Annuities

The Real Problem with Retirement Planning


Annuities

Some people claim the U.S. Department of Labor (DOL) conflict of interest rule is ruining the retirement industry. But, have you ever thought that maybe the industry is ruining retirement?

According to a 2015 article from U.S. News and World Report, Americans aren’t saving enough. Here are the average retirement account balances at the end of each age bracket: 

20s – $12,537
30s – $33,784
40s – $68,683
50s – $122,957
60s – $212,812

While the DOL implementation and other market shifts certainly affect retirement trends, at the end of the day, Americans simply aren’t prepared for retirement. Imagine having $212,000 set aside for retirement with no further chance to earn income. And, it must last you the rest of your life. 

In reality, the retirement industry may have created this problem. For the past two decades, I’ve been told to focus on building a renewable income stream for myself. But, in order to do that in a productive business model, most planners must move up market and set minimum asset levels to engage new clients. The problem is millions of Americans have failed to work with a financial professional early in their career to develop a well-allocated, systematic savings plan. Now, they are suffering the consequences.  

The DOL is attempting to level the playing field, but collateral effects include commoditization of our business. How can you make your business stand out from the rest and make a difference in your clients’ lives before the industry continues to make the same mistakes?

 

Strategies for Improvement

  • Evaluate your business model and target markets in light of the DOL rulings to ensure excellence in products and services
  • Focus on serving the middle class through education and strategy, as this population is ill-prepared for retirement, both financially and emotionally
  • Initiate income planning conversations with Americans of all ages whenever the opportunity arises
  • Utilize effective tools that provide relief for past years of ignoring the problem  

 

Winning Strategy

Seize the opportunity to support the underserved middle class in America. Moreover, discover market niches that boost productivity for you and your business as you navigate the post-DOL world.

 

About the Author

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.

 

 

3 Steps to Get Out of Your Comfort Zone


Annuities

As a child or a young professional, I never dreamed of being a writer. I simply didn’t have the patience to stare at a blank page, waiting for the right words to come to mind. Over time, I’ve learned to rely on my expertise and passion for the subject to make it easier to begin the writing process. But to get to this point, I had to take the first step. 

When I initially began writing blogs, they were inconsistent and infrequent. Gradually, as I changed my habits and made time to write blogs regularly, themes began to emerge and a clear niche evolved. 

By practicing the habit of writing, I have developed a love for it. So much so, in fact, the editorial team probably pulls out their hair at times due to the mass quantity of content I throw at them. This passion for writing did not emerge naturally, however. I had to start with the basics and restructure my time to accommodate for this new hobby. 

 

How I got out of my comfort zone: 

  1. I developed the right mindset. Habits are formed by a mindset, so you simply must change your mindset to change your habits. The fear of the new habit must be overcome with a clear understanding of the benefits of changing your behavior, and you must remind yourself of those benefits daily. Repetition creates consistency. Consistency breeds new habits. 

  2. I made time. Writing was an additional hobby that I wanted to adopt without replacing any of my existing work duties. When I examined my time, I realized that the long hours I spent on an airplane listening to music or simply staring at the seat in front of me could be used more productively. Establishing a new habit to occupy previously “wasted time” seemed like an effective strategy.
     
  3. I executed. On every flight segment, I challenged myself to write one blog. I would use the quiet time on the plane to concentrate my thoughts and ideas into coherent written words. Over time, I developed consistency, and the task of writing became far less daunting. I also expanded my knowledge of content marketing to refine my skills, and soon, passion and expertise emerged. 

When the Ash Brokerage creative staff approached me about compiling the blogs into a book, it took me by surprise. I never imagined myself as a published author. It took some time to get used to the idea, but, in the end, I’m glad decided to step outside of my comfort zone. By taking the first step and forming a new habit, I now have a book sold on Amazon that hopefully gives advisors like you motivation, new ideas, and helpful strategies to better serve your clients. 

 

Winning Strategy

Get out of your comfort zone and try something new. You may be surprised by how much you enjoy the experience of pushing your limits and challenging your capabilities. New habits can improve your personal and business life immensely. Take the first steps: develop the right mindset, set aside time, and execute. 

 

About the Author

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.

How to Draft Your Team Like a Winning NFL Coach


Annuities

In his daily devotional, “The One Year Uncommon Life Daily Challenge,” former Indianapolis Colts coach Tony Dungy shared his strategy for selecting players in an NFL draft. As you may know, a team’s draft pick can make or break a franchise because of the amount of time and money invested in each player.

During the draft process, Dungy evaluates the list of potential picks and writes DNDC (“Do Not Draft because of Character”) next to the names of people with character flaws. This may seem harsh, but he understands the costly, long-term effects of having a player with poor character on his team.  

Too often, teams seek short-term results while ignoring long-term problems. In order to avoid this pitfall, you should implement Dungy’s stringent criteria when drafting your customer base. Similarly, your customers should use the same criteria when choosing you as their financial planning professional. 

 

Drafting Your Best Team:

  • Be someone of outstanding character who is worthy of being drafted by your clients

  • Match your best practices with the right prospects – if your view of retirement planning does not align with your prospect’s vision, you should have the fortitude to walk away from the potential business

  • Don’t be distracted by short term results; remain focused on your clients’ best interests over time – with increasing longevity, a retiree may be your client for at least 25-30 years, so it’s critical to maintain a clear vision of their future  

  • Educate your clients on their need for a specific return, instead of only striving to beat the market index each year

  • Constantly strive toward developing new alternatives and services – as millennials age and client demographics change, you must adapt to meet their needs, specifically through technology

  • Remain flexible in an ever-changing world without compromising your long-term focus

Adjusting to the new fiduciary standards may seem difficult, but you can mitigate risks – for your clients and your business – by following Coach Dungy’s simple rule: Do Not Draft because of Character. 

