Annuities

That Time Coach Knight Went Fishing at Practice


Annuities

Because I was a student manager for Indiana University’s basketball team, I’m often asked how practices were with Coach Bob Knight. As you can imagine, they were generally intense with little time wasted. But, many of them included invaluable life lessons for all involved. One such practice was during our Christmas break. Coach came out of his locker room with a fishing pole in hand. I automatically knew this practice was going to different. 

 

Coach spent 90 minutes talking about being aware of your surroundings for the best chance of success. He used the analogy of fly fishing in a river with a fast current. He moved around the basketball court, simulating how a fisherman might move. He said you have to be careful when stepping on slippery stones, as you need a steady frame to cast your line. And, you have to pay attention to the strength of the current, so your feet aren’t pulled out from under you. 

 

You have to gather all this information into your decision-making process as you fish. And, you have to practice. Coach would cast his line and land the bobber within 6 inches of his target. Every time. Years of repetition created muscle memory, so he was extremely accurate. 

 

Practice for Planners

Coach’s fishing analogy was true for basketball, and it’s also true for income planning in an investment portfolio. There are hundreds of risks associated with a retiree’s income plans, but longevity-related issues multiply the chances of running out of money. Each risk in longevity is its own stone covered by moss. The client can easily slip and get caught up in the current. After that, it’s hard to recover. The damage is already done. 

 

In planning, you have to constantly check the variables surrounding your clients, just as you would check for slippery rocks or pay attention to the speed of the current. You can reduce the impact of longevity by shifting your client’s risk. 

 

The cash flow pressure of a long-term care event can be mitigated with insurance or income riders that provide additional income. Annuities are the only vehicle that use mortality credits to boost income yield to the client, and income streams can be guaranteed through immediate or deferred income products. And, inflation protection can be reduced through riders on many annuities. 

 

Want to be as accurate as Coach Knight? You’ll need repetition. Make income planning a repeatable process in your practice, and you’ll be more efficient and effective with your clients. You’ll also improve retention and increase referrals. 

 

Winning Strategy

Navigate the planning process like a skilled fisherman. Eliminate or reduce as many slippery stones as possible. Watch your step so you don’t get caught up in the current. Shift the risks and make your client’s journey more predictable. 

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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. You can get his latest book, “Winning Strategies: The New Rules of Retirement Planning,” on Amazon. 

Retirement Practice Management Financial Planning

Bringing Annuities to Light


Annuities

I recently attended a sales conference hosted by Allego, a training software company. The conference displayed best use cases for training but did so in light of the changing way people learn. As we attempt to bring more awareness to annuities in the financial planning process, I think it is really important to understand how our clients learn. 

 

Traditional brick and mortar business are rapidly declining, and our digital footprint is coming front and center. How we interact with prospective clients and clients is changing right before our eyes. Consider these stats from Forrester Research: 1

  • 68 percent of buyers want to research an idea online before they buy
  • 60 percent of buyers would rather get their initial information online instead of talking with a person
  • 62 percent of buyers say they decide on a vendor based on their digital image alone

 

Your prospective clients are more educated, have more resources and information at their fingertips, and have more choices of vendors than ever before. To remain relevant, you have to provide value upfront and more frequently than you did just 10 years ago. 

 

The learning curve in our industry is not steep; it’s more like a ramp. But, the longer a prospective client takes to engulf themselves in a topic, the longer the retention. That makes your sales cycle extremely long. But, education is positive for our industry. It’s always been a bedrock. It just needs to be delivered in a different medium. 

 

What’s Your Story?

Every financial planner can benefit from stepping back and thinking about how you deliver information to your clients. Before you dive into the digital world, take some time to clarify your message and your story.

 

The way your clients interpret your message can either be like holding several eight-pound bowling balls, or striking a cord that addresses their internal emotions. It’s not about us anymore. It’s about what we can deliver to them emotionally and philosophically. That’s what clients want to know. When you communicate in that perspective, you touch the hearts of many people, which can lead to new level of engagement. 

