Annuities

Think Like a Factory


Annuities

I recently listened to a 30-minute podcast featuring Jeb Banner, CEO of Smallbox.  Smallbox develops web sites and consults on transformative ideas like putting employees first.  The owner works with clients on Factory Days and/or Weeks.  At their core, Factory Days are about reinvesting in yourself and your support staff.

 

Smallbox shut down its business for the first time in 2011 for a Factory Week, allowing everyone to get away from the business and work on themselves.  And, of course, we can all use time to improve ourselves—recuperate, recharge, relearn and discover new possibilities.  Although the experiment was not perfect, it did focus on the employees and their development.

 

How often do you shut down your business to improve your staff and your practice?

 

As planners, we control our schedules.  Unfortunately, we allow our clients to set our weekly or daily schedules.  And we tend to chase the “next case” or “next revenue source.”  But we rarely take time to get offsite and work on our own practices.  The old saying is “work on your business not in it.”  I would say that most financial professionals are busy chasing the next urgent need, regardless of its importance.  We simply love to be busy as a way of justifying our revenue to our clients.  Worse yet, we have hired talented individuals to leverage our time, sales and service, but we don’t always know how to use our staff in the most effective ways possible. 

 

How much more balanced would your life be if you didn’t have to chase after every client need?

 

If you reinvest in your staff, I bet you can learn much from them about your business.  And, they are likely to provide great ideas on becoming more efficient, providing better customer service and helping you grow your business.  But they need to know what to do and how to do it.  A simple word for that process is “training.”  We rarely budget time, energy, dollars and other resources to make our staffs better.  I am almost certain that we all underutilize our sales support staff members.  If we better train them, chances are we can have better balance in our lives—versus running around 10 to 12 hours a day. 

 

Who do you think is most important? 

 

While it may seem selfish, Smallbox would argue that you and your staff are the most important assets you have.  Ultimately, you are using your talents for the betterment of your clients’ financial futures.  However, you have to keep yourself and your staff engaged in ways that help them grow and get better.  Learning and growing will allow you to provide more value to your clients and prospects.  So, from time to time, take time to step away from your business and get re-engaged in your most important asset:  you and your staff.

 

Winning Strategy:

Schedule regular time throughout the year to think about your business, discover new ways to help clients, and improve the skill sets of you and your staff.  It’s worth the investment.

 

About the Author

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.”

Success and Consistency


Annuities

As many know, I am a big college basketball fan.  When you look at some of the most successful programs in the country, you’ll find one thing in common: consistency in coaching. Coaches like Roy Williams at North Carolina, Coach K at Duke, Bill Self at Kansas and Rick Pitino at Louisville have all been at their schools many years.  Some years have been better than others at those schools, but no one can deny those programs have stamina and a level of excellence that is well above the average college program.  Even with successful programs that have seen coaching changes over a period of years, the same culture will likely exist throughout the program.

 

Having a quality coach at the helm is equivalent to having consistency in your retirement portfolios.  There will undoubtedly be market downturns and volatility, but consistency provides a powerful motivator for our clients to remain with their plans.  Consistency comes from us always being in communication with our clients, even in difficult market times.  We must be a consistent voice for our clients and prospects, providing information, education and advice—even when our clients don’t want to hear what we have to say.  Plus, we need to listen and react to our clients’ biggest concerns—turning their assets into retirement income. 

 

Vehicles providing guaranteed income could create the kind of stamina and consistency in a portfolio our clients seek.  It’s not that the entire portfolio needs to be guaranteed—far from it.  In fact, our research shows that between 18-28 percent of income should be guaranteed to optimize the retirement income.  That leaves plenty of assets to be invested in an allocation strategy that can protect purchasing power due to inflation. 

 

Our industry needs to look at new ways to provide guarantees and create consistency and stamina for retirement income.  Several vehicles can reduce the pressure—or improve upon—a systematic withdrawal strategy.  We need to educate our distributors, broker-dealers and advisers on vehicles like HECMs, income annuities and Qualified Longevity Annuity Contracts (QLACS).  All are underutilized today but could provide valuable benefits to our clients’ retirement income portfolios. 

 

Winning Strategy:

  Think like a successful college program or sports franchise.  Add consistency to your retirement income portfolios for more success with clients

 

About the Author

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.”

Annuities success business practice

Industry Changes


Annuities

If you ask most people what the biggest change the financial services industry is facing, they will likely say regulation.  The DOL’s fiduciary standard and conflicts of interest rule has certainly captivated everyone’s attention for more than a year.  Regardless of implementation date, firms across America are already changing how they conduct business.  But, regulation is only a small percentage of the changes that likely will force us to change our practices—and for the better.

 

Several trends will impact the expectations of our clients in the future as they plan for retirement.  Each creates a certain amount of risk, but three in particular will force us to have a different kind of conversation with our clients than we’ve had in the past. 

 

Growth of Defined Contribution Plans—For the three decades beginning in 1979, the number of participants in defined contribution plans grew from under 20 million to nearly 70 million.  At the same time, defined benefit plan participants decreased to under 20 million during those same 30 years.1  We are beginning to feel the effects of that switch to defined contribution as the first wave of retirees roll out of their 401(k) plans.  The timing of the DOL rule is perfect, because so many American workers need advice on generating income, not accumulating assets.  For planners who want to grow their business, they will need to reconcile the need to plan for income versus asset management.  Clients will soon begin asking—if they aren’t regularly doing so now—about how to generate income for life.  The importance of asset management is decreasing, as evidenced by fee compression within the industry.  Our clients simply do not see the value in asset allocation services the way they did during the accumulation phase of their lives. 

