Robert Graham, RFC, president and CEO, RG Capital, AIG Financial Advisors, Scottsdale, Ariz.
1. What retirement issue has hit you or your clients out of left field, and how did you resolve it?
Graham: The number one retirement issue is not being prepared or not having a clear line of sight on what needs to be done to be prepared. For example, people think that they are saving enough to prepare for their future. But once we factor in inflation, taxes and all the other dynamics in a retirement analysis, they find out they're actually coming up short.
We resolve that by giving them a savings goal or target, and their goal is to save that amount in the various vehicles every month until the day they retire. If they're able to do that, then generally speaking, we have a great outcome.
2. What prospecting methods have been most successful for you in attracting retirement-planning clients?
The absolutely most successful prospecting method has been niche marketing through "guru" relationships. For instance, one of our top referral sources is in the dental profession. We were able to build relationships with top consultants in that industry, and those folks refer clients to us. Right now we spend very little on marketing but average five to 10 qualified referrals per week.
3. Do you face any frequently occurring retirement-planning mistakes with prospects?
The biggest mistake is not paying attention to what's happening with their money. I tell prospective clients that nobody cares about their money more than they do, and so it's that much more important for them to read their statements and understand what's happening with their money. They don't pay attention, so their accounts are ebbing and flowing and they have no idea why -- that leads to a number of mistakes, not just one in particular.
4. What challenges do you face when modeling clients' retirement incomes and cash flows, and how do you resolve them?
One challenge is debt. If folks are in debt, we have to make sure they address it correctly, because the debt creates challenges as to how creative an advisor can be. We have models that address accelerating their debt payoff, while still keeping liquidity and income needs in consideration.
The other concern in modeling is inflation. One thing we do to take the pressure off the investments' return is to increase the savings goal for our clients by 3 percent every year. That helps to offset a bit of the impact of the inflation.
5. What mix of products and solutions do you use most often and why?
For investments, we use individual bonds and exchange traded funds (ETFs) more than anything else. Those both provide low cost and tax efficiency. We try to create efficiencies in those two areas to take pressure off the assets, so clients have more money working for them. Also, we work a lot with small business owners and use retirement plans: defined benefit and defined contribution. Those are logical tax-avoidance strategies.