Annuities

Preparedness


Annuities

A lot of people come into our office or ask me at industry events how we’ve been able to grow our annuity business four times as fast as the industry. Several things come to mind, such as the willingness of ownership to invest in the business, the commitment to the business plan, and a push toward constant innovation. However, most people talk about how we have prepared. In my recent book, Free Throws for Financial Professionals, I talk a lot about my time as manager for the Indiana University basketball team in 1987, particularly Coach Knight’s preparation style for games.

Coach was hailed as a strategic genius on the court. His preparation didn’t go unnoticed: one sports pundit was quoted as saying, “Give Coach Knight a week to prepare and he is likely to win the game.”

I don’t disagree. But over the years, I’ve come to believe Coach’s success came down to practice and preparation rather than any particular gifts of genius. He was relentless in preparation. He knew his business – his team – better than anyone else. I would argue that he actually knew the tendencies of the other team better than their coach in some situations.

The student managers (myself included) kept statistics at every practice, starting with the first drills in October all the way to the national championship game. The stats were compiled every day for the coaches to see a summary of shooting percentages, assists, rebounds and turnovers. The coaches would view the practice footage to see which tactics were the most effective. In addition, we broke down the stats on the cuts that started the offensive sets. Coaches would ask why we were performing better with one set in particular over another. For the answer, they looked at the daily video tape. As the season progressed, the coaches had more and more data to rely on to make in-game decisions. They understood the tendencies, the strength and the success we had against multiple defensive set ups and plays. It wasn’t luck. It was being prepared.

Financial planners need to have the same sense of intensive preparation. We need to understand our metrics better than anyone else. We have to know – I mean really know – our target clients, how often they want to meet, the time commitment each client needs, and the areas where we are most likely going to succeed. If we don’t understand our business, we will be inefficient and ineffective for our clients. In other words, we will lose the game because we can’t make adjustments.

Winning Strategy: Preparedness wins over talent and price in any situation. Be a champion. Know your business and prepare for success.

About the Author
Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. His latest book, “Free Throw for Financial Professionals,” is available now – learn more at www.freethrowsforpros.com.  

retirement preparation

Racing and Retirement


Annuities

Every year in May, I get excited for the return of the Indianapolis 500. It’s called The Greatest Spectacle in Racing for a reason: every Memorial Day weekend, nearly 300,000 people pack themselves into a stadium around a 2.5-mile oval just west of Indianapolis. This race involves 33 cars on a track, driving at speeds exceeding 220 mph, and the flying start is one of the most exciting moments in racing. You can see team colors around the track – bright, vibrant, and distinct. The cars flash by in a blur, and yet have the same distinct color pattern.

Lasting between 3 and 5 hours, this particular race becomes more about endurance than speed. Engines fail. Accidents happen. Mistakes in the pit force a car off the track. Any number of issues can come up over 500 miles, so winning requires razor-sharp focus.

Isn’t that just like retirement planning?

There is so much trouble that can come along on your way to the finish line – healthcare costs, long term care events, inflation, tax bracket changes and uncertain life expectancies. Clients have to stay in the race in order to win it with some level of guarantee until they reach the finish line.

It’s not where you start retirement planning so much as how you finish it. In 102 races, there have only been 20 winners that have started from the fastest qualifying position. Don’t panic if your client doesn’t seem to have enough assets – just think differently about how to help them get to the end of the race. Keep them in a position to maintain momentum, maneuver smoothly in traffic and pull away from the pack.

Client’s retirement funds must have the power to grow – hopefully, free of taxes during the accumulation phase so that the account has more money to produce income. At the same time, the portfolio must have some level of risk mitigation, especially in the final 10-15 years of accumulation. There has to be a balance of protection and growth.

As the final 20 laps tick down, the tactics change. Drivers get more aggressive; crew managers position the car for the optimum level of fuel to make it faster, yet still get to the finish. The sequence of return risk is no different. However, there are better ways to mitigate the potential risks. Planners have to find a way to get maximum income for the longest period of time while protecting inflation risks and price fluctuations.

It’s a long race with many levers that have to be pulled in order to win– not just assets under management with a questionable withdrawal percentage. Having flexibility, consistency, and power ultimately wins the race.

Winning Strategy: Make sure your clients cross the finish line by keeping them in the race first and then focusing on strategies that keep them out of trouble.

About the Author
Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. His latest book, “Free Throw for Financial Professionals,” is available now – learn more at www.freethrowsforpros.com. 

