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.
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.
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.
© 2018 Ash Brokerage LLC.