Suggestions On How To Work With Retirees On Taking Income

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Washington

Its one thing to talk about helping retirees arrange for their income needs, but planners and advisors are starting to ask, just how do you do this?

Several speakers here at a retirement income conference offered some ideas. The meeting was sponsored by the National Association for Variable Annuities, Reston, Va.

One suggestion is to address longevity issues outright. Its “terrible” to tell people they will likely live into their late 70s, when the likelihood is that at least one of two 65-year-old spouses will live into their mid-80s, said Donald Ray Haas, president of Haas Financial Services, Inc., Birmingham, Mich.

“We should look at a couple, and approach their income as if it were going to go on forever,” said Haas, who is author of Financial Planning for The Baby Boomer Client (published by The National Underwriter Company, Erlanger, Ky., which also publishes National Underwriter Life & Health/Financial Services.)

Displaying a photo of a four-generation family, he added: “This will probably be your family!” Plan with that in mind, he suggested.

Also, factor in the likelihood of inflation, Haas said. When a person retires, for instance, consider using a high percentage of equities for several years. Then gradually shift the client to fixed instruments. When should that shift to fixed start? “I dont know!” Haas quipped, pointing out that people are living so much longer today that its hard to say. Planners have to rethink their portfolio ideas, he said.

Another idea from Haas: “counsel” your baby boomer clients, rather than “sell” to them.

The selling approach entails spending “some” time in fact-finding with clients, a lot more time in making presentations, and even more time in closing, the planner indicated. Haas used to do that himself, but he said he soon found it doesnt work very well. “Boomers want information, advice and counseling,” he explained. “They dont like authority or to be told what to do.”

It works much better to spend a lot more time on fact-finding, he said, noting he routinely spends up to two hours at this stage. Then, spend less time on the presentation, and very little time on the close.

Clients who participate in the counseling sessions leave the first interview feeling “elated,” Hass said. And, when they return for their recommendations, he said the close is a “slam-dunkI never hear them say, `I cant do that.”

He said he has had a “fantastic” career doing this over the past 20 years. The reason, he suspects, is because “it places the client first.”

When helping clients with the wealth distribution and transfer phase of their lives, keep in mind that “planning is the product,” suggested Phillip G. Lubinski, managing director of Allmerica Financials Colorado agency in Denver.

The retirement market “is about planning, relationships and quality of advice,” he maintained.

His office provides all three through what he calls an “Income for Life” turnkey system. It features an Income For Life Seminar; six hours of training for advisors; and an emphasis on keeping advisors in front of clients, writing cases (not doing administrative work).

Since its inception four years ago, he said, this program now generates an average seminar sign up ratio of 70%, an average closing ratio of 80%, and an average commission per close of $10,000 (in a mix of life, annuity, mutual fund, and long term care products).

Focusing on distribution planning helps solve productivity, product mix and recruiting challenges that the industry faces, Lubinski maintained. “More importantly, it provides retirees with what they so desperately wanta distribution plan.”

You can do retirement planning at the worksite, too, said Mark M. Skinner, president of CitiStreet Associates, L.L.C., East Brunswick, N.J.

“In our Financial Planning for Retirement program, we use one-on-one counseling to deliver (accumulation, protection, and distribution) advice to clients at the worksite,” he said, noting most are mid-income people.

CitiStreet introduces the program at group meetings and then its specialists enroll the employees individually. “Were going a different direction” than the industry on this, he allowed, but he said his company chose a one-on-one approach because “we found employees need education, advice, and counseling.”

It takes 30 minutes to do the interview for the retirement needs analysis, he noted, but the outcome is inclusive. Its asset allocation program incorporates not only the employees situation but also that of the spouse, for instance.

Its important to factor the long-term goals into the planning, said Skinner. Research shows that, on a number of issues, financial services people dont listen to their clients, he explained, “so we built this in, to be sure we listen to the goals, and then we built that into the distribution plan.”

Overall, he said, “the distribution phase of life is becoming more and more important for our clients, and for us. So we are looking at all the planning issues on a long-term basis.”

Why is all this talk about retirement planning important? Because “the stakes are high” for advisors and providers, as well as retirees, said Jack Ward, senior consultant with Marketing Leverage, Inc., Glastonbury, Conn.

In the next 20 years, he explained, 43 million baby boomer households will be moving into retirement, with an estimated $4.3 trillion in investable assets. Since money tends to move when people retire, that is the time when many key decisions are made, he said.

Retirement isnt a single event, Ward cautioned. “Its shifting into a transition process that may last 20 or more years. And although interest in asset protection is rising, so too is concern about income management. Increasingly, people want to create and preserve liquidity, so they can reserve some flexibility and not lock in all their money.

All this suggests, he said, that whats needed today, are “broad-picture financial solutions analysis tools,” not just needs-based selling tools. The focus increasingly must be on advice, he said.


Reproduced from National Underwriter Life & Health/Financial Services Edition, June 29, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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