Finding the Answer and Giving Knowledge


Annuities

Lately I’ve been listening, watching, and communicating with experts who specialize in hiring and managing millennials. It’s clear that this new generation of financial planner is operating with different metrics and definitions of success than the one that came before. To be clear, I’m not saying it’s wrong – it’s just different. I was blown away by the level of professionalism at the Financial Service Professionals Industry Issues Competition. Five universities competed this year, and it was clear that the new generation of advisors is as committed to the principles of integrity, preparedness and accountability as the generation that came before. One young person recently posted a video of her thoughts about the value of education versus experience. She made a great point: college teaches you how to find the answer, but experience gives you the deeper knowledge.

The same can be said for our industry, too – particularly as it applies to both generational differences and to technology. A mentor once told me, “The internet is a great place to get information, but it’s a terrible place to sell.”

While financial products are almost purely digital today, the web may not be the best place to educate and advise people on complex problems – including retirement. In the age of social media and soundbites, the internet isn’t known for being conducive to nuance. Still, it remains the easiest place to get information. How you use and filter that information marks the difference between success and failure in financial planning.

Clients depend on knowledge, not piles of data. Don’t just settle for an answer. You need to find the knowledge behind the answer that can be conveyed to the client. What technology can’t deliver – and you can – is expertise: the ability to use the information wisely, properly, confidently, and in the best interest of the client. That is what separates the financial professional from technology: human connectivity.

We tend to pacify our clients with information too often. They can find that information now, on their own. Instead of spreadsheets, statistics, fund returns and portfolio allocations, we can help them find the answers that make the most sense of the information. What they need is a person to guide them through the maze of data to formulate the best strategy for success. Think about concentrating on delivering value in the form of knowledge and expertise, not just information and data.

Winning Strategies: Your client can – and will – find a lot of information just as quickly and reliably as you can. As planners, we need to shift our focus towards using information to convey our knowledge and expertise rather than just providing data.

About the Author
Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. His latest book, “Free Throw for Financial Professionals,” is available now – learn more at www.freethrowsforpros.com.  

Best Interest Discrimination


Annuities

In normal circumstances, four days on a cruise ship sounds like a dream. But this wasn’t a normal cruise.

Part of professional development sometimes means continuing education, and that’s where I was – at sea, for a four-day conference, listening to talks about the financial industry and tax updates. Work is work, regardless of where you are, and I felt a need to stay connected to the office during my four days away. While signing up for internet service aboard the ship, I learned that the daily fee for basic, lowspeed internet was $15.95. I pay around $65 a month for Wi-Fi at home – that’s roughly $2.00 a day. And the coverage on board was spotty and slow at best.

Now I’m sure getting a Wi-Fi signal in the middle of the ocean is no small feat, but I have questions:

- Is paying 697% more money for less service really in my best interest?

- Who in the leisure industry is responsible for these outrageous pricing decisions?

- Why aren’t these people being held accountable?

As I thought about pricing, fairness and accountability, another question came to mind: Why does there seem to be a double standard regarding Best Interest rules directed toward the insurance industry in comparison to everyone else? Is paying $15.95 a day for internet more unreasonable than a 3% commission for lifetime income that will last 20 or more years?

The noise around Best Interest continues to increase in 2019. The SEC has an interest in providing Best Interest Standards, which seem to be the most efficient way of providing uniformity and consistency. Several states have recently begun formulating their own definitions of Best Interest Standard as well – some include a private right-of-action similar to the DOL’s version of Best Interest. But I’ve recently had to question why the financial services industry is being discriminated against and held to a certain standard when other industry standards are more lenient.

My wife and I signed a purchase agreement for a townhouse that was being built. The outer shell was already complete when we closed on the property, but we had to build out the interior. Six months after the plans were approved, we only have one pipe installed for the plumbing. Where is the accountability to a professional association for the construction industry? Why is someone allowed to charge interest and hold thousands of dollars with no benefit to the client? This would never hold up as Best Interest.

Our industry generally has the highest level of ethics of any consumer-facing enterprise. Politicians aren’t shy about voicing disgust when those ethics are violated, and yet the country turns a blind eye to abusive pricing strategies of other industries and shows a complete disregard to consumer expectations. It’s time to stop and look at all consumer interactions, not just financial transactions. Be involved with local advocacy groups. Be vocal towards your congressional representatives in the Best Interest conversation.

Winning Strategies: Be an advocate for Best Interest for everyone and every industry. Support what’s best for the consumer but every industry needs to be held accountable.

About the Author
Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. His latest book, “Free Throw for Financial Professionals,” is available now – learn more at www.freethrowsforpros.com