5 steps to building a retirement income planning...
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5 Steps to Building a
Retirement Income Planning
Business
Elaine Floyd, CFP®
Director, Retirement and Life Planning
Horsesmouth
Why Do Retirement Income
Planning?
Advisors Advisors Advisors Advisors who have invested the time and effort to specialize in who have invested the time and effort to specialize in who have invested the time and effort to specialize in who have invested the time and effort to specialize in
this arena have had significant growth in their practices, with this arena have had significant growth in their practices, with this arena have had significant growth in their practices, with this arena have had significant growth in their practices, with
more than 7 in 10 advisors reporting growth from retirement more than 7 in 10 advisors reporting growth from retirement more than 7 in 10 advisors reporting growth from retirement more than 7 in 10 advisors reporting growth from retirement
income clients in 2010income clients in 2010income clients in 2010income clients in 2010....
—Advisor Best Practices in Delivering Retirement Income
by Dennis Gallant and Howard Schneider
Available through Retirement Income Industry Association (RIIA)
Why Do Retirement Income
Planning?
• Add assets – New clients
– Consolidation of accounts
Why Do Retirement Income
Planning?
• Add assets – New clients
– Consolidation of accounts
• Retain clients as they age into retirement– Better service
– Deeper relationships
Why Do Retirement Income
Planning?
• Add assets – New clients
– Consolidation of accounts
• Retain clients as they age into retirement– Better service
– Deeper relationships
• Network with centers of influence– Form strategic alliances
– Build referral network
Step 1
Recognize the Opportunity
• Who are the people?
• Where are their assets?
• What do they need?
AgeAgeAgeAge PopulationPopulationPopulationPopulation
50-54 22,298,125
55-59 19,664,805
60-64 16,817,924
65-69 12,435,263
Retirement Retirement Retirement Retirement
AssetsAssetsAssetsAssets
$17.5 trillion$17.5 trillion$17.5 trillion$17.5 trillion
DC AssetsDC AssetsDC AssetsDC Assets
$4.5 trillion$4.5 trillion$4.5 trillion$4.5 trillion
IRA AssetsIRA AssetsIRA AssetsIRA Assets
$4.7 trillion$4.7 trillion$4.7 trillion$4.7 trillion
65% of lump
sum
distributions
from DC plans
are rolled over
to IRAs
Client Triggers for Retirement
Income Planning
• Lump sum distribution
• Age 62 (Social Security decision)
• Desire (or need) to retire
You need to get to them long
before then!
Step 2
Shift Your Mindset
• A new generation is
phasing into retirement
• Decumulation is different
from accumulation
Baby Boomers: Who Are They
and What Do They Need?
• Optimistic
• Rebellious against
convention
• Educated
• Strong work ethic
• Need to know they are
valued
How Boomers’ Retirement
Will Be Different
• Longer retirement
How Boomers’ Retirement
Will Be Different
• Longer retirement
• More reliance on personal savings
How Boomers’ Retirement
Will Be Different
• Longer retirement
• More reliance on personal savings
• Low interest rates
How Boomers’ Retirement
Will Be Different
• Longer retirement
• More reliance on personal savings
• Low interest rates
• Higher lifestyle expectations
How Boomers’ Retirement
Will Be Different
• Longer retirement
• More reliance on personal savings
• Low interest rates
• Higher lifestyle expectations
• Health care costs out of control
Retirement Planning for
Baby Boomers
• Process, not product
• Holistic
• Complex
How to Work with Baby Boomers
on Retirement Income Planning
• Listen
• Educate
• Collaborate
• Develop a roadmap to
the future
Cracking the Nest Egg: Shifting from
Accumulation to Decumulation
• Dollar-cost averaging works in reverse
Cracking the Nest Egg: Shifting from
Accumulation to Decumulation
• Dollar-cost averaging works in reverse
• Compounding works in reverse
Cracking the Nest Egg: Shifting from
Accumulation to Decumulation
• Dollar-cost averaging works in reverse
• Compounding works in reverse
• The sequence of investment returns matters
Cracking the Nest Egg: Shifting from
Accumulation to Decumulation
• Dollar-cost averaging works in reverse
• Compounding works in reverse
• The sequence of investment returns matters
• Time is the enemy
Cracking the Nest Egg: Shifting from
Accumulation to Decumulation
• Dollar-cost averaging works in reverse
• Compounding works in reverse
• The sequence of investment returns matters
• Time is the enemy
• Mistakes can be fatal
Step 3
Become the Expert
• Focus on retirement
income planning
• Specialize in the services
boomers need to
successfully retire
Why Specialize?
