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3 strategies to help clients manage assets

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The top concern among many individuals aged 45 to 65 is maintaining their current standard of living. Pre-retirees often have concerns about:

  • Not maintaining current standard of living
  • Health-care/prescription costs
  • Availability of Social Security
  • Outliving assets
  • Inflation of U.S. dollar
  • Market conditions/performance during retirement
  • Leaving legacy for children/heirs
  • Impact of taxes on income
  • Paying for children’s education
  • Caring for elderly parents

Unlike previous generations, nearly 20 percent of American retirees expect to continue working in retirement in order to supplement their retirement income or provide reasonable insurance coverage.

The best ways to set yourself apart from other advisors is to put annuity suitability standards into your presentation. This will engage the customer in a discussion and earn their trust.

“Suitability information” means information that is reasonably appropriate to determine the suitability of a recommendation, including:

  • Age
  • Annual income
  • Financial situation and needs, including the financial resources used for the funding of the annuity
  • Financial experience
  • Financial objectives
  • Intended use of the annuity
  • Financial time horizon
  • Existing assets, including investment and life insurance holdings
  • Liquidity needs
  • Liquid net worth
  • Risk tolerance
  • Tax status

In making a recommendation, it is critical to gather information that is specific to a client’s circumstances.

Ask questions like:

  • When will you need access to your money?
  • Will you need income from the assets in the annuity?
  • What will you use for emergency funds?
  • Will the assets be passed to your heirs?
  • What death benefits do you want to have, or not want to have, on the annuity?

Use these answers to determine the correct surrender charge length, liquidity and annuitization needs, as well as death benefit requirements.

Three strategies to manage your client’s assets.

1. Tax deferral

The number one rule: Your clients should only pay income taxes on their earnings when they need to withdraw their money.

2. Decrease risk/increase safety

Seniors are validly concerned about losing their money in the stock market.

3. Guaranteed income

Increase return without risking your clients hard-earned dollars.

Two methods to implement the strategies

Reduce taxes on Social Security benefits by repositioning assets from taxable vehicles to an annuity product. Here is a before and after chart:


Stretch IRAs

After age 70-and-a-half, a person has to take monies out of his qualified accounts based on certain percentages or RMD (Required Minimum Distribution). By putting the money into an annuity, the annuitant can designate beneficiaries to receive this money at a lower RMD. Since this money is coming out at less than 2 percent to 3 percent, the account can actually grow over years. Many times, the grandchildren can receive this money throughout their lives as well.

There are two ways to secure a Stretch IRA. First, you can write a letter of intent to the insurance company stating that you wish for the distribution to follow the RMD schedule for the beneficiaries. However, if the beneficiaries challenge this and take it to court, the insurance company will release the monies. Most children will abide by the wishes of their parents and most of them will not know that they can challenge the insurance company for the money.

The second way to insure the Stretch IRA is to put the annuity in a trust, and this will guarantee the wishes of the owner.

There are several other ways to help our clients; we have only presented a couple here. Not all strategies are right for all clients; however, the right strategy that is best for your client is the one you should help them with. You will know this by doing an appropriate fact finder to ensure the solution you present is suitable for that particular client’s situation.

For more from Lloyd Lofton, see:


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