Editor’s Note: Ed. Note: Dick Duff's last Producers Web article was in August of 2009. In the meantime, he has completed Retirement Breakthrough, The Safe, Secure Way to Guaranteed Income You Can't Outline--in Any Economy. Now, he begins a series of retirement income planning articles based on this consumer-friendly book. Welcome back, Dick.
Lifelong retirement income thinking
When we enter the workforce, good financial advice might be, "Buy life and disability insurance to protect human life values; blend in emergency funds and a savings plan to educate your children, too. Then, probably sometime in your 40s, dedicate the next 20 years to a personal retirement income plan. You'll still need insurance for personal well-being and to assure legacies for others."
Simply put, we may spend 70 to 80 years thinking about our finances. We will accumulate until retirement, and then spend our retirement kitty as long as we live. We will use insurance products to shore things up along the way. And, we will not want to run out of money, even if we live until age 100. In essence, that is also the message of “Retirement Breakthrough.”
Of course, such planning is more difficult than it appears. We (and our clients/prospects) tend to procrastinate. We stop and begin new financial routines. As we strive to buy low and sell high, we learn that the stock market usually goes in the wrong direction at the wrong time. After trial and error, we eventually embrace safety and guarantees. There are life-changing events too — a divorce (and a remarriage), foreclosures, lawsuits, a new employer, business failures and aging parents. Even our financial advisor may die, leave the business or get into some kind of trouble. We learn more about staying healthy and living longer. Presently, for every four years that go by, we will live another year from birth. For example, in 2014, that will be age 81 instead of age 80. As more hear that good news, they must focus on not running out of money. Imagine living until age 105 and coming up short at age 93. It will happen. Money at ages 60–65 generally won't keep up with inflation and a reasonable rate of withdrawal over 40 years.
The message is, "You want to enjoy yourself in retirement; you don't want to run out of money." As an advisor, share motivational stories (joyful and sad) about what has happened to your clients, family and friends.
Win-win relationships with retirement income clients
In all client situations, you'll have an opportunity to describe what you do as a financial advisor. Take the following pointers and adapt them to your personal style. Make them your "mission statement," commit the final message to memory and begin all seminars and client meetings with your philosophy. Know that the best time to explain this is at the beginning of a business relationship.
1. I am a financial person who solves problems and generally works for a commission — not a fee. A commission schedule is set by others and beyond my control. It doesn't influence my recommendations. When financial institutions pay me, you won't. My compensation will usually come indirectly out of general funds and from surrender charges others suffer when they cancel financial products prematurely. Please know that I spend a lot on continuing education, which keeps me current on what counts for you. Both of us must prosper as we work together. You don't want me to leave the business. Then, both of us will lose.
2. I help others manage risks, mostly those associated with living too long or dying too soon. Either or both risks can involve running out of money at the wrong time — your worst nightmare. Think of me as a retirement income coach and educator. My specialty is assuring that there will plenty for you and those you are concerned about.
3. My passion is income planning, and I only work with people who feel the same. When I'm not certain about something, I’ll tell you and get answers from a specialist. This must be a fun experience for both of us. If not, we will part amicably.
4. I am available 24/7 to research your questions and concerns. We'll work on what counts. Contact me anytime — even in the middle of the night. Here are my e-mail and website addresses, fax numbers and personal cell phone number. I will be with you as long as we like each other and are both alive.
5. As soon as we begin, I need personal and financial information about your facts, circumstances, goals and objectives. I'll keep everything confidential and won't give any of it to others without your permission. I also need your commitment to get things done and begin your plan as soon as possible. As long as we work together, please don't ask those who market products to compete with me. However, if you learn of something interesting, tell me; I can probably get the real story for you.
6. I appreciate referrals to others who may want financial help. Don't worry about whether people want to buy something. All I ask is that they are responsible, caring and honorable — like you.
In summary, take time to set things straight in all income planning situations. You might even get a written agreement in principle. Place your client or prospect first and let them know how much you care. It's okay to insist on win-win, too. If you don't feel comfortable with this approach, you should probably seek another occupation.
In my next article, we’ll look at what makes up a core retirement income plan.