• 70% to 80% of investors who deal with a
stockbroker, financial planner or advisor will
change advisors before retirement
• Clients switching from accumulation to
distribution want an advisor who specializes
in retirement income planning
What You Need to Know
• To become a retirement income specialist,
you need to know:
– Rules
– Guidelines
– Products
– Clients
Know the rules
• IRA rollovers
• Roth IRAs
• Beneficiary designations
• Required minimum distributions
• Qualified plans
• Social Security
Know the guidelines for
distribution planning
• Living off the interest
• Mandatory vs. discretionary
• 4% rule
• Bucket strategy
Know the products
• Stay on top of new products designed for
retirement income
• Understand the complexities
• Do your due diligence
• Match clients with the right products for their
needs
Understanding your clients
• Income needs
• Income sources
• Overall situation – taxes, goals, & more
Recommended Reading
www.horsesmouth.com
• Become Become Become Become a a a a Retirement Income Specialist (76468)Retirement Income Specialist (76468)Retirement Income Specialist (76468)Retirement Income Specialist (76468)
• Planning for a 30Planning for a 30Planning for a 30Planning for a 30----Year RetirementYear RetirementYear RetirementYear Retirement (80820)(80820)(80820)(80820)
• Cracking Cracking Cracking Cracking the Nest Egg: When Accumulation Becomes the Nest Egg: When Accumulation Becomes the Nest Egg: When Accumulation Becomes the Nest Egg: When Accumulation Becomes
Distribution (79507)Distribution (79507)Distribution (79507)Distribution (79507)
• A A A A 6666----Step Retirement Income Strategy for MidStep Retirement Income Strategy for MidStep Retirement Income Strategy for MidStep Retirement Income Strategy for Mid----Market Market Market Market Clients Clients Clients Clients
(84475)(84475)(84475)(84475)
• The The The The Art of Managing Retirement Art of Managing Retirement Art of Managing Retirement Art of Managing Retirement Assumptions (80471)Assumptions (80471)Assumptions (80471)Assumptions (80471)
• Drafting Clients' Retirement PlansDrafting Clients' Retirement PlansDrafting Clients' Retirement PlansDrafting Clients' Retirement Plans————A A A A Checklist (73051)Checklist (73051)Checklist (73051)Checklist (73051)
• The Zone System for Choosing Retirement Income The Zone System for Choosing Retirement Income The Zone System for Choosing Retirement Income The Zone System for Choosing Retirement Income
Products, Products, Products, Products, Parts 1 & 2 (79765 & 79766)Parts 1 & 2 (79765 & 79766)Parts 1 & 2 (79765 & 79766)Parts 1 & 2 (79765 & 79766)
Recommended Reading
Books
• Retirement Portfolios: Theory, Construction, and Management Retirement Portfolios: Theory, Construction, and Management Retirement Portfolios: Theory, Construction, and Management Retirement Portfolios: Theory, Construction, and Management by
Michael J. Zwecher
• Unveiling The Retirement Unveiling The Retirement Unveiling The Retirement Unveiling The Retirement MythMythMythMyth by Jim C. Otar
• Pensionize Your Nest Egg Pensionize Your Nest Egg Pensionize Your Nest Egg Pensionize Your Nest Egg by Moshe A. Milevsky and Alexandra C.
Macqueen
• Retirement Income Redesigned: Master Plans for DistributionsRetirement Income Redesigned: Master Plans for DistributionsRetirement Income Redesigned: Master Plans for DistributionsRetirement Income Redesigned: Master Plans for Distributions,
Edited by Harold Evensky & Deena B. Katz
• The Buckets of Money Retirement Solution: The Ultimate Guide The Buckets of Money Retirement Solution: The Ultimate Guide The Buckets of Money Retirement Solution: The Ultimate Guide The Buckets of Money Retirement Solution: The Ultimate Guide
to Income for to Income for to Income for to Income for Life Life Life Life by Raymond J. Lucia
• In the Presence of Taxes: Applications of AfterIn the Presence of Taxes: Applications of AfterIn the Presence of Taxes: Applications of AfterIn the Presence of Taxes: Applications of After----tax Asset tax Asset tax Asset tax Asset
ValuationsValuationsValuationsValuations by William Reichenstein
Certifications
• Certified Retirement Counselor®
– International Foundation for Retirement Education
– http://www.retirement-resource-center.com/
• Chartered Retirement Planning Counselorsm
– College for Financial Planning
– http://www.cffp.edu
• Retirement Management Analystsm
– Retirement Income Industry Association
– http://riia-usa.org/training/rma.asp
Step 4
Define Your Offering
• Life planning
• Budgeting
• Account management
• Portfolio management
Life Planning
• Questions to help clients imagine their life
in retirement
• Where will you live?
