The title might make you think that I will be talking about how to spend your retirement years. Without a doubt, many people spend more time driving a golf cart around the course, or their neighborhood for that matter, during retirement. However, longevity and golf share other commonalities in the retirement income space.
In 2016, Dustin Johnson was at the top of the money list for the PGA tour, earning more than $9.3 million.* (This does not account for his endorsements, just his winnings from the 22 tournaments he played in 2016.) One of the reasons he won so often or ended close to the top of the leaderboard when he played was his putts per hole. For the entire season, Dustin Johnson putted 1.71 times per golf hole.
The 100th best PGA golfer for 2016, Adam Hadwin, earned $1,067,809 – just 11.4 percent of what Dustin earned earned for the same season. Adam played in slightly more tournaments throughout the year, too. His putting average was 1.77 putts per hole … just .06 strokes more. But, that little difference in putting made an $8.2 million difference in income.
Fortunately for Adam, he has a chance to learn from his experience, and he will likely earn more throughout the rest of his career. In fact, in 2017, he has already won a tournament and matched his previous year’s income.
Unfortunately, our clients don’t get the same opportunity to rebound in retirement. Instead, they make largely irrevocable decisions when they leave their working years, so they have to get it right the first time. Like putting, the smallest movements can have huge consequences.
We must guide our clients through the complexities of longevity. A major health event that requires home health care or skilled nursing might demolish the assets a person has saved. And, simply living too long creates added stress on their ability to keep pace with inflation. All are real problems that, for the most part, have to be dealt with when your clients stop working and start living off their accumulated assets.
Minor tweaks like asset allocation may improve or lessen a portfolio’s ability to sustain itself through a systematic spend down over the rest of a retiree’s life. You should take time to learn about new techniques and products for your clients. With new risks surrounding longevity and retirement income planning in general, you owe it to your clients to be innovative, creative and purposeful in your planning. Just like practicing your putting, practicing your profession can make a big difference for your clients and prospects.
Keep current with new products and strategies to your give your clients the best opportunity for success. When you concentrate on the small things you can tweak, you will likely have profound differences in your clients’ retirement success.
The marketplace is demanding financial professionals to work in our clients' best interest, which will not only need to address retirement income, but also the risk of longevity.
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.”
*PGA Tour Official Money Board, 2016: http://www.pgatour.com/stats/stat.109.2016.html
© 2018 Ash Brokerage LLC.