Seventy-five percent of plan participants switch their primary financial advisor or initiate a relationship with an advisor within five to 10 years of retirement. One explanation for this migration is that clients don’t think their advisors understand the difference between investing for retirement and managing income from investments during retirement.
The baby boomer generation began turning 60 in 2006 and will soon retire in large numbers. They will make decisions about how and when to take distributions from their retirement savings. Financial professionals who have developed accumulation programs for these clients now need to focus on the payout phases of retirement.
Clients frequently change advisors at or near retirement, often to an advisor who contacts them within 90 days of taking a retirement distribution. When it comes time for your clients to make a retirement plan distribution election, they will only call you if they know you are prepared to help them with this specialized decision.
With the baby boomers beginning to retire, now is a great time for you to refocus yourself in the eyes of your clients as a financial professional specializing in retirement income management.
Developing a Marketing Plan
You can significantly increase your sales by developing a coordinated marketing plan focusing on retirement income management. As you devote time and resources to this market, your clients and your community will come to see you as a specialist in this field.
The goal of the plan is to establish you as a financial professional who is a specialist in retirement income management. Sales of life insurance, annuities, long-term care insurance and other investments will naturally evolve from the plan.
Communication with existing clients is a good place to start. Effective use of a client management system will save you time and ease the process.
You will already have the birth date of each of your clients, but you probably will not have not collected and entered a retirement date for each client. Unless you have the manpower to call each client and ask for a projected retirement date, assume that each client will retire at age 65, then enter the correct projected date into your system as you meet with each.
Five to Ten Years Prior To Retirement
If clients are at least 10 years from retirement, indicate a date 10 years prior to retirement to contact clients to schedule an appointment to review their retirement accumulation progress and to discuss the concept of pension maximization. Also, begin annual reviews if you are not already doing them. If a client is pre-retirement, but closer than 10 years to retirement, immediately schedule a review to discuss pension maximization.
Why pension maximization? One of the most important choices your clients make as they retire is their pension payout option (i.e., single life only or joint-and-survivor). Not only will this decision determine the amount of pension income your client will receive, it is often a choice that, once made, is irreversible.
In the five to 10 years before retirement, regularly send your clients information on:
? Retirement income management
? Pension maximization
? Retirement risk management (life insurance)
? Social Security options
? Long term care options
Mailing campaigns can get expensive; consider developing email lists of clients at particular ages and using those lists to effectively distribute pertinent information. Most clients are technologically proficient these days.
Two Years Prior to Retirement
Forty-three trillion dollars will be distributed from retirement plans over the next 20 years. Nearly all of it will be either directly transferred or rolled over into IRAs to continue tax-deferral on those assets. Many financial professionals are shocked when long-term clients who retire don’t call them before making this critical financial decision.
Your clients simply don’t connect making this decision with the accumulation planning you have done for them in the past. Yet, this could be the single, largest financial transaction that most of your clients will ever make.