• What will you do?
• How long will you live?
• What surprises does life hold?
Life Planning Resources
www.horsesmouth.com
• Reinvent Your Practice With a Life-Planning Approach
(85858)
• How Life Planning Changed My Practice (79710)
• Life Planning: 11 Areas to Cover With Clients (71670)
• 5 Questions to Ask Clients 5 Years Before They
Retire (75015)
• 16 Lifestyle Questions to Ask Retiring Clients (76728)
• Explore Clients' Meta-Goals Before Setting a
Strategy (78283)
• 8 Reasons That Clients 'Flunk' Retirement--And How You Can
Help (76224)
Life Planning Resources
Books
• What Color is Your Parachute? For Retirement by John E.
Nelson
• How to Retire Happy, Wild, and Free by Ernie J. Zelinski
• Super-Charged Retirement by Mary Lloyd
• Your Retirement, Your Way by Alan Bernstein and John
Trauth
• The Big Shift: Navigating the New Stage Beyond Midlife by
Marc Freedman
• Portfolio Life: The New Path to Work, Purpose, and Passion
After 50 by David D. Corbett
Budgeting
• Determine income needs in retirement
– Housing, food, transportation
– Clothing and personal items
– Discretionary: hobbies, travel
– Insurance and taxes
• Identify sources of retirement income
– Social Security
– Pensions
– Income from work
– Asset income
Source: Income of the Aged Chartbook, 2008; Social Security Administration
Account Management
• IRA rollovers
• Roth conversions
• Sustainable withdrawal plans
• Assistance with required minimum
distributions
Account Management Resources
www.horsesmouth.com
• IRA Rollovers: Pros Generally Outweigh Cons (74925)
• Taxes Will Make or Break 2010 Roth Conversions (84059)
• The Portfolio vs. the VA: Which Is More Capital Efficient for
Retirees? (84855)
• What the Experts Say About 4% Withdrawal Rates (80037)
• The 'Bucket' Approach to Asset Allocation (79704)
• Inherited IRAs: Preserving the Stretch (82003)
Portfolio Management
• Investments
• Financial products
Step 5
Market Your Services
• Identify prospects and
centers of influence
• Host a retirement income
workshop
• Launch a drip email
campaign
Recommended Reading
www.horsesmouth.com
• The Prospecting Mindset That Works
Today (84687)
• 'Will I Run Out of Money in Retirement?' (84018)
• Change Today, or Lose Clients Tomorrow (84234)
• A Single Sentence That Tripled Referrals (86096)
Your Target Market for
Retirement Income Planning
Services
• Age: 50+
• Assets: $250,000+
• Temperament: Agreeable
– Willing to disclose personal information
– Open to your ideas
– Collaborative and compliant
Host a Retirement Income
Workshop
• Showcase your expertise in retirement
income management
Host a Retirement Income
Workshop
• Showcase your expertise in retirement
income management
• Get in front of groups of pre-retirees
Host a Retirement Income
Workshop
• Showcase your expertise in retirement
income management
• Get in front of groups of pre-retirees
• Make it easy for clients to bring in
referrals
Host a Retirement Income
Workshop
• Showcase your expertise in retirement
income management
• Get in front of groups of pre-retirees
• Make it easy for clients to bring in
referrals
• Educate clients, prospects, and
centers of influence
Host a Retirement Income
Workshop
• Showcase your expertise in retirement
income management
• Get in front of groups of pre-retirees
• Make it easy for clients to bring in
referrals
• Educate clients, prospects, and
centers of influence
• Promote your retirement planning
services
Host a Retirement Income
Workshop
• Showcase your expertise in retirement
income management
• Get in front of groups of pre-retirees
• Make it easy for clients to bring in
referrals
• Educate clients, prospects, and
centers of influence
• Promote your retirement planning
services
• Set appointments
Horsesmouth Advisor/ClientWe handle the marketing. You handle the clients.
All the materials you need to host a Retirement
Income Workshop• Client Materials
– Workshop Invitation & Email
Reminders*
– Post Card*
– Workshop Sign-in Sheet
– Powerpoint Presentation & Script:
“Life After Work”*
– Workshop Evaluation and Request
for Information*
– Follow-up Client Articles & Emails*
*FINRA reviewed
• Advisor Marketing Materials
– Strategy Brief
– Campaign Checklist & Schedule
– Telephone Scripts
• Invitation call
• Reminder call (assistant)
• Follow-up call
– Presentation Tips
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