Rules of Retirement Planning,” on Amazon.

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The Legacy Strategy that Passes Greater Values


Annuities

Many times, your clients will say they wish to leave a legacy or inheritance to their children or grandchildren. Usually, they think of this as a lump sum of cash or certain personal items. But what about a steady income? You could help them create a longer, and potentially more fulfilling legacy with a joint income annuity.

 

We’ve had successful results with this concept. Usually, clients want to leave a certain amount of money to their beneficiaries. However, before they pass and give away their remaining assets, they’re going to need a certain amount of income. This strategy solves both challenges.

 

In this situation, the older client elects to purchase a single-premium immediate annuity and make a child or grandchild a joint annuitant. There are a few advantages to purchasing an annuity in this manner:

 

  1. The older client enjoys an income guaranteed for life
  2. Income is received with an exclusion ratio, so most of the income is received tax-free
  3. When the older client passes away, the joint annuitant continues to receive the income for the rest of their life
  4. If a cost-of-living rider is attached, the joint annuitant enjoys potentially guaranteed step-ups in income for the rest of their life

 

Greater Values

This is already a unique strategy to legacy planning, but I encourage clients to take this one step further. I ask them to write letters to their child or grandchild, passing along memories, advice and family values. Along with the funds from the annuity, these letters can be sent at certain life milestones:

  • 16th birthday
  • High school graduation
  • Wedding day
  • Birth of first child 

In these letters, the parent or grandparent can share their wisdom – struggles as a teen, joy in marriage, the challenges of raising a family, etc. These letters are what will make a difference to beneficiaries. The transaction is more than an economic benefit. It becomes an inheritance of a legacy.

 

Winning Strategy

When it comes to wealth transfer, we tend to think about life insurance or beneficiary designations. Think outside the box to transfer wealth that includes value – family values.

Retirement Webinar

Craving More?

We recently sat down with a few of our top Retirement Income Consultants to gather their perspective from the field. Watch how they helped their territory grow with tools and resources from Ash.

Watch the Replay

 

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. You can get his latest book, “Winning Strategies: The New Rules of Retirement Planning,”  on Amazon.

Wealth Transfer Annuities Family Values Legacy Planning

Guaranteed Income and Success


Annuities

Over the past four and a half years, my firm has been working on a software tool to help Americans think and act differently in preparation for retirement. JourneyGuide  helps identify how a client will meet their spending needs on an after-tax, after-inflation basis. It’s fast, accurate, and it allows you to work with your client not just for your client. 

 

Important findings have been coming out of the software for some time. I find the most important aspect revolves around guaranteed income and the positive effects it has on the portfolio. 

 

Earlier this year, we released a study on Qualified Longevity Annuity Contracts (QLACs) which proves they improve the probability of success in retirement portfolios.1 After a QLAC was added, many of the scenarios we tested increased to more than 90 percent probability of having $1 in the portfolio at age 95. What surprised me the most was that the largest improvements were for younger ages (ages 55-60) and more conservative clients. We often think of the traditional income annuity buyer as being 65-plus. This study clearly shows that placing an annuity with younger ages is beneficial. 

 

Any Guaranteed Income is Good

However, it’s not just deferred (QLAC) or immediate income annuities that improve outcomes. The power of guaranteed income is demonstrated case after case. The ability to provide income that the client will always receive is a powerful story. Purchasing the income and allowing the rest of the portfolio to generate less accomplishes two things:

  • It takes pressure of the portfolio to sustain a high withdrawal strategy 
  • It allows the portfolio to be invested with a long-term focus instead of short-term gains for income

 

These findings work regardless of income now or income later. The ability to take pressure off the portfolio allows the client to invest longer term, which might provide additional tax relief in the form of long-term capital gains versus ordinary income. Guaranteed income can be found in Social Security, defined benefit income payments or commercially purchased annuities. Those are the only vehicles that support mortality credits and provide income for as long as the client lives. 

 

Winning Strategy

Go to www.journeyguideplanning.com and request your free demonstration of JourneyGuide. I think you will find the tool can change how your clients think and act in retirement. 

 

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. You can get his latest book, “Winning Strategies: The New Rules of Retirement Planning,” on Amazon.

 

1Ash Brokerage, “QLACS Improve Probability of Retirement Success,” 2018: https://goo.gl/Vw9Htz

QLAC Qualified Longevity Annuity Contracts Guaranteed Income Retirement Planning Annuities