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Reboot your practice by solving these 7 retiree problems

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What is your value proposition?

In other words: What can you offer prospective clients that is unique and different than most other advisors?

Related: 10 tips for new insurance agents

Since the insurance industry offers a large variety of products, we have a large selection of client acquisition and relationship entry points. We are in the business of solving problems, and the one overriding problem that most retirees have is an inefficient allocation of retirement savings.

The advent of three, major category, products in the last few years gives advisors all of the tools they need to address the broad needs of retirees. These product categories are annuity income riders, indexed universal life insurance, and asset-based long-term care insurance.

Since each of these product lines, along with a few others, solves specific problems for retirees, strategic use of all products allows the advisor to cobble together a very nice product array.

The types of problems this strategy will allow advisors to address include:

          • Inadequate income;
          • Asset growth;
          • Healthcare expenses;
          • Tax burden on qualified money;
          • Advanced directive legal documents;
          • Estate succession; and perhaps the worst of problems for retirees
          • Procrastination.

Procrastination can be caused by a lack of a sense of urgency because the retiree is either unaware of the first six issues or does not have adequate resources to solve them.

I created a seminar that addresses these problems called, “The Seven Ways Retirees Crack Their Nest Eggs.” It is designed to address these problems in one hour, by the problem solver, which is you. When advisors does a complete and proper fact-finder, they will discover the problem areas for each prospect. That way, a plan can be introduced that will solve all their problems.

Of course, each plan will be different because the assets available may not meet all expectations optimally. But the solutions can meet all expectations adequately, by scale.

Even a modest portfolio of $150,000 with a steady income from Social Security and possibly a small pension can be allocated to secure a comfortable and sound retirement.

Even a modest portfolio of $150,000 with a steady income from Social Security and possibly a small pension can be allocated to secure a comfortable and sound retirement. (Photo: iStock)Even a modest portfolio of $150,000 with a steady income from Social Security and possibly a small pension can be allocated to secure a comfortable and sound retirement. (Photo: iStock)

Here’s a case study:

A client of mine, Hilda, had $150,000 of assets along with an income furnished by a pension of about $2200 per month. At first look, it doesn’t appear that there’s much to work with in Hilda’s savings account. However, her needs and desires were very modest. Hilda had excellent health insurance through Medicare, but she was lacking a long-term care solution.

Related: 3 options for long-term care planning

We placed $50,000 in an asset base long-term care product which, along with her husband’s military background giving her a potential aid and attendance benefit, she would now be covered for home healthcare, assisted living, and with the possibility of Medicaid, nursing home care. Since she owned her home, living expenses were modest and didn’t present a problem for cash flow. Also, since the asset-based long-term care product had a return of premium feature, it could also be a source of emergency cash if necessary. We placed another $50,000 in a flexible fixed annuity with a 3 1/2 percent guarantee and short-term surrender charges. Lastly, we set aside funds in a funeral trust to satisfy final expenses. That left her $40,000 of cash for emergency purposes. She was very happy with the plan and is a good client today. Her surrender charges have run full-term on the annuity, so she is completely liquid with growth and her worries over long-term care expenses have been solved. I was paid well for my time and knowledge of products ($7,000) and it worked well with her modest lifestyle and available portfolio. An asset manager could not, and would not even attempt to, solve her retirement concerns.

I tell my clients that all problems have a solution. Being aware of the problems begins the process of solving them. Having a competent source is where the advisor enters their lives.

One final note. Many retirees have bought into the notion that an asset manager can solve all problems by making a portfolio grow rapidly. While this works for some, it’s not failsafe for most.

The insurance agent is best suited to solve a majority of retirement issues for Middle America were most of us live. So, your value proposition is one of a complete and effective plan to solve the problems associated with retirement.

Read more columns by Kim Magdalein:

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