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Editorial Comment: Dare To Dream

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How can advisors make the most of the retirement income opportunity? asks Ann Toplin in her article in this month’s Income Planning (see The retirement income planning opportunity is now).

Toplin has many excellent suggestions to offer, a few of them excerpted below.

To this list, I would like to add one more: dare to dream.

That sounds new-age, non business-like. Yet, often times, the very advisors who should be beacons of hope to clients are themselves mired in doubt. That can’t be a good strategy for income planning. They need to see the bigger, brighter picture.

Here are some of the doubt-filled questions I often hear from advisors: Can I really build a practice in income planning? Will this income planning software really make reliable projections that will prove out for the client? Will my customers actually implement my recommendations? Isn’t this financial discipline too esoteric or remote for customers to understand? Will regulators come after me for developing a plan that fails through no fault of my own – say, if there is economic downturn, improper implementation, unforeseen developments, etc?

It’s not just advisors who have doubts. So do consumers.

How many surveys have we seen in the past year reporting on how consumer savings rates are abysmal, consumer confidence is at record lows, and retirement outlook is dark? Such reports do not spur people to go and seek out an income planner. Rather, the reports stir up uncertainty and fear, and squelch any notion of planning for retirement income.

For example, AARP – the champion of the retirement set – recently published a survey showing how aging boomers are facing great difficulties. “The economic downturn is hitting roughly one in 10 middle-aged and older Americans especially hard,” AARP says in a news release, and this is “compelling them to borrow money for everyday living expenses and to seek help from family, friends or charities.” Furthermore, 33% of the 1,002 survey participants (age 45 and up) said they had stopped putting money into their 401(k) or retirement account, AARP says.

The insurance and financial industry has an equal complement of scary findings. In this month’s issue of Income Planning, for instance, we carry two such reports: Anxiety about economy roils boomers’ retirement outlook and The rich also worry about inflation, Phoenix finds. We have many similar articles in our archives.

To be fair, news of such findings do inject the business climate with a sobering dose of reality. Not all Americans are living in rah-rah-land.

But the reports also put a strangle-hold on optimism. If you are an advisor who reads such reports, for instance, wouldn’t you think twice about even bothering to try to learn more about income planning? If one in 10 boomers is borrowing money for everyday living expenses, and if 33% have stopped putting money into their qualified savings plans, what are the chances that such boomers will pony up for income planning?

Chances are some boomers will never want to do income planning. But there is more to the story:

  • First, advisors should look at what the other 90% of boomers are doing. Could be that at least half of them are in need of income planning strategies and would welcome the advisor’s guidance and support. Along with this, it could be that in a particular advisor’s corner of the world, clients and potential clients may have far better finances and opportunities, despite the difficulties being recorded by certain surveys. A clear-minded analysis of these possibilities is absolutely essential for advisors to make effective business decisions about developing their income planning practice. To make that analysis, they first need to dare to dream that the negative surveys don’t paint the full picture.
  • Second, advisors need to look beyond the negative findings and beyond the moment. They need to evaluate whether they believe these hard times will pass and whether clients will appreciate being nudged into planning with that more positive message in mind. For instance, if an economy-concerned client wants to pull all discretionary funds into money market accounts and bank certificates of deposit, wouldn’t it be worth taking some time to advise the client on the long-term effect of such safe-money concentration? Here, the advisor needs to dare to dream that these bad numbers will not continue indefinitely and that negative survey numbers may not represent the situation of people in his/her community. The advisor needs to dare to dream that there are better solutions than pulling back or at least additional solutions. And the advisor then needs to do the due diligence to test out the possibilities, do the needs analysis and compliance, and otherwise move toward productive solutions.

On that note, here are three of the nine suggestions for advisors presented by Ann Toplin in her article. (To see more suggestions, read her entire article here.)

  • Make retirement income planning a part of ongoing client meetings and communications, especially for clients who are nearing retirement or newly retired. Find out about clients’ retirement investments, whether they are expecting company pensions and when they hope to begin Social Security benefits. This is an opportune time to discuss the benefits of asset consolidation and rollovers.
  • When selling annuities, position them as part of a retirement income plan. Show clients how annuities can help them create guaranteed “retirement paychecks” and fill potential retirement income gaps.
  • For high-income pre-retirees, position annuities as solutions for aggressively saving for retirement. Communicate that annuities are savvy savings options when the client has already maximized contributions to employer-sponsored retirement plans and other qualified accounts.


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