 

A new level of engagement is what will bring products to a new light. The change in perspective will allow the product to fit into the overall purpose of the financial plan, which is totally focused on the client. Take a few minutes to think about how you communicate. Are you talking the same way you did just a couple of years ago, or are you ahead of the curve in how prospective clients want to interact? If you want to learn more, check out my site, https://www.clarifyyourmessage.com/Michael-McGlothlin, and to see how I could help you market and grow your business.

 

Winning Strategy

Think about how your target market communicates and researches information. Match that behavior and you have a better chance of being the go-to financial planner for that group. 

Retirement Webinar

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We're talking shop with Tim Ash! This webinar will be packed so register now and bring your notebook!

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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. You can get his latest book, “Winning Strategies: The New Rules of Retirement Planning,” on Amazon. 

 

1Forrester, “B2B Buyers Mandate A New Charter For Marketing And Sales,” Jan. 10, 2017: https://www.forrester.com/report/B2B+Buyers+Mandate+A+New+Charter+For+Marketing+And+Sales/-/E-RES132705

Retirement Financial Planning Education Client Value

Why June Should Be Client Value Month


Annuities

OK, so June is officially Annuity Awareness Month. If you’re anything like me, you get excited about the opportunity to spotlight our business and how annuities fit into the planning process. However, I’m not sure Annuity Awareness Month is the appropriate title. Instead, I think it should be Client Value Month. 

 

Let’s talk about the meaning of value in retirement income planning. 

 

  • Value goes beyond products. Anyone can find products through a variety of online resources. In many cases, those products are less expensive. What separates you from an online financial grocery store? Advice, wisdom and client engagement. 

 

  • Value is defined by the client, not you. Too often, I see websites and marketing material focused on the advisor’s credentials, experience or area of expertise. The focus needs to be on what you do for your clients. 

 

 

  • Value is understanding the client’s vision. Everyone has a different vision of retirement – start early, travel, leave a legacy, maintain a healthy lifestyle. That’s the vision that you have to meet. It’s the future the client wants to attain. You can deliver that future efficiently and effectively.

 

  • Value is creating confidence. In many cases, annuities make the overall retirement portfolio more predictable. In doing so, you increase the probability of your client having a certain level of income to meet their vision of a great retirement. 

 

Winning Strategy

Focus your attention on your client’s goals and their vision of a great retirement. That will lead you to the placement of safety and guaranteed income where annuities fit. But, start with the value and not the product. 

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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. You can get his latest book, “Winning Strategies: The New Rules of Retirement Planning,” on Amazon. 

 

1Nationwide Retirement Institute, Social Security 4th Annual Consumer Survey, September 2017: https://nationwidefinancial.com/media/pdf/NFM-16735AO.pdf

Retirement Annuities Client Value

3 Reasons You Need to Talk About Guaranteed Retirement Income


Annuities

This blog is meant to educate, motivate and inspire advisors to look at retirement income planning in a different way. Retirement can’t be discussed with a client without involving some type of guaranteed income – Social Security, defined benefit plans or commercially purchased annuities. All have the same basic components, but it’s critically important to have an income discussion with clients as early as possible. Here are three reasons why: 

 

1. Social Security planning and integration is rapidly becoming an important topic for many Americans. Recent surveys indicate that the majority of clients will seek out another financial planner if their current planner is not talking about Social Security integration.1 In and of itself, Social Security is nothing more than a public annuity. You place funds into the system for a guaranteed income that you can’t outlive. So, no one should be uninformed about annuities because many people’s main source of retirement income is an annuity called Social Security. 

 

2. At the close of 2017, the S&P 1500 Pension Index stood at 84 percent.2 That means the average pension plan is only 84 percent funded. Pension risk transfers continue to grow. (See my March 2018 posts on pension risk transfers for more information.) Transferring the liabilities of a defined benefit plan typically requires the use of a group annuity – a promise to pay the plan participants for the rest of their lives according to the plan document. Today, insurers are in a much better position than pension administrators to manage longevity risks. We are moving into a more volatile market situation while longevity for 70-year-olds grows. Those are two risks where plans can ill afford to miss the mark. 

