What retirement issue has hit you or your clients out of left field, and how did you resolve it?
The biggest issue for my clients has been the ability to create income in a declining market and also a low interest rate environment. How we addressed it is we had to switch our process from being a buy-and-hold style to more tactical and more strategic. We’re also utilizing investments that we typically didn’t utilize, such as investment grade bonds, by buying bonds at a discount and selling them when they started to trade up when credit spreads have narrowed.
What prospecting methods have been most successful for you in attracting retirement-planning clients?
It’s a combination of referrals and a lead-based generation in which we’ve been building leads over the past 10 years of people that we know are accredited investors.
Do you face any frequently occurring retirement-planning mistakes with prospects?
Many times the biggest mistake is they are too conservative in the sense that they don’t have a proper equity allocation in their account. Especially in a down market, people run away from the equity exposure. So what we’re seeing right now is people tend to be too fearful and too conservative, thinking that markets will never return to growth.
What challenges do you face when modeling or forecasting clients’ retirement incomes and cash flows, and how do you resolve them?
Time horizon and client expectations. Every client is a long-term investor when things are good, and they become very short-term when things are bad. It’s by managing those expectations and educating them on the cycles of the economy and cycles of the market that we help them to stay the course.
What mix of products and solutions do you use most often and why?
We use variable annuities, exchange-traded funds, and dividend-paying stocks primarily. The reason we use them is because they have flexibility to be able to play both sides of the market. They have liquidity, and in the case of the variable annuities, they can also have a guarantee of income stream or a guarantee to the heirs or the spouse, which tends to be important in some cases.