Producers Will Have To Embrace An Income Distribution Focus Soon
The pressure of demographics in this country is going to force many insurance producers to shift their focus in the near future, said James Benson, who until recently was the interim head of the National Association for Insurance and Financial Advisors.
Speaking at the annual meeting of the Association for Advanced Life Underwriting here, Benson said, “If we are going to be successful in a transforming world, it has to do with the demographics, the longer life expectancy and the fact the Baby Boomers are starting to retire. There is an enormous need we need to think about.”
One of the problems the industry needs to address is its failure until now to focus on income distribution planning, according to Benson.
He said many insurance professionals have spent their entire career focusing on the estate building process. “Now we have to get into another business,” he said. “We have to become income specialists.”
Dealing with the Baby Boomers large retirement accounts over the next several years is an area that has been largely ignored by the industry, Benson said. He related an anecdote about a brother-in-law of his who recently retired and came to Benson with his retirement account worth $1.2 million dollars. “He asked me what to do with the money, and I had no idea what to tell him,” he said.
Getting into the income stream business is something all financial planners need to start thinking about, he said. In the next four to five years, the boomer generation will start entering retirement, and by that time planners should become experts on the topic of income planning.
“This is a coming business, its not here today, but its coming,” he said.
Benson estimates that 10 years from now, the typical firm will derive 30%-50% of its revenues from the sale and service of income stream products.
“The income business will be one of the largest businesses in the country,” he said.
Another speaker at the meeting said that despite all the attention on the boomers, this 76-million member generation is not as close to retirement as the media would have you believe.