Observe. Seek Data. Share It.

Observe. Seek Data. Share It.

Recently, I traveled to Philadelphia, Pennsylvania, where our firm hosted Thrive University with Curtis Cloke. It was a high-level training session for serious planners in the income planning marketplace. The attendees (myself included) gained a lot of valuable insights, several of which I realized are echoed by a book, “Misbehaving: The Making of Behavioral Economics,” by Richard H. Thaler. 

Nearly three decades ago, Thaler was a lone wolf talking about behavior economics and the effects of client behavior. Over the last 30 years, he’s gleaned a few key takeaways: 

  • ­The power of observation – “The first step to overturning conventional wisdom is to look at the world around you.”
  • ­The importance of collecting data – “To really convince yourself, much less others, we need to change the way we do things: we need data, and lots of it.”
  • ­The criticality of speaking your mind – Thaler brought about change by being prepared to speak up himself, but he also stresses the need for all of us to speak up.

What’s the takeaway for us as financial professionals? A few things. 

  1. Observe. Look around you and your clients. We are – and likely will remain – in an overall low-interest-rate environment. Today’s economy is drastically different than the late 1990s and early 2000s. We live in a more volatile market. The question in income planning is no longer, “How can we mitigate risk with asset allocation?” but instead, “How can we shift the risk through product allocation?” Client demographics continue to change around us and expectations have changed as well. 

  2. Seek data. We don’t know what we don’t know, so we always have to be willing to learn. Thrive University, for example, opened the eyes and minds of many of the attendees. One advisor said, “I need to go back and have a conversation with all my clients about this philosophy.” Curtis helped us remember the importance of nominal versus real returns, implied yield comparisons, fee drag and tax impact – components that make a strong income plan for life. 

  3. Share it. In the early stages of behavior economics, Thaler went against the grain. While the topic is growing, it’s important we help continue the message. The fact is, our clients do NOT act rationally. Because of irrational behavior, we must set bumpers in their financial plans to provide guidance and a level of safety in income. But, it’s important for all of us to look the two points above, recognize that we need to change our mindset, and, as an industry, change the way we deliver inflation-adjusted income to our clients.  


Bottom Line

By admitting that our clients need a different strategy and taking time to work on our business, not in it, we will change the security level of many Americans in their retirement.  Look around at the changes, seek answers with an open mind and change the level of security for many of your clients. 


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.