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NAIFA Convention & Career Conference Orlando World Center Marriott Resort September 15, 2009. Optimizing the Retirement Income Planning Process Steven L. Welton, CLU ChFC Vice President, Strategic Marketing UNIFI Companies. Retirement Income. Definition:

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NAIFA Convention & Career ConferenceOrlando World Center Marriott ResortSeptember 15, 2009

Optimizing the Retirement Income Planning Process

Steven L. Welton, CLU ChFC

Vice President, Strategic Marketing

UNIFI Companies

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


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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


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Market Need Positioning for Retirement Income Planning

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


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Practice Readiness

Skills and Competencies:

Insurance

Investments

Social Security

Health Care

Real Estate

Elder Care issues

Designations: CASL American College

CRPC College for Financial Planning

CRC InFRE

Tools and Process

Changing Practice Economics

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


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Health Care Expert

Mortgage Broker

Accountant

Real Estate Agent

Other

Financial Advisor

Insurance Agent

Attorney

Tax/Estate Expert

Expanding Professional Networks

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


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Advice-Based Planning

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


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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 change

Added or switched brokers and advisors within 15 years of retirement

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


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Fidelity Research Need

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


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Retirement Income Management Process Need

5. Convert resources into income

6. Maintain and update the plan

6. Maintain and update the plan

4. Identify options for addressing gaps

1. Estimate duration of retirement assets

2. Identify and manage retirement risks

3. Identify distribution, tax and estate issues and opportunities

Data Collection

Source: InFRE – International Foundation for Retirement Education, 2009

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


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Advisor Need

Less experienced, and more product oriented

Advisor

Approach to Market

More experienced, and more advice oriented

MARKET

More Upscale and/or

Pre-retirement

Comprehensive Tool

Advisor

1.

Comprehensive Plan and Product Solution

A

Simple Tool

Development of a Simplified Plan

Multiple Product Solution

Advisor

2.

Customers

B

Single Packaged Concept

Pre-defined Product Concept

Advisor

Simple Tool or

Calculator

3.

C

MARKET

Less Upscale and/or

Post -retirement

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


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Planning Tools Need

  • 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


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How To Manage Retirement Income Need

Essential Expenses

Discretionary Spending

Fill Income Gap (A)

Fill Income Gap (B)

  • Lifetime Income Sources

  • Social Security

  • Pensions

  • Annuities

  • Other lifetime income sources

  • 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


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Planning Tools Need

Other important considerations:

  • Client profile

  • Learning curve

  • Anticipated usage

  • Back office support

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


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Planning Tools Need

Comprehensive Planning

Calculators

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


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eMoney Advisor Need

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.

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


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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


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Comprehensive Planning ability to create a customized financial plan to suit any client situation.

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

  • 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.

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


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Retirement Income Module ability to create a customized financial plan to suit any client situation.

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.

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


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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


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Client Personal Home Page spending analysis, keeping your client on track during their retirement years.

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.

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


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Electronic Document Storage spending analysis, keeping your client on track during their retirement years.

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.

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


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Annuitization spending analysis, keeping your client on track during their retirement years.

Living Benefits

Methodologies

Annuity Payouts

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


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Sustainable Withdrawal Rates spending analysis, keeping your client on track during their retirement years.

Bucket Strategy

Methodologies

Systematic Withdrawals

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


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Methodologies spending analysis, keeping your client on track during their retirement years.

Income Only Plans

Dividends

CD

Real Estate

Bonds

Life Insurance

Laddering

Rental Income

REITs

Reverse Mortgages

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


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Income Strategies spending analysis, keeping your client on track during their retirement years.

Income Generating Products

Product Solutions

* 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


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Income Strategies spending analysis, keeping your client on track during their retirement years.

Income Generating Products

Product Solutions (cont’d)

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


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Income Strategies spending analysis, keeping your client on track during their retirement years.

Income Generating Products

Product Solutions (cont’d)

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


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Advisor Best Practices spending analysis, keeping your client on track during their retirement years.

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


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