Which product or investment areas are you most interested in learning more about or adding to your product offerings? We asked more than 100 independent producers this question late last year as part of our 2014 Advisor Survey, and the answers we received tell a lot about the direction the industry is headed. This year, the focus is largely on boomers and the products they need to launch a successful retirement. From advanced uses of indexed life insurance to Med Supp sales strategies, these are the topics your peers placed at the top of their knowledge wish lists.
1. Social Security maximization strategies (50%)
For baby boomers approaching retirement, Social Security brings up a host of unanswered questions. How soon will I be eligible? When is the best time to begin taking withdrawals? What about for my spouse? Even for advisors who know the program well, these questions can be daunting because so much depends on the client’s individual situation. Mark Caner, president of W&S Financial Group Distributors, Inc., advises looking first at the immediate milestones your client is facing that may be impacted by Social Security. Looking at the smaller picture, rather than trying to answer each and every question your client may have over the course of 20 years, allows you to create a tailored plan that doesn’t overwhelm your client.
Caner writes, “For example, let’s say your client is coming up on common action stages of the retirement planning process. Perhaps they are approaching age 60. If that’s the case, 62 looms as a milestone:
- 62 is the earliest a worker can receive a Social Security retirement benefit. The benefit will be 75% of the full retirement age benefit. For workers born 1955 and later, the early retirement benefit will be less than 75%. The minimum is 70%.
- 62 also is the earliest a spouse can receive a Social Security spousal benefit based on worker’s earnings history. Benefit will typically be 35% of worker’s full retirement age benefit. For those born in 1955 and later, the spousal benefit will be less than 35%. The minimum is 32.5%.
2. Baby boomer demographics (38%)
By 2017, baby boomers will make up half of the U.S. population, a 2012 Nielsen study revealed, while simultaneously deeming them ‘the most valuable generation’ for marketers. What’s more, this generation needs financial advice, and lots of it. Having watched the 2008 market crash from the peak of their careers, many boomers saw their retirement portfolios take a substantial tumble. As a result, they’re gun-shy about investing and eager to learn about secure products like fixed annuities that can safeguard their lifestyle and offer guarantees as they move into a decumulation phase. They are also looking for a highly customized financial plan, one that takes into account where they fall within a generation that spans a whopping 20 years.
3. Advanced uses of indexed life insurance (38%)
From a $64.8 million market in 1998, indexed universal life (IUL) has grown to become a powerhouse that in 2012 brought in $1.3 billion in annual premiums. There’s a lot to like about this product. As Brian Anderson wrote for LifeHealthPro late last year, “Unlike traditional universal life, where interest is credited based on a declared rate determined by the insurance company, IUL interest is credited based on the performance of an index or indexes. And unlike variable universal life, IUL offers protection to the cash value. You’ve got upside crediting potential with protection against market downturns. This has proven to be a winning formula in a low interest rate environment.”
Everyone, it seems, agrees that this is a growing market. And so everyone wants to know more.
But the sales process is not a slam dunk, namely because IUL outprices many of its cousins in the life insurance world. Dick Weber, president of The Ethical Edge, Inc., offers this advice to agents who are struggling to close the sale: “Price is only an issue in the absence of value,” he notes. “Here's what I recommend to a broker struggling with ‘why would I recommend paying anything more than necessary for life insurance?' Add value — like riders — to get away from number-driven sales.”
4. Medicare Supplement sales (38%)
Like Social Security, Medicare brings us back to the demographic that many advisors are looking to reach: the baby boomers. As more and more of this market turns 65 — 10,000 boomers each day, to be precise — their questions related to Medicare are mounting. Should I buy Medicare Advantage or Medicare Supplement? If I buy Med Supp (the stronger coverage, particularly now that doctors are seeing their reimbursements slashed for Medicare Advantage), which supplements best match my health concerns and my lifestyle? What coverage do I need if I expect frequent visits to my doctor’s office? If I may have an extended hospital stay? If I have expensive prescriptions? If I travel overseas? Knowing Med Supp from A-N is an excellent foot in the door to serve the boomer market in an area of great need.