The Good News of Market Downturns


Many people look at market corrections in largely a negative way. Of course, we can always talk to clients about buying low and selling high as a reason to invest or reinvest when a correction occurs. Just like making lemonade out of lemons, advisors should evaluate all angles of a client’s situation and look for ways to improve it in an ever-changing world. 

Following the August 2015 market drop, a potentially good subject to bring up at your fourth quarter client meetings is the re-characterization of Roth IRAs. Oct. 15 was the cutoff to change a Roth IRA back to a Traditional IRA for the previous year. However, if your client took advantage of converting a Traditional IRA to a Roth prior to the market dip in 2015, there are reasons to look at re-characterizing the asset back to a Traditional IRA and then re-convert.  

Because the client converted prior to the correction, that client will pay tax on the larger amount converted. Re-characterizing the asset allows them to eliminate the tax consequences at the higher asset value. The asset must stay a Traditional IRA for 30 days; then, the funds can be re-converted to a Roth IRA at the lower market value. Assuming the market stays lower than the original conversion date earlier this year, the client can convert the same amount of shares at a lower value and less tax. Then, any future gains (even those below the original conversion amount) grow tax-deferred and are accessed tax-free for qualified withdrawals.  

Of course, the client only benefits from this transaction if the account value stays below the originally converted amount prior to the re-conversion. This is a market risk you and a client must discuss. However, this tactic allows them to potentially convert more under the same tax bracket than prior to the market correction.  

Looking at ways to efficiently convert funds from a taxable consequence during retirement to a tax-free status positions the client for potentially more disposable income later in life, and it gives them a higher probability of not running out of money. That’s truly looking out for your client’s best interest. When you have that conversation, my guess is your client will appreciate your knowledge and attention to detail in handling their account.  

Bottom Line: Look toward the tax code for opportunities to open up conversations with your client and help position more tax-free income for them later in life.  


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. 

Be Ready for Change


Change. Wow, some things sure have changed in the insurance business, while others remain the same. (More on the latter in a bit.)

At the risk of showing my age, I remember selling life insurance out of a rate book. Paper illustrations were next, and now we can display values on an iPad or other mobile device. The same goes with mutual fund sales – they used to include a paper prospectus. Now, a CD delivers the same information.

I just attended our national sales meeting and change was a continuous topic. The message was loud and clear: Be prepared and able to change because change is constant.

The market is always introducing new products, and new strategies to use them. Government regulations and carrier changes can make our jobs more complex, but they can also make things more interesting. 

Don’t forget our clients’ needs are always evolving, too. Retirement planning isn’t what it used to be, and the economy can change without notice. We have to be on our toes if we want to be effective. 

That brings me back to the latter … There are some constants in our business, such as protection and reliability. Clients will always need solutions to give them those things … and they’ll always need professionals like us to deliver them!


Put It In Practice

Be ready for change, but hold on to your beliefs for the solutions we provide. The core of our business will never change. 


The Parable of the Reserve Tank


Recently, I heard retirement specialist heavyweight Tom Hegna share at story with some very powerful truths that are relevant to every financial advisor. These life-changing principles are vital to prevent seniors from running out of money in retirement. The original story is from Dick Austin – he contributed to Tom’s book, “Retirement Income Masters: Secrets of the Pros.”

To summarize, some friends from the Northeast had always wanted to visit the desert. So they flew to Death Valley, rented a car and headed across the desert. The trip was wonderful – everyone was having a great time! But suddenly, they noticed a road sign that read, “Next Gas Station 100 miles” … and their gas gauge was rapidly approaching “E.” Their joy quickly turned to anguish, and they worried about what they should do. 

Dick wrote that running out of money in retirement is just like running out of fuel. Everyone thinks it’s about the day you run out. But it’s really about the years prior to that unfortunate event. 

It can be said, “You know you’re going to run out, but you just don’t know when.”

Just as the friends stared at the glaring red “E,” many people in retirement are just staring at their own “gas gauge”— their brokerage or savings account balance— waiting for it to run out. Unfortunately, life for many brings about the loss of peace of mind in retirement and the inability to enjoy the “scenery” along the way.

The Unexpected Discovery – The Journey continues

So what came of the friends in the desert? I like to think they discovered their rental car’s reserve tank – they just had to flip a switch in the glove compartment. Once they activated it, the gas gauge showed that the car could safely reach the next gas station. What a huge relief! All the passengers took a deep fresh breath of air. Their trip was once again enjoyable.

The Real Discovery

But that’s not the best part! As the travelers continued to read more about this reserve tank, its technology and its scientific ingenuity, they discovered their last-minute ploy was actually the least efficient way to use the tank. It had really been designed to enhance and optimize the journey, and using it only as a last resort was the worst way.

Here’s what they found out:

  • The main gas tank would take the vehicle about 500 miles
  • Turning on the reserve gas tank after the main tank was about to run out only added about 25 miles 
  • To their surprise, if they had used the reserve tank FIRST and THEN switched to the main tank, the vehicle would have gone about 680 miles
  • If they had switched back and forth between the two tanks, depending on outside conditions, they could have gotten 700 miles

Unbelievable, right?! Counterintuitive and almost illogical, but it’s true. No, not the part about an SUV going through the desert (that part is made up), but the principles are real.


The Biggest Surprise Yet!

Reverse mortgages are the reserve tank for most retirees.

I know what you’re thinking: “You’ve got to be kidding me!” No, I am not.  

