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April 22, 2004 at 08:00 PM
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How can advisors, planners and reps get going on doing income planning with baby boomer clients?
A widely held view is that, if the advisor has been focusing mostly on helping clients build up assets, it is very hard to go the other direction, advising on how to live on those assets during retirement.
But professionals in the field have a different take: Income planning is a natural part of being an advisor, they say, adding it often starts with something as small as nudging the boomer to talk about his or her approaching retirement plans.
“Whether its a new client or an existing client, I continually talk with the person about reaching personal goals, says Murat M. Dorkan, a junior partner with the Jim Elliot/Michael Shelton Agency in Towson, Md.
And, he says, “I let them know that my job is to help them achieve their dreams and goals. If the person wants to retire at 50, well find a way to do it. If the goal is 55 or 60, well do that, too. Or, if the person wants to buy a vacation home or a boat, well find a way to make that happen.”
As for the income piece of it, Dorkan says he asks clients how much they want to have in monthly income during retirement. “Then we bring the assets together and see what the persons retirement income would be like today, and we go from there.”
Dorkan has just qualified for “Silver Level” membership in the Preferred Providers Program of The Penn Mutual Life Insurance Company, Philadelphia. He attributes his accomplishment to helping clients achieve financial independenceduring the working years and as they move into retirement.
Oftentimes, he says, boomers will come to him holding several financial plans they have purchased over the years, but they havent done anything with them. “They have paid thousands of dollars for all this work, but they have never followed through,” he says.
This has led him to conclude that boomersand people generallyneed help with the follow through. That means the advisor needs to be there with the client, actually showing the person how to achieve the goals.
Paul Morris, senior vice president of the agency department at New York Life Insurance Company, New York, says this will happen naturally at the income phase if the agent has made a point of tending to all financial phases of a clients life.
That is part of core training for agents at his company, he says.
“We have found that if you build a great lifelong relationship with the client, the nudging into the income planning phase of life will be easy. That is because, if you have been keeping clients abreast of whats out there and if you have earned their trust, they will be receptive to your recommendations.”
A good time for advisors to begin the transition to income planning is during the regular account review process the advisor has with the client, Morris says. “When the clients tell you what is happening in their lives, its a natural time to broach the subject.”
For example, if a client mentions that the middle child has just graduated from college, “that tells the astute agent that the client now has funds that have been freed up.” This becomes an opportunity for the agent to suggest converting some of that money into something that can be used for retirement income, he continues.
But how does the advisor who does not have an income planning mindset begin to think and work in that direction?
Education programs, say a number of people in the field. For example, Morris says New York Life has its retirement specialists get in front of agents at least every year to talk about retirement planning issues.
“In addition, our life consultants teach agents to be there in all life change situations, like graduations, birthdays and so on.” Staying in touch on those occasions can create opportunities to start the client thinking about what is coming next, he explains.
