Income Planning Means Back To School For Advisors
To be effective in income planning with baby boomers, financial advisors need to be educated on income issues, say experts in the field. In fact, they say, this education is a must-have, not a nice-to-have.
Computer programs do a good job with financial modeling, concedes Andrew Beierwaltes, a financial advisor with AXA Advisors in Chicago. But they dont tell how to do the distribution of assets. Thats where you need product knowledge and professional education.
In Illinois, for example, public school teachers have good pensions, Beierwaltes points out, but they still need information on retirement planning.
As they retire, he explains, these boomers face increasing health care costs, so more of their money will go toward taking care of themselves when they are older. In addition, they will face decreasing health care benefits plus increases in premiums.
That means, even with their good pensions, teachers need the advice of a trained professional, Beierwaltes says.
Many advisors have not yet learned the ropes of income planning with baby boomers or anyone else, says Byron Udell, founder and CEO of AccuQuote, Wheeling, Ill.
A lot of advisors have spent their entire careers selling accumulation products, he explains, and that is what they are comfortable doing.
But today, says Udell, many of their boomer clients are entering, or about to enter, the stage of life where they really need to focus on retirement income planning, not accumulating
To help these clients, accumulation-oriented advisors need to get educated on income planning and income options, he contends. If they dont, they risk losing their clients, he says.
To illustrate the power of education, Udell tells what happens when he is in a competitive situation on an income plan. He says that if the client buys into a misleading statement made by the competitor, I always say, Put us all on the same phone call, and let me respond. The competitor always backs down, he says, so he never gets a chance to defend his proposal in that manner. However, he adds, I often win [the account]because Id never make an offer like that unless we had the better product or program.”
The bottom line, he says, is “if an advisor is truly educated in this field, the advisor will win.”
Convincing boomer clients to do income planning is not always a piece of cake, however. Experts say boomers can be tough to reach on this subject.
For example, Jason Ford, unit sales manager of Bankers Life and Casualty in the Little Rock, Ark., branch office, says he prefers to start income planning by discussing long term care needs (and insurance), if the client has not funded already for that exposure.
Yet “it took me a year and a half to convince one man to buy an LTC policy,” Ford says. (The wife was more receptive: She bought an LTC policy after talking about it for 2-3 months.)
Both clients are boomers, in their mid-50s.