Missing the Shot You Didn’t Take

Missing the Shot You Didn’t Take

I can never resist talking basketball in the spring, especially around the NCAA tournament and the final stretches of the NBA season. 


For anyone who knows me, my recreational basketball skill set is focused on offense, not defense. Specifically, my game is played between the two 3-point lines. I usually don’t leave a game thinking I should have taken a shot but didn’t. A lot of coaches tell players that they will never make the shot that they don’t take. 


Recently, one of my best wholesalers posed a question to the rest of our sales team. He asked how often clients wish they had bought something a year ago but didn’t have the faith to make the decision. 


Think about how many people wish they had bought a few years ago. And, think about how many had wished they sold it while it was at an all-time high. That’s always the case – clients always wish they had done something a year ago.


So here’s my question: What will you wish you had done this year when you look back at your business next year? 


One Possible Answer

Pension risk transfer is an opportunity to drive revenue in your practice for 2018 and beyond. However, many are reluctant to pursue this market because it has a long gestation period before you receive revenue or commission. I think there are several reasons to evolve your financial planning practice to include pension risk transfers:


  • Current tax law allows companies to make deductible contributions to their 2017 pension shortage at the higher tax rate of 35 percent. This equates to a 14 percent discount for applying contributions to the pension shortage in 2018.
  • With our recent strategic partnership, Ash Brokerage can provide fee income to financial advisors before product is placed and while the company completes the termination process. 
  • More and more large companies are taking advantage of shifting pension risk to insurance companies. Small and midsized companies tend to follow larger corporations, and most pension assets rest with small businesses. 
  • Bond yields will likely change dramatically over the next 36 months, putting pressure on the fixed income portion of the investment portfolio. The same can be said for the recent volatility in the equity markets. It makes it difficult for plan sponsors to manage the risk for investment yields. 
  • Life expectancies continue to increase for older workers. That puts more obligation on the plan assets to provide lifetime income to the plan participants. That translates into more risk for the plan sponsor. 


Economic and tax climates make it a great time to talk about pension risk transfers. If you don’t begin integrating it into your practice today, you will likely look back a year from now and say that you wished that you done so. Don’t be wishing you had done something a year ago that is now costing you business. Take a good look at pension risk transfers as a larger part of your business. 


Winning Strategy

Don’t look back a year from now and wish you had added pension risk transfers to your business. The climate is ripe to take advantage of a business opportunity that might not come by again. 

Policy Review - 10 Ideas For Existing Life Insurance

Craving More?

Watch the replay of our webinar where we talk how pension risk transfers can be an effective tool for defined benefit plan sponsors seeking solutions for rising costs and longevity risk.

Watch Now


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.”