For broker/agent use only - Not for use with clients

NAIFA Convention & Career Conference

Orlando World Center Marriott Resort

September 15, 2009

Optimizing the Retirement Income Planning Process

Steven L. Welton, CLU ChFCVice President, Strategic Marketing

UNIFI Companies

For broker/agent use only - Not for use with clients

Retirement Income

• Definition:-The stage at which a household’s focus switches from accumulating assets for retirement to using those assets to provide a lasting and predictable stream of income that will maintain a desired standard of living-At this stage, the household is in need of tax-efficient financial advice and solutions to establish that reliable income stream and to minimize the risks on those potentially declining assets to provide a satisfactory and manageable sense of well being.

For broker/agent use only - Not for use with clients

Market Need Positioning for Retirement Income Planning

For broker/agent use only - Not for use with clients

Practice Readiness

Skills and Competencies:InsuranceInvestmentsSocial SecurityHealth CareReal EstateElder Care issues

Designations: CASL American CollegeCRPC College for Financial PlanningCRC InFRE

Tools and Process

Changing Practice Economics

For broker/agent use only - Not for use with clients

Expanding Professional Networks

Real Estate Agent

Health Care Expert

Tax/Estate Expert

Other

Insurance Agent

Mortgage Broker

Accountant

Attorney

Financial Advisor

For broker/agent use only - Not for use with clients

Advice-Based Planning

For broker/agent use only - Not for use with clients

Pre-Retirees May Change Advisors To Get The Services They Need

Source: McKinsey & Co. “Managing Retirement Income: Innovative Strategies to Capture and Retain Retirement Income,” 2006

No changeAdded or switched brokers and advisors within 15 years of retirement

For broker/agent use only - Not for use with clients

Fidelity Research

• When a retirement income plan was developed:

- 50% more clients were very satisfied

- 77% of clients did or would consolidate

- 95% of those clients would provide referrals

Source: Fidelity Advisor 2006 Survey of Investors at Retirement

For broker/agent use only - Not for use with clients

Retirement Income Management Process

1. Estimate duration of retirement assets

2. Identify and manage retirement risks

6. Maintain and

update the plan

Data Collection

4. Identify options for addressing gaps

5. Convert resources into income

6. M

ainta

in an

d

upda

te th

e pla

n

3. Identify distribution, tax and estate issues and opportunities

Source: InFRE – International Foundation for Retirement Education, 2009

For broker/agent use only - Not for use with clients

A

B

C

Comprehensive Tool

Comprehensive Plan and Product Solution

Less Upscale and/or Post -retirement

MARKET

More Upscale and/or Pre-retirement

MARKET

Advisor

Advisor

Advisor

More experienced, and more advice oriented

Advisor

Less experienced, and more product oriented

Advisor

1.1.

2.2.

3.3.

Customers

Product Knowledg

e

Advanced Sales, Concepts

Tools, Support

Education Training

Simple ToolDevelopment of a Simplified Plan

Multiple Product Solution

Simple Tool or Calculator

Single Packaged ConceptPre-defined Product Concept

Approach to Market

For broker/agent use only - Not for use with clients

Planning Tools

• Development of a Retirement Income Plan– Goals based– Cash flow based– Identify essential vs. discretionary expenses

• Additional Planning Capability:– Accounts you manage– Outside accounts

• Asset Allocation

• Client Management

For broker/agent use only - Not for use with clients

How To Manage Retirement Income

Lifetime Income Sources

•Social Security

•Pensions

•Annuities

•Other lifetime income sources

Fill Income Gap (A)

Essential Expenses Discretionary Spending

Fill Income Gap (B)

Managed Income Sources

•Taxable assets

•Personal retirement accounts

•Employment income

•Other variable sources

Source: InFRE – International Foundation for Retirement Education, 2009

For broker/agent use only - Not for use with clients

Other important considerations:• Client profile• Learning curve• Anticipated usage• Back office support

Planning Tools

For broker/agent use only - Not for use with clients

Planning Tools

Fidelity Retirement Income Evaluator

Money Guide Pro

Morningstar Retirement Income

Money Tree

Insmark Wealthy & Wise

Profiles Professional

e-Money

NaviPlan

SunGard

Calculators Comprehensive Planning

For broker/agent use only - Not for use with clients

Licensed advisors have access to their own personal branded, representative website. This allows monitoring of a client’s assets and liabilities, as well as creation of in-depth cash flow analysis, or modular based scenarios.

eMoney Advisor

For broker/agent use only - Not for use with clients

One of the features of the Wealth Management System is the ability to create a customized financial plan to suit any client

situation.