 

Fee Disclosure—Many of us are accustomed to disclosing fees, especially those of us who have worked with ERISA plans in the past. However, the change in client mentality will encourage us to not only disclose more but also to redefine how we disclose.  I sense that the new purpose of disclosure is more about understanding the client value and less about fees.  Our clients are becoming more educated through unlimited educational resources, robo-advisors and fee-conscious service providers.  Unfortunately, these trends are affecting the value of the traditional planner who focuses only on retirement income planning.  In the past, our fee structure included asset management.  We now need to solidify how much is going for asset allocation services and how much is going to our other value-added services.  Disclosure will force the successful planner to add more value.  You might say that is simple fee compression, and it might be, but if you evolve into a holistic financial service that offers more than just asset management, you have more justification for your current fee structure.  Those additional services can be added with scale and efficiency to replace or grow your revenue per client—now and in the future.

 

Re-engineered Marketing—Gaining clients in the future will be more difficult—even more difficult than it feels today.  Our prospects have access to our backgrounds, our web sites and our social media profiles within seconds.  We are faced with so many chances to create one negative impression against hundreds of positive public interactions.  In the future our prospects will come to our offices with more information about our firms than they ever had before.  It’s as if we, the planners, are at a disadvantage because we don’t know as much about them.  However, we can use technology to manage the marketing risks and turn it into a positive.  We must have a social media strategy with checks and balances—a process for posts and reviews. This will take effort to set up but can pay dividends in client acquisition.  The costs associated with prospecting can become scalable and efficient if social media is used properly. Additionally, we have to always be on the lookout for new ways to secure new clients using referrals and positive experiences. 

 

While regulation will affect us in 2017, the financial planning market place is likely to have a more profound impact on how we grow going forward.  Take the opportunity to evaluate how you will grow regardless of regulation. 

 

Winning Strategy:

Think about how changes in the market will affect your clients’ views of retirement planning.  Disclose your value differently than in the past and focus on marketing those strengths in the future. 

 

About the Author

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.”

 

EBRI, Department of Labor

Getting Better Every Day


Annuities

I’m not sure about you, but the Garmin advertising campaign excites me every time I see it.  It works around the idea of beating yesterday’s performance.  As I train for a half marathon, I’m constantly reminding myself that it’s about getting better after several years away from running.  Regardless of where your financial services practice is today, you should adopt the same philosophy when it comes to preparing for the new fiduciary and conflict of interest rule.

 

With more than 1,000 pages of text, the new rule can be overwhelming.  At times, I find myself wondering how our firm will be able to adapt to all our interpretations of the rule.  But, growth and change happens gradually.  I say “by baby steps” on many occasions.  You have to beat the previous day.  So, what can you do today in order to move the needle forward, if ever so slightly, from yesterday?

 

First, I encourage you to look at your books of business and review your exposure to the rule.  You should be working with your marketing organization or broker-dealer to see how their interpretation of the rule will impact your client files.  Segmenting the clients with qualified accounts would be a great start. 

 

Next, I think it is important to look at where you want your practice to be in the next three to five years.  There are two main questions I think you have to answer when preparing for the DOL rule:

 

Are you going to move up market?

Or

Are you going to become more efficient in your current market?

 

Both are viable options, but how you want your practice to look in the future should dictate how you approach your clients today.  If you are moving up market, you will need to begin addressing protection and longevity needs.  Or, if other producers are vacating your market, you need to think about how you can capture market share.  But you need to think about how you plan to grow your existing business. 

 

Neither one of those strategies happens overnight.  You must begin to take the baby steps necessary to gain control of your future business.  Think about what you have to do today that will make your life easier after the rule takes effect in April, 2017.  You will be glad you prepared. 

 

Winning Strategy:

Adapting to the new fiduciary standards takes time.  You can’t jump off the couch and run a marathon.  You need to improve little by little.  The same goes for preparing for the new rules.  Think about how you can improve today in a way that will positively impact your practice after April 2017.

 

About the Author

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.”

Annuities DOL Practice Enhancement

Connecting to Our Clients


Annuities

Living in Fort Wayne means I can usually find very few direct flights. On a recent connection at a national “hub” airport, my plane was running a few minutes late. So I had a chance to sit down, eat my dinner of M&Ms I’d bought at a kiosk, and relax for about 20 minutes.

I chose a bench facing the middle of the concourse and began watching people pass me one-by-one. Some were running to their next connection; others dragging their children through the concourse.

A few were simply strolling through the airport, while most were walking briskly. One poor soul was just leaning against the handrail on the moving sidewalk after an exhausting day of travel.

 

Where were they all going?

Why were they going there?

What could they all be doing that had to be done at that particular location? Why was it so important?

 

For a tired annuity wholesaler, these were monumental questions. But I think these are the same questions our clients deserve. The only difference is to add  “in retirement” to the end of the question.

 

Where are you going in retirement?

Why are you going there in retirement?

What has to be done at that particular location in retirement? Why is it so important in retirement?

 

If we ask those questions, I bet we find out a lot about the lifestyles our clients want in their retirement. Where? Why? What would they be doing? Having those issues out on the table can guide us to solutions that will be most meaningful to those we serve. And, by the way, stop and say hello the next time you see a middle-aged man in a suit and tie sitting in a concourse eating M&Ms.

 

Winning Strategy:

Ask the right questions and get the correct answers to our clients’ most heartfelt goals for a successful retirement.

 

About the Author

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.”

Annuities Client Relationships Retirement