November 12, 2010

Securities America’s Nagengast on Retirement Planning for Clients, and Reps: The Weekend Interview

IBD looks to differentiate itself with comprehensive retirement program, and financing for rep M&A

“You’re going to have clients that retire into every kind of market,” says Jim Nagengast, so any portfolio you build to deliver retirement income, he argues, must provide income regardless of market conditions. Moreover, the client has to buy into the retirement plan, so that emotions don’t get in the way of following the plan.

That's why, says Nagengast (left), who was named CEO of Securities America this summer, the independent broker-dealer has launched its NextPhase Retirement Income distribution program.

One day after the midterm elections, Nagengast sat down with AdvisorOne to discuss the 1,900-rep BD’s retirement income strategy. He also to touched on the other initiatives that Securities America is focusing on in the highly competitive IBD space, including its program to help reps buy other advisory firms.

Tell me about the retirement income plan. What’s special about it?

What we’re doing with our retirement income distribution (RID) program is more complicated, more real life, using a time-segmented approach rather than a systematic withdrawal approach. It uses five or six pools of money, guaranteed on one end of the spectrum, and more aggressive on the other, It outperforms systematic withdrawal, and it reduces the emotional discomfort clients can have with a systematic withdrawal approach. You’re going to have clients that retire into every kind of market, including down markets. Don’t you want something that will perform in all markets?

It also presents the client with a visual picture of how they are making progress toward their retirement goals. We’ve also developed marketing around the program, helping advisors getting clients in the door, and built a proposal generator that includes cash needs planning for down the road.

So you build a plan, then manage and track it, automatically telling the advisor when to take action to harvest gains and reallocate [among the buckets].

(Securities America executive Zach Parker spoke about the RID plan during the 3rd annual Retirement Income Symposium in Chicago on Nov. 8)

How long have you been running the program, and why are you doing it?

We’ve been doing this for three years now. We want to be a fee-based leader among independent broker-dealers, and for that, you need to be a retirement income leader.

We’ve also wrapped the RID program into our NextPhase program, which is built on the Envestnet platform.

(See previous article from AdvisorOne on the rollout of the RID program into NextPhase.)

What else is new at Securities America?

There’s PAL—our Practice Acquisition Loan program, where we’ll lend up to $500,000 to advisors to acquire other practices. Within the next month, we’ll announce a deal with a regional bank that will be able to loan another $500,000 to advisors [under the program]. One of our competitive advantages is that we have capital; we won’t apologize for that.

(Securities America, which has 1,900 reps, is part of Ameriprise.)

What are the rates for the loan?

Prime plus three; with one of our competitors, you have to give up 20% of your equity [to get a similar loan].

I know Securities America puts a lot credence in coaching for its reps. Do you have a coach?

I have a coach now; I got one when I was interviewing for this position.

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