The Immeasurable Return on Family Values

The Immeasurable Return on Family Values

While we’ve had our eyes on the U.S. Department of Labor’s Fiduciary Rule and Conflicts of Interest Rule, Congress has recommended some new tax laws that might adversely affect the American consumer even more so. 


A proposed bill would limit the amount of retirement funds that might be stretched to the next generation or the following generation. The proposal limits the amount a retirement investor can stretch to only $250,000. 


This is where you should look at different angles and new ways to attack the problem. Many annuities allow for joint, non-spousal annuitants. The advantage of this set-up is that both annuitants get income for both their lives. This allows annuities to be a vehicle that creates a “stretch-like” provision above the $250,000 of assets under management. 


More than Money

How would your clients and beneficiaries react to being able to do the following?

  • Grandparent receives an income on an asset for the rest of their life – guaranteed – with a cost of living increase each year
  • When the grandparent passes away, the grandchild receives the same income – guaranteed for their life – with a cost of living increase each year
  • On the grandchild’s 16th birthday, the planning firm sends a check plus a note from the grandparent about how special the “Sweet 16” is and to enjoy their teen years
  • On the grandchild’s 21st birthday, the planning firm sends a larger check plus a note from the grandparent about how important family values are as an adult – the grandparent writes about the fears they had when they were 21 and how they succeeded
  • When the grandchild weds, the newlyweds get a letter from the grandparent about the secrets to a 50-year marriage, and reaffirms the family values that helped them weather the storms
  • When the couple has their first child, a letter arrives talking about how challenging parenting will be, but the rewards of raising a child far outweigh the early mornings, teething, potty-training, and other heartaches in raising a child. The letter reassures them everyone has been there and, if they stick to the family values, their child will be successful, healthy and wealthy. 
  • And so on…and so on…


In these cases, the return on money becomes irrelevant. You are not helping your clients pass along just tax savings or a better return; you are perpetuating value that is important – their family values. 


Winning Strategy

Talk to your clients who have grandchildren. Show them how they could create a stretch provision that is not dictated by tax law. Instead, it is driven by their family values – I think they will find the idea more valuable than any return you could provide. And, it will likely give the family even more than you can ever provide through asset allocation. 


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.”