Presentation Transcript

1. Organize Productive Conversations With Your Clients

   The Retirement Challenge: Presented by: Jason E. Lea, CFP ®
2. Some Stunning Statistics Red Sox Team World Series Batting Average David Ortiz World Series Batting Average Likelihood you will stay awake for 1:45 today! David Ortiz # hits Rest of Team- total hits (not including Ortiz) Koji Uehara’s W/S ERA 14.4% (.144) 73.3% (.733) 87.6 % 11 22 0.00%
3. Agenda Changing Landscape Economy, Politics, and Interest Rates Our Mission Today 3 Main Client Objectives 5 Simple Steps Strategies Carrier Panel
4. Thank You To Our Sponsors
5. Talking to Your Clients 1 conversation every day Work with your BSMG advisors Have the right tools to present solutions Understand the risks For your clients To your practice
6. Retirement Market – It’s Pretty Big U.S. Total Retirement MarketTrillions of dollars, end-of-period, selected periods $20.9 Trillion * The Investment Company Institute“TheU.S. Retirement Market, Second Quarter 2013.”
7. DC Plans and IRA’s Retirement Assets by TypeBillions of dollars, end-of-period, 2013:Q1–2013:Q2 * The Investment Company Institute “The U.S. Retirement Market, Second Quarter 2013.”
8. The Retirement Landscape The Financial Crisis – what’s the impact? A wake up call for clients Clients realize they need advice on retirement Clients feel more secure when they work with a financial professional
9. A Stunning Opportunity 75% of Clients switch advisors at Retirement1 67% percent of clients want a retirement income plan, only 25% have received it.2 87% of clients who received a retirement income plan moved their assets to that advisor.1 1Source: McKinsey & Co., Cracking the Consumer Retirement Code, 20072Source: Fidelity Investments, Adapting a Practice for Retirement Income Planning, 2006
10. Consumer Poll: Important Features Guaranteed to Not Lose Value 67% Protects Lifetime Income from Market Losses 62% Provides Guaranteed Rising Income 58% Provides for My Family If I Die or Become Disabled 50% Has Higher Returns 19%
11. Biggest Retirement Concerns Rising Cost of Healthcare 50% Inflation and the rising cost of living 50% Insufficient funding for Social Security & Medicare 40% Higher Taxes 20% The Gov’t budget deficit 19% Global crisis and uncertainties 13%
12. Taxes 3 ways Retirement Income taxed Ordinary Income Capital Gains Tax-Free
13. Top Marginal Federal Ordinary Income and Capital Gain Tax Rates from 1913-2013
14. Income Taxes On Distributions
15. Pain Outweighs Gain or *2012 AIG Retirement Reset Study Which is more impactful to retirees? Protection from loses is more important than higher, riskier returns 8x More important!* Peace of Mind is 4xmore important than wealth*
16. Life Expectancy Doubled in the last 100 years Average Length of Retirement for a married couple age 65? 27 Years! (Age 92)
17. Economy, Politics, Interest Rates Slow recovery, unemployment remains high Washington refuses to collaborate Persistently low interest rates Market Volatility
18. Savings Rates and Interest Rates
19. The Importance of Saving
20. Post-retirement expenses Less Legacy Heirs, charities Dreams Grandchild’s education, vacation home, RV Frequency Financial Independence Wants Travel, entertainment, gifts, motorcycle Needs More Food, shelter, clothing
21. 3 Major Retirement Topics Retirement Income Asset Protection Legacy Planning
22. There’s Only Three Uses for $…
23. Retirement
24. Make it Personal
25. Income Defined Benefit “Pension Plans” Social Security Will these be enough for your clients? Clients can create their own personal “pension” plans
26. Asset Protection HealthCare and LTC costs Market Risks Interest Rate Risks Inflation
27. What’s Your Legacy? Spend Pennies on the Dollar to: Take Care of your spouse when you’re gone Take care of Kids and Grandkids Give to Charities/Organizations that have meaning to you
28. Retirement: Solutions
29. Our Mission Today Be able to “Yellow Pad” it with your clients
30. 6 Simple Steps Define Your Relationship with the client Ask key questions, gather data Evaluate client’s financial status Develop and present your recommendations Implement your plan Yearly or quarterly check-ups
31. Define The Relationship Let them know this is conversation you are looking to have with your clients Ask if they are willing to discuss with you, and explain that it’s a very important What Retirement goals do they have?
32. Ask Questions, Gather Data Use a Fact Finder Determine Client goals