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Retirement Planning > Retirement Investing

Advisors: Retirement Clients Want Safety Of Principal

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WASHINGTON — Two advisors speaking at a meeting here pulled no punches in recounting how retirement-minded clients are approaching their finances in the wake of the recession.

Clients want safety of principal, both advisors said during a breakout session at an annual retirement conference organized by LIMRA, LOMA and the Society of Actuaries.

“My clients aren’t focused on income distribution,” said Brion Harris, managing partner at Premier Planning Group, Annapolis, Md.

“I always ask them, ‘Are you concerned about growing your assets or protecting what you already have?’ If they answer protecting what they have, I know they will enjoy what we do.”

That’s because his firm focuses on safe money, Harris said.

“My clients are happy to see that the stock market is recovering and that things are getting a little better,” he allowed. “But most are waiting for the other shoe to drop. They expect a W (recession).

“So, though they are glad for the recovery, they want to take advantage of it to position their money so that it’s safe in the future.”

To emphasize that ‘safe money’ is his focus, Harris said he sends each new client an 80-pound safe.

How has the safe money strategy worked? “I had my best year ever, at a time when the markets were down 38%,” Harris said.

John F. Reutemann Jr., senior wealth strategist at Research Financial Strategies, Rockville, Md., said many of his clients lost so much money in the stock market, due to the recession, that they no longer need a second-to-die policy in an ILIT.

He said many of these same clients are not primarily concerned about leaving money to their kids.

“People no longer believe the 10% to 12% payout projections that they were shown in the 1980s,” he said. “People are now thinking about earning 5% on half the money they used to have. And the people who were wiped out by Bernie Madoff–they have zero percent left.

“People are petrified.”

When clients arrive in his office, Reutemann said, “always, in the first 15 minutes of our conversation, they are skittish. They want to know, ‘Are you going to save our money?’”

People also want answers, he said. “They hear terms like SIPC, SEC, FINRA, segregated account, general account, variable annuity, fixed annuity, and they want to know what they mean,” he said.

Reutemann’s strategy is to select products that will continue to perform and that have a big name behind them. He also looks at the company’s ratings, assets, management and products offered. “Due diligence on the insurance companies is extremely important,” he said.

Advisors need to ask tough questions about who they are dealing with and consider whether the companies will be there for the long term, he said, adding, “I don’t want to have to explain to my clients why the company failed.”



A look back at what the experts were saying about the advanced sales market earlier in the year.


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