Opportunities Abound In Meeting Financial Needs Of Retired Men

To meet the financial needs of retired men, you must understand both their psychology and their individual financial circumstances.

The older man typically was his familys sole or primary breadwinner and, in retirement, he continues to have the breadwinner mentality. He wants to provide for his wife and children.

The older man may not see long-term care insurance or life insurance as a pressing need. Instead, hes vitally concerned with protecting his capital, earning a good return, generating cash flow and making sure his beneficiaries, not Uncle Sam, will inherit his money.

With the stock market diving, hes deeply concerned about his principal. He may have a portfolio of mutual funds and annuities that have turned in disappointing results. He may not know how to evaluate his funds. He may not realize that the funds and stocks he bought many years ago arent appropriate investments at this stage of life, but even if he does, he may not know how to go about choosing ones that are. He often doesnt know where to get good financial advice.

Surprisingly, many retired men, even those with sizable portfolios, have been abandoned by their stockbrokers, who avoid calling clients during down markets.

Heres a real-life example. My client was an executive with a big corporation. His company provided financial planning to its executives and set him up with an advisor at a wirehouse firm. Over the years, his investment advisor changed several times. Once he retired, he never heard from anyone again–even though his portfolio had climbed past the $1 million mark. When he came to me, he had incurred some big losses and was eager to talk to someone who would listen to him and provide good advice.

Admittedly, it is a lot easier to sell investment products when the markets booming. But the opportunities are just as great, if not greater, in the senior market today.

Many retired men are sitting on a lot of money, and often their money isnt working as hard for them as it could be. This gives you, the advisor, a chance to reposition the assets appropriately.

During your first meeting, find out what he sees as his most pressing concerns and take a look at his investments and tax situation. Get the facts and determine his risk tolerance. Youll often find big gaps in planning and some very basic mistakes that you will be able to rectify readily.

Sometimes, though, mistakes are more difficult to overcome. For instance, one 65-year-old client had been convinced by his previous broker to roll over $1 million from his retirement plan into a Roth IRA so that his children wouldnt have to pay taxes when they inherited the money. This created a huge taxable event and unnecessary loss of principal just at the stage in life when he should be preserving his capital for the long term.

Like most senior men, this man felt it was very important to pass his assets to his heirs with as little tax as possible. He just didnt get good advice on how to achieve his goal.

Many older men dont realize they are leaving their families with big tax liabilities. The easing of the estate tax has obscured the fact that retirement plans create the biggest taxes for most people. A man who has $100,000 or $250,000 or $1 million in his IRA often doesnt realize that when he dies, his heirs will most likely owe taxes on the proceeds.

This provides many planning opportunities. You can create strategies using life insurance to offset the taxes on the retirement-plan distributions. Setting up a life insurance trust will also remove the death benefit from the taxable estate.

Long-term care is a huge financial risk that every older person faces. Most people tend to think, “It wont happen to me.” The denial factor is usually stronger in men than women.

Thats why it often makes sense to discuss LTC insurance after youve straightened out an older mans investments and tax planning and won his trust. LTC insurance completes the planning process, providing the vital protection that ensures that he will be able to afford first-rate care and pass on his assets intact to his spouse and children.

Some experts predict that one-half of all financial advisors will be out of the industry within a year. The strong and well prepared will survive, and focusing on the senior market is one of best ways to thrive during hard times.

Wilma G. Anderson, president of Senior Care Associates. in Littleton, Colo., teaches how to sell LTC insurance and other products to the senior market. She is also a registered representative with Woodbury Financial Services Inc. Her e-mail address is wilma@TheLTCCoach.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, October 28, 2002. Copyright 2002 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.