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Retirement Planning > Social Security

Preconceived prejudices and the problem with ‘profitable’ clients

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“Putting the client first”—do you consider it a central business philosophy or a tired cliché?

If you fail to offer a product or service solely because you can’t make money at it, you’re squarely with the latter, no matter how much lip service you pay.

Social Security is a prime example. Too many advisors (wrongly) imagine outdated stereotypes of nearly destitute senior citizens living on government-sponsored fixed incomes. Indeed, we’ve spoken with top advisors with hundreds-of-millions in assets under management and an equal amount in production who simply refer their clients to the local Social Security Administration office or the toll-free number.

This is a bad move because as more baby boomers retire, they’re redefining what Social Security means, just as they’ve seemingly done with almost every other aspect of retirement.

For instance, Social Security, for all intents and purposes, is an annuity, albeit one offered through the government. The principle is the same; the client (or in this case the worker) pays a defined amount of money in exchange for an undefined sum that may or may not equal the original investment, but nonetheless guards against the financial implications of increasing longevity.

A thorough review of a client’s eligible Social Security benefits prior to retirement therefore leads to a discussion on the value of annuities and how they might compliment a retirement plan. Among other strategies, they can fill in spending requirements not covered by a recipient’s benefit amount.

Further, declining to fully review a client’s Social Security benefits potentially opens the door to a host of compliance and legal issues. Just think of the recent spate of lawsuits brought about by clients who claim they were never informed about long-term care insurance and you’ll understand our urgency. In addition to pre-conceived prejudices involving senior citizens and fixed incomes, many advisors have the opposite problem; they believe their high-net-worth clients don’t care about Social Security. Again, it’s an incorrect assumption and properly planning for Social Security can result in hundreds-of-thousands of dollars in extra retirement income. It doesn’t matter if they’re a millionaire multiple times over, they’ll be pretty upset with the advisor who failed to take it into account.

Social Security is a life stage discussion, one that often necessitates other products and service above and beyond annuities. The point here is therefore not to shill for either Social Security or annuities; rather, it’s too illustrate the opportunity for a win-win that arises from looking at the client’s situation in total. It’s just one example of how good ethics is good for business, and make the advisor far more successful in the long run.


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