Spurring Boomers To Think About Income Planning

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Remarkably few people take the time and effort to plan their financial future, says Bill Bachrach, president and CEO of Bachrach & Associates, San Diego, Calif.

This is so whether the person is a baby boomer approaching retirement or an adult in any other age group.

“Many people die without a will, too,” he says.

Still the growing trend among financial advisors is to target the baby boom generation for retirement and income planning services, he says. The size and projected longevity of the group are key factors in this.

But, given the reluctance of people to do such planning, how can an advisor spur a boomeror anyone elseto talk turkey on the subject? Advisors interviewed by National Underwriter agree this can be a challenge. Still, they say, advisors who employ sound planning practices often meet with success.

In fact, says Briggs Matsko, “I generally dont have to spend a lot of time getting clients to think about retirement.” Matsko is a senior planner and executive vice president of California Fringe Benefit, a Sacramento, Calif., subsidiary of Lincoln Financial Advisors.

Throughout the years, Matsko says, “Ive been instilling in my clients the values of saving for the long term.” This paves the way for the income planning discussion. It is a process-driven approach, he says, not product-driven.

How does it work? Matsko begins by working with people to establish goals. Concerning retirement, he nudges them to “envision” and “crystallize” their retirement.

“Most people are abstract in their ideas about this,” explains Matsko, “so our value added is to get them to talk about itwhat they will do; whether they will work part time; where they will live; whether they want to, say, play golf and if so, how many days a week; whether they will help put a grandchild through schoolWe also help them think about [how to maintain] their independence.”

This discussion can take some time–20 to 90 minutes or more–but Matsko views it as worthwhile. It is a “process of discovery,” he explains. It leads to setting goals and helps show clients why they need to do certain things. This makes for an easy transition to income planning for those who need it, he adds.

To move the discussion along, he shows clients a “Retirement Income Matrix” (a pyramid) that he created as a visual aid. It identifies core expenses, joy expenses, accumulation goals and wealth transition issues that clients face in retirement.

Depending on what needs to be done, Matsko may have three or four appointments with a client before a plan is set up. But that process often leads to selection of products to help implement the plan, including income products.

As a result, “my clients have a higher than average rate of annuitization, both fixed and variable,” he says, noting they annuitize if it suits their situation.

Many clients become excited about this, he observes. They want to have an income for life. And they like the fact that what they come up with is a “customized solution” to meet their own particular needs, he says.

Financial planning often provides the impetus for boomers to decide to buy long term care insurance, too, points out Julie Gelbwaks Gewirtz. She is vice president-marketing at Gelbwaks Insurance Services, a Plantation, Fla., LTC specialty firm.

“Most people we talk to about LTC insurance come to us on referral from a financial planner,” she notes, though some also call as a result of something seen in the media.

Generally, the planner tells the client to buy LTC insurance, she says, “so they come here absolutely willing to buy. Very few are not sold on the concept.”

If the clients are a couple, the age range tends to be 55 to 60, Gewirtz points out, and most are professionals, many of them affluent. They view LTC insurance as part of their retirement plan, she says, adding that their reasoning is, “why spend the money for care if we can leave it to our heirs” and use the LTC policy to pay for care?

Boomers tend to research the product first, by speaking to other people, checking the Internet and asking questions, Gewirtz points out. They want to understand what they are buying. But those who already have been to a financial planner need less education, she says. “They already know they need it.”

“It has always been difficult getting people to do retirement planning, but now its uphill and a headwind,” contends Bachrach of San Diego.

His suggestion? Become a trusted advisor, not a sales person, he says.

Such an advisor will tell the client the truth, even when its not what the person wants to hear, and even if the advisor risks losing the business, he says.

Many boomers have “raw” emotions right now due to upsetting trends such as spam, direct mail, seminar selling, war, and erosion of trust in corporations, Bachrach explains. “Theyll recoil if they think they are being sold something, or if they think the advisor is sugar-coating things,” Bachrach maintains.

Even “consultation sales” approaches are not very effective with boomers, Bachrach maintains, because this is still perceived as sales.

On the other hand, boomers do respond affirmatively to the trusted advisor, he says. Such advisors inspire people rather than instill fear of the future, and they focus on the bigger picture, not just individual product needs, he says.

“You need to provide holistic, long-term, and comprehensive financial planning. Identify values, goals and benchmarks. Provide a framework for the client, so it becomes easy to make decisions. And be willing to opt out if its not going right.”


Reproduced from National Underwriter Life & Health/Financial Services Edition, October 24, 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.