Annuities

Resting on the Red Sweater


Annuities

March Madness is the most exciting time of the year for me – even more exciting than Christmas. You see, this time of year always brings back memories of Indiana’s run to the national championship in 1987.

 

As a student manager, I can remember preparing the bench for the national championship game at the Superdome in New Orleans, Louisiana. I was extremely anxious – everyone was. And, as I walked back into our locker room for the last time before warm-ups, what I saw made me even more anxious. 

 

Coach Bob Knight was laying on the training table. He’d folded his famous red sweater into a nice, neat pillow … I couldn’t believe he seemed to be resting peacefully just minutes before our biggest game of the year.  

 

Looking back now, however, I think he was at peace because he knew our team was prepared. During the season, we had several days to prepare for games, but for the national championship, we had just 48 hours. However, we followed the exact same process: 

  • The team reviewed the players from Syracuse right after the national semi-final 
  • The coaches watched film Saturday night and presented the game plan to the players the following morning
  • On game day, we went through the exact same preparations as we did for every other game in the  season
  • We continued to use our model of basketball – man-to-man defense and motion offense 

 

Preparing for Your Own Big Game

When it comes to preparing for the fiduciary rule, you can use the same formula for success. As planners, most of us already act and make recommendations in the best interest of our clients. However, we need to document our sales process and make it repeatable.

 

Though the outcome was different for each game, the Hoosiers’ process remained consistent through the 1987 season. We evaluated each team’s strengths and weaknesses from top to bottom – we just didn’t look at the team’s starting five or star players.

 

Similarly, as planners, we have to focus on all the risks associated with financial planning. Too often, we look at asset management as the solution to wealth management. But, we also have to consider longevity needs (so our clients don’t run out of money), long-term care, taxes, the death of a spouse, and transferring their legacy to the next generation. These concerns need to be evaluated as a regular part of our client process.

 

I encourage everyone to evaluate their sales and business practices during the time remaining before the fiduciary rule takes effect. You could say it’s already in effect due to many broker-dealers implementing new strategies and FINRA assessing fines based on conflicts of interest. To reduce your risk of litigation, you should prepare to win, and prepare consistently.

 

Winning Strategy: Establish a sales process that is repeatable and can easily be documented. Consistency will allow you to focus on your clients’ needs, and force you to consider all the risks.

 

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.”

Preparation DOL Fiduciary Annuities