 

3. Finally, our research through our JourneyGuide™ planning team finds that guaranteed income sources increase the probability of success by large margins. By placing 15-25 percent of a retirement portfolio in guaranteed income sources, a large segment of the population will have a better chance of having at least $1 remaining in the portfolio at age 95 (or whenever they select). Please go to www.journeyguideplanning.com for your free 14-day trial of the software tool and schedule a one-hour training session to learn how your clients can benefit from the proper placement of annuities. 

 

Annuity Awareness Month gives you a chance to talk about annuities with your clients. Think about how comfortable your clients are with the annuities they already have – even if they may not realize it. I think it will provide a great comfort level. 

 

Winning Strategy

Take a step back and talk to your clients about the annuities they likely own now – Social Security and pension plans. Knowing they already have guaranteed income sources might make them feel better about placing annuities in their portfolio.

Retirement Webinar

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We're talking shop with Tim Ash! This webinar will be packed so register now and bring your notebook!

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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. You can get his latest book, “Winning Strategies: The New Rules of Retirement Planning,” on Amazon. 

 

1Nationwide Retirement Institute, Social Security 4th Annual Consumer Survey, September 2017: https://nationwidefinancial.com/media/pdf/NFM-16735AO.pdf

 

2Mercer, “S&P 1500 Pension Funded Status Increased by Two Percent in 2017”: https://www.mercer.com/newsroom/january-2018-pension-funded-status-increased-by-two-percent-in-2017.html

Retirement Social Security Pension Risk Transfer JourneyGuide

Crossing the Bridge, Together


Annuities

All month long, we’ve been talking about Social Security and the many ways it could impact your clients. But have you thought about how it could impact their families?

 

By now, you’ve hopefully read our Crossing the Bridge white paper, which explains how you can use an annuity to delay Social Security benefits and maximize your clients’ retirement income.* Maybe you’ve also taken a look at our JourneyGuide™ planning software, which literally shows the impact of delaying benefits to age 70. 

 

Aside from increased income and improved portfolio performance, there are collateral benefits to optimizing Social Security income. Typically, your client is trying to get as much income as possible and as early as possible. Help them consider all their options – and the impact on those they care about –before they make a potentially irreversible decision.  

 

  • First of all, taking Social Security income at age 62 means that the benefit will be reduced by 25 percent for someone eligible for full retirement at age 66. If they were to wait until age 70, their benefit would be 32 percent above their full retirement age. That equates to a 76 percent increase over the income received at age 62. That’s significant! 

 

  • Your client’s Social Security decisions will also impact their spousal benefits. So, at the death of the primary insured, the beginning income for the spouse would be 76 percent higher in many situations. Also, the impact of cost of living increases on both benefits should not be overlooked. This is a key consideration as you look to leverage some of the many options available in Social Security for couples. 

 

  • Another consideration is when there are young children involved. With more adults having children later in life, you must consider the impact on their family at retirement and at the death of the primary insured. A delay can add significant dollars to those households with younger children still at home. Children with disabilities need consideration, too. 

 

There are numerous strategies to maximize Social Security for your clients, especially married couples. Take time to sit down and listen to their concerns and legacy plans. It’s highly likely that the proper choice of Social Security options can make a big difference for them and their families. 

 

Winning Strategy

Learn all the options with Social Security and look to maximize the primary insured’s benefits. For their own needs, and the needs of their loved ones.  

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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. You can get his latest book, “Winning Strategies: The New Rules of Retirement Planning,” on Amazon. 

 

*Ash Brokerage, “Crossing the Bridge: How to Fill the Income Gap Between Early Retirement and Maximum Social Security,” Updated April 2018: http://go.ashbrokerage.com/WC2017-07-RET-Bridge_LP-Content.html