For most of their history, reverse mortgages have been rather unpopular with financial planners, due both to their relatively high costs, and the fact that they are typically viewed as a resource or tool of last resort. Yet the reality is use of reverse mortgages has exploded over the past decade due to newer, lower cost options. Several recent research articles in the Journal of Financial Planning have illustrated methods showing how reverse mortgages can be used proactively to enhance retirement income sustainability. 


No More Loan of Last Resort

Where did this language of “last resort” come from?  

The earliest written source actually came from a FINRA investor alert that quoted “Reverse mortgages should only be used as a last resort.” Is that true? The answer has always been no, but it wasn’t until Dr. Barry Sacks, a PhD, MIT trained physicist, Harvard Law graduate and ERISA-focused law practitioner, and his brother, Dr. Stephen Sacks, took that presupposition to task that we actually had the metrics to prove it.

I won’t get into all the details right now, but you can find the full article and videos HERE with links to the published work, “Reversing the Conventional Wisdom: Using Home Equity to Supplement Retirement Income” 

The research was profound, but the summary was really quite simple: Using a reverse mortgage as a last resort is the least effective way to use it. Dr. Sacks further stated that using the reverse mortgage as a first option gives retirees significantly better outcomes than expected.   

The research was so compelling, Dr. Sacks was asked to share it with FINRA – in October 2013, FINRA changed their positon on reverse mortgages by eliminating the “last resort” language. That’s right, they’re no longer a product of last resort!  

The facts are out and the results are in. The reverse mortgage is truly the reserve tank in retirement income planning. Any advisor who is still suggesting that they only be used as a last resort has missed both the updated research and the power of putting one in place earlier in retirement versus later.  

Now more than ever, advisors need to learn every legitimate strategy available to preserve and protect their clients’ retirement while keeping their own practice relevant and expanding. 


How Can an Advisor Learn More?

Reverse mortgages may not always be the right conclusion, but they should certainly be a part of any serious retirement conversation. The journey of a lifetime necessitates a well-planned and investigated strategy for the future. Find out how the best years are yet to come for your clients through the proper, planned use of the reverse mortgage. Learn more at: or   


HECM Reverse Mortgages Don Graves

Anticipating a Botched Punt


If you didn’t watch it, there’s a good chance you heard about it. When rivals Michigan and Michigan State met up in October, the Spartans capitalized on a fumbled punt attempt and grabbed a last-second touchdown to win the game. I listened to the final minutes on the radio while driving to dinner with my wife – the announcers were nearly speechless. In the aftermath of that wild finish, I’ve heard superlatives like “unthinkable,” “improbable,” “given away” or “unbelievable.” I even read a statistic that indicated Michigan State had a 0.2 percent chance of winning before the final play of the game.  

As I think about that game in relation to my profession, two things keep going through my mind. First, it’s important to finish strong. And second, it’s important to plan for contingencies.  

So many analogies can be made between retirement planning and the botched punt. In the final stages of life, the fear and anxiety of “not messing up” increase and create more pressure. This is no different than running out of money before you die or having the game rest in your hands. The anxiety that comes from a close game is no different than looking out five years and knowing you won’t have enough money to last if you stay alive. The emotional struggles for immediate family and the next generation cannot be put into words.  

Botched punt aside, we’ve seen several last-play wins this year in the Big Ten. I’m guessing the coaching staff didn’t run through the possibility of something going wrong, preparing their teams for adverse situations … but you simply can’t plan for every possibility. 

However, in retirement planning, you can mitigate a lot of the risks that come at the end of the game. One risk is longevity and long-term care. You never know when or if a care event will happen to your clients during retirement, but you can take action today and reduce their risk – just like a coach running through contingency plans. By having the proper liquidity and funding for care events, your clients and their families can better react to unforeseen events. And, by planning for a long income stream, you can reduce everyone’s anxiety.  

Bottom Line: Have you discussed or expected any “botched punts” in your clients’ retirement plans?  If not, you might be wise to plan for contingencies and talk to them about what to do in the event of living too long. 

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. 

Working with Skill, Not Luck


Shallow men believe in luck.  Strong men believe in cause and effect. 
– Ralph Waldo Emerson


Too often we tell a client things like, “I feel confident this strategy will work for you” or “Based on historical performance, this will work.” What we’re really saying is we’re relying on luck. We hope the vehicles we’ve chosen perform exactly as they have in the past to provide the needed income. And, we assume the strategy won’t need to be changed, adjusted or enhanced. “Set it and forget it” is a recipe for disaster. 

As we look to the future with a fiduciary landscape in mind, I think it’s important to make sure we’re operating from a point of skill and not luck. Skill requires a greater understanding of the cause and effect of financial vehicles. Just understanding how a product works is no longer acceptable. We have to move to understanding how that particular product benefits the client in the best possible way. 

The industry and its regulators continue to move toward science and away from art. In the near future, it will be imperative to substantiate your recommendations with certainty that they meet the best interests of your client. No longer can we rely on the art of selling, which is valued individually. Instead, our skills used to create that art need to rise to the top and not only be seen, but documented.  

Bottom Line

This is a change of mindset we must become used to if we are to survive as financial professionals. Being held to a higher standard isn’t a bad thing or unsurmountable. It simply means we must operate our businesses differently while accomplishing the same client objectives. It’s skill, not luck that will make a difference for so many Americans going forward. 


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