 

Winning Strategy

Align the vison of the client, yourself, and your staff in the retirement planning process. If you don’t feel the client shares your long-term vision for their future, do not engage with them.  Invest your time in better-suited clients and strategies to create your own winning team.   

 

About the Author

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.

 

DOL Changes: What You Should Do First


Annuities

“Everyone has a will to win; few have a will to prepare to win.”

–Bob Knight, former Indiana Hoosiers basketball coach

With the new U.S. Department of Labor (DOL) rules coming into effect next year, many financial professionals are asking, “What do I have to do to comply?” I think the better question is, “What should I be doing to prepare?” Instead of solely focusing on what you must do, go a step further. Determine how you can enhance your business to not only comply, but also excel above the competition.

 

Critical Success Factors in Future Business Models:

  • Compensation regimes must remain as neutral as possible – All revenue should be paid through an established grid so consumers are confident that conflicts are reduced.

  • Products with classes must become more uniform – The DOL recognizes the time and effort devoted to some sales cycles for more complex and best interest sales. Differential compensation must be set by class, not individual product. Furthermore, all of us will need to work with smaller margins.  

  • Conflicts of interest must be eliminated – Metrics such as highly concentrated positions, high placement ratios of product classes, and repetitive solutions must be addressed.  

  • Distribution systems like career agencies add value in the oversight of producers – It’s essential to know your client, agents and brokers in a fiduciary environment. Highly structured general agencies and Offices of Supervisory Jurisdiction provide value and confidence when executed properly.

  • The fear of disclosure must be abandoned – As an advisor, during your recruitment process you should educate your clients about disclosed information, including your commissions and overall revenue into your firm. As a business owner, you shouldn’t feel violated by the requirement to discuss your compensation regimes and business models. Your clients will appreciate learning why, how, what it takes to serve them with honesty and loyalty.  

  • We have to keep our curiosity – You must abandon your old biases in the former “suitable world” and remain open to different classes of assets and solutions to innovatively solve client needs.  

While many uncertainties about the new rule remain, the DOL has indicated its willingness to provide guidance throughout the implementation period. However, the six items above will serve as a foundation for thought and action as the specifics are gradually clarified.

Winning Strategy:

Preparing to win is more important than the desire to win. Use the DOL’s implementation period to assess your business model and develop new strategies to deliver meaningful client solutions. Focus on improving methods of distributing products and services for future success.

 

About the Author

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.

Why We Can’t Let Collaboration Die


Annuities

Whenever someone enters my office, they are greeted by a picture of “The Last Shot.” It captures the moment when Indiana basketball player Keith Smart took the final shot of the game to help the Hoosiers win the 1987 National Championship. However, it’s not just Smart I appreciate when I look at this picture. I also notice the other players, supporting him both on the court and on the sidelines. (EDITOR’S NOTE: If you look closely, you’ll notice Mike is one of the supporters on the sidelines as a student manager!)

Every time I look at this picture, I am reminded of the value of teamwork and collaboration. In a similar way, we must demonstrate a high level of cohesiveness in order to serve clients effectively. Often, our clients are trusting us with their very last retirement dollar, and they deserve an extremely high level of professionalism in return.  

Over the course of 30 years in this industry, I’ve observed a shift from holistic service to specialization. While the focus of retirement planning remains on accumulating assets, our clients need more than just asset management. Too little emphasis is placed on long-term care needs, guaranteed income floors, and the transfer of wealth with the least amount of taxation.

 

Making Your Team Work

With the current DOL ruling defining new standards for our industry, are you capable of performing ALL the analysis necessary to serve your clients with excellence? My guess is that, individually, you aren’t able meet that expectation. Therefore, you should use a more holistic, team-centered mindset to achieve these goals. 

This type of collaborative plan can be executed with a variety of professionals:  

  • Life insurance agent 
  • Long-term care expert
  • Attorney
  • CPA
  • And possibly others needed to serve the best interests of the client

When you use this approach, you must be certain everyone understands their role as individuals and teammates. Regardless of which who created the original plan for a client, everyone working on the case will also be held to the fiduciary standard, thus making it imperative for the team to work as a cohesive unit.

As you assemble your championship team, ask yourself a few questions: 

  • Are you willing to individually take on the fiduciary risk from others’ recommendations?
  • How can you ensure every team member is being transparent with the client about fees and disclosures? 
  • Is it time to re-think your business model as a sole practitioner and look to building a producer group that can address your clients’ needs under one entity? 

There’s no doubt we must continue to collaborate for the better of our clients. Yet, the real question is how to do it effectively and efficiently for our business. Now is a great time to look at all your vendors as teammates and determine what gaps you need to fill. Just as a coach strategizes where to position certain players, you need to strategize with your carriers, vendors, services and technology.  

When we surround ourselves with like-minded professionals, collaboration only benefits our clients. Think about how you will collaborate in a more regulated environment, and consider the consequences of working independently in a fiduciary setting while maintaining best interest standards. My fear is that collaboration will quickly fade as an unintended consequence of regulation and broker-dealer compliance. But, teamwork is too important to lose as we transition into the next chapter of financial services. 

 

Winning Strategy:

Our strongest professional relationships might change as a result of regulation, but we can’t sacrifice collaboration. You must be intentional about strengthening and maintaining your relationships, creating a team that will be effective for your clients and your business. 

 

About the Author

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.