Some Strategies For Nudging Boomers Toward Income Planning

“You can be in the lead,” stresses Mindel. “And you should have no problem whatsoever in making a living doing this.”

Remember, he adds, “If you go with the pack, you will rise and fall with the pack.”

Consumers stand to benefit from dealing with income planners, Mindel maintains. “Thats because most of us are not rational about our own investments. We need an advisor to serve us as a buffer for what is going on today.”

Right now, according to the GE survey, 69% of the Americans do not use a planner to help plan their retirement. Further, 54% do not plan to use a planner in the future.

Those numbers would seem to suggest that income planning will be a hard road to hoe for many planners. But the three GE executives do not see it that way. To them, the findings suggest that advisors now have an opportunity to set themselves apart and to break into a new market.

For instance, Mindel views boomers who totally reject the idea of income planning as “future clients,” not lost sales.

Mengel, of St. Louis, says it is important to keep the persons risk acceptance level in mind when doing income planning. Todays clients are more risk averse than in the late 1990s when aggressive investing was in vogue, he says. Now, many are looking for security and guarantees.

They were burned once, when the stock market plunged in the early 2000s, says Mengel. They dont want that to happen again. As a consequence, “they are becoming more willing to work with someone who will stay with them and keep them from making the same mistake again.”

One approach he uses, in advising such clients, is to select a deferred annuity that has a specific income planning feature. He says he positions it to take the place of the defined benefit plan of the past.

Gencarelli suggests presenting income products (like income annuities) as an asset class, like bonds, equities or cash. Then do an allocation, he says.

As for the bigger picture, Gencarelli is convinced the insurance industry needs to promote income planning in the broad sense. “We should treat it like other movements in the industry,” he says, citing asset allocation as an example. To raise awareness, the movement has to be top down and grass roots, he adds.

His own company is actively involved in this in several areas. For instance, it offers “assisted sales” support, where a company specialist helps reps identify persons in the reps client base who would be good candidates for income planning. And it is developing technology to help reps present retirement numbers and concepts to clients.

This will be an investment, he allows, but he is convinced it will be worth it.

When his father died, Gencarelli says his dad still had assets to his name, despite having lived in assisted living and a nursing home. Gencarelli credits this to the fact that his father had a guaranteed income in retirement, courtesy of his traditional (defined benefit) pension plan and Social Security.

Many workers today do not have traditional pensions anymore, he continues. And, while many have defined contribution plans401(k)s and the likethese dont have embedded income guarantees.

Unless baby boomers set up income plans of their own, they may not enjoy the same level of financial security that his father had, Gencarelli cautions.

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 19, 2003. Copyright 2003 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.