For broker/agent use only - Not for use with clients

The Retirement Income planning process covers: •Looking at retirement timeframes and longevity issues. •Analyzing your basic and discretionary retirement expenses. •Understanding your guaranteed sources of income. •Planning your reliable income for a strong retirement foundation. •Understanding risk and the power of time in investing. •Developing a long-term investment strategy. •Creating an asset withdrawal strategy. •Protecting your plan. •Implementing and maintaining your plan.

Planning for retirement incorporates all of the elements of financial planning. You must account for income, expenses, investments, and taxes.

Comprehensive Planning

For broker/agent use only - Not for use with clients

The Retirement Income Tool allows you to monitor your client’s income during their retirement years. The system allows you to perform several techniques and stress tests.

Retirement Income Module

For broker/agent use only - Not for use with clients

Another feature of the Retirement Income Tool, an in-depth spending analysis, keeping your client on track during their retirement years.

For broker/agent use only - Not for use with clients

The client’s Personal Financial Home Page is where daily updates of all accounts are located in one customized website, accessible anywhere an internet connection is available.

Client Personal Home Page

For broker/agent use only - Not for use with clients

The Vault is an online secure storage facility that houses and protects a client’s valuable, personal documents such as wills, trusts, insurance documents and passports in an electronic format. Video and sound clips can also be stored. The Vault is an excellent safeguard against storms or other natural disasters.

Electronic Document Storage

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Methodologies

Annuity Payouts

Annuitization Living Benefits

For broker/agent use only - Not for use with clients

Methodologies

Systematic Withdrawals

Sustainable Withdrawal Rates

Bucket Strategy

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Methodologies

Income Only Plans

Bonds Life InsuranceCD Real EstateDividends

Laddering Rental Income

REITs

Reverse Mortgages

For broker/agent use only - Not for use with clients

Product Solutions

ANNUITIES

•Annuitization – guaranteed income•Systematic withdrawals

Fixed Annuities

•Annuitization – guaranteed income•Systematic withdrawals•Guaranteed living benefits payout

Variable Annuities

Guaranteed Living Benefit Rider

•Guaranteed income Single Premium Immediate Annuity

LIFE INSURANCE

•Tax free income* Variable Universal Life

Fixed Universal Life

Indexed Universal Life

Whole Life

MUTUAL FUNDS/UITs

•Systematic Withdrawal Program (SWIP) Target date/payout funds

Unit Investment Trusts (UIT)

Income Funds

Income Strategies Income Generating Products

* Tax free income is based on withdrawals to basis then loans. Loans and withdrawals will reduce the policy’s death benefit and cash value and may cause the policy to lapse. Adverse tax consequences may occur if the policy lapses.

For broker/agent use only - Not for use with clients

Product Solutions (cont’d)

MANAGED ACCOUNTS

•Individually designed distribution plan Rep Managed

Discretionary Managed

Individual Customized

FIXED INCOME

•Income laddering Brokered CDs

CDs

Government Bonds

Municipal Bonds

Corporate Bonds

EQUITY SECURITIES

•Dividend Income Stocks/Preferred Stocks

ETFs

Income Strategies Income Generating Products

For broker/agent use only - Not for use with clients

ALTERNATIVE INVESTMENTS

•Income generation from non-correlated investment products/tax benefits

Real Estate

Equipment Leasing

Oil & Gas

Structured Products

CASH MANAGEMENT ACCOUNTS

•Managing your cash flow

Product Solutions (cont’d)

Income Strategies Income Generating Products

For broker/agent use only - Not for use with clients

Advisor Best Practices