March 18, 2009

Five Questions for the Retirement Advisor

Kelly Welker, Branch Manager, Welker Financial Strategies LLC-LPL Financial in San Antonio.

What retirement issue has hit you or your clients out of left field, and how did you resolve it?

I have a handful of clients that retired prior to age 55 and are taking substantially equal payments under Rule 72T for retirement income. With a market decline such as this, even with a well-balanced and well-allocated portfolio, it may be difficult to recover. They're in serious danger of running out of money. They are allowed under IRS rules to decrease payments once, but that may not be an option for people already stretched thin with their budgets.

I have written letters to congressmen, contacted FSI [the Financial Services Institute] and called for help from my back office to try to get regulatory changes put in place to allow clients to decrease the amount they are taking, but also put it back to the original percentage once the account recovers. With the recent changes made to RMDs [or required minimum distributions], there is hope someone is listening. The other option is to encourage the client to return to the workforce. This will be the best option for them in the long run.

What prospecting methods have been most successful for you in attracting retirement-planning clients?

Most of my retirement planning clients are obtained by referrals. I find that the accounts are larger, the trust is gained faster, and the loyalty to stay with me is deeper. We also have small round-table discussions with two or three couples on a particular subject.

Do you face any frequently occurring retirement-planning mistakes with prospects?

Most of the problem prospects I meet with have one issue in common: They not saved enough for retirement and they expect to be able to take eight to 10 percent out of their account until they die!


These same individuals never really do any planning do begin with. The first time they meet with an advisor is when they have already made the decision to retire and have not even determined if they can afford to live on the amount of money they have saved.

What challenges do you face when modeling clients' retirement incomes and cash flows, and how do you resolve them?

My serious challenges come when I have a younger retiree (under 65), and fixed-income rates are down. This has been the case for the last six years.


It is a challenge to keep full liquidity, get them the income they need without invading the principal, and have the necessary growth to keep up with inflation and last them for their lifetime. Until the recent market crash, most models worked great. Now we have to adjust and reallocate.

What mix of products and solutions do you use most often and why?


We are using variable annuities with guaranteed withdrawal benefits and guaranteed income benefits to guarantee income stream within compliance guidelines.


I believe that given the right set of circumstances for the right client, these are some of the best solutions to many of our retirement-income problems. I have also found a continued need for insurance products, especially long-term care, is vital in this kind of market. It is important to make sure our clients' insurance needs are being met.

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