(Editor's Note: This is part one of a two-part series; part two appears Wednesday, June 23, online.)
Eight hours of Web-cast coaching should help Securities America's 1,900 independent advisors put five to 10 clients on the road to comfortable retirement income.
This is the independent broker-dealer's goal as it launches a new retirement income-distribution coaching program on Thursday, July 8. It introduced the program at its annual conference held in Huntington Beach, Calif., earlier this month.
Securities America, part of Ameriprise Financial, says it uses a laddered time-segmented distribution strategy that pinpoints different types of investments, each best suited to progressive segments of clients' retirement years.
"We've done a lot of research on the time-segmented strategy and are confident in it," says Zachary S. Parker, who is responsible for SA's annuity and insurance business lines, and income distribution planning.
"All the data lead to its being better than a systematic withdrawal program. But we've found that advisors have a hard time implementing the strategy;" thus the coaching program, explains Parker.
The $499 series of eight weekly web conference calls will be limited to 12 advisors per session. Each hour-long Web-cast, enhanced by PowerPoint presentations, will be run by one or more SA subject-matter experts. The group education and discussions are to be supplemented by individualized coaching.
SA 's launched its Income for Life model in 2005. This software can be used with the more complex Managed Opportunities NextPhase program, which has management and tracking capabilities.
The latter's tracking and reporting feature lets FAs keep on top of whether a plan is meeting a client's goals, allowing for needed adjustments. As one portfolio segment reaches the target market value needed to generate income during a specific period, SA says, "The investment in that segment can be harvested to help ensure future income without continued exposure to market volatility."
SA recommends that advisors use a time-segmented distribution strategy for most client income needs while "providing additional income through guaranteed income sources."
Designed for consistent income throughout retirement, the time-segmented approach typically splits assets into five-year periods. Each segment is constructed and managed as an individual portfolio with its own investments, with all investments working in sync to generate income.
"For the first years, you're in fixed products, allowing the rest of your money to build for those periods beyond 10 years," explains Parker. "That means there's less chance of having to pull the money out when [the investments] are down in value."
For advisors, the key benefit to this strategy is "helping to control clients' emotions," Parker says. "They're less concerned with market downswings and upswings, because they're not taking income from accounts that could be down in value."
In addition, "It controls the distribution process a lot better than when everything is in one account and you're drawing from it. When it's down in value, that causes emotional issues with the client--and it's not necessarily advantageous for the [financial] plan either," the Securities America executive says.