Digging Deeper: 3 Ways to Generate Revenue from your Existing Book of Business

Digging Deeper: 3 Ways to Generate Revenue from your Existing Book of Business

As I travel around the country on business, I enjoy talking with advisors from different channels – banks, broker-dealers, independent agents, registered investment advisors. Regardless of business model or channel, one consistent topic always comes up: 


“I need to find more clients. Can you help me with a seminar or dinner so I can find new clients?”


But, I like to think of the question in a different way and ask: 


“Are you interested in finding more clients? Or more revenue for your practice?”


Usually, the answer is revenue. But advisors tend to think that new clients are the source of new sales and revenue. Which is partly true. However, there’s a goldmine of existing opportunities with your existing clients. 


Mine Your Book

According to LIMRA’s 2016 Fact Book (its most recent edition), there are $486 billion of assets in nonqualified annuities – both variable and fixed – on carriers’ books right now. Some facts to consider: 

  • These contracts are NOT being annuitized and the owners are NOT electing to receive income from the rider
  • Approximately 33 percent of those owners are older than 75. Of those owners, 65 percent are classified as affluent, high-net-worth or mega-millionaires – those are all the clients that you either have in your book of business or are already recruiting to the firm. 


To make a difference with the people you’re already working with, I suggest that you dig deeper. Look at those older contracts and find a better use than just tax-deferred accumulation. Here are three suggestions:

  • Talk to your clients about putting the IRS in the back of the line, and your clients and their beneficiaries in front. Products today offer an exclusion ratio with the ability to access the cost basis first, without incurring the ordinary income tax immediately at time of death. Then, the beneficiary can spread out the tax consequences for a longer period. 
  • Turn tax-deferred assets into tax-free benefits for long-term care purposes. Only 7 percent of Americans have shifted their risk to an insurer. Asset-based long-term care products allow you to transact an exchange without current taxes and continue the tax-deferred growth. If the client uses the funds for qualified long-term care expenses, the cost basis and gains are returned to the client tax-free. You’ve taken a future tax consequence and turned it into useful and timely tax-free capital. 
  • Lock in the gains. We’ve seen an unprecedented bull market since the financial crisis. Many clients may do not want to take as much investment risk as they did 10 years ago. And, when asked about it, they probably don’t want to feel the same pain they felt in 2009. Sweep the variable contracts with no downside protection to a more secure vehicle that qualifies for a tax-free exchange, either fixed or fixed indexed. You might want to look at an income rider to provide options for the client if the market does correct and they wish to take income from another source besides their systematic withdrawal from equities and bonds. 


I think if you were to talk to your prospective clients about these ideas, they would find more benefit to working with you. You might even speed up the sales process. More importantly, you provide a valuable benefit for those clients. 


Winning Strategy

Dig deep into your client base. Ask more questions about assets held outside of your firm. Provide solutions that defer taxes and put your clients and their beneficiaries first. 


About the Author

Mike McGlothlin is a tireless advocate for the retirement planning industry. As executive vice president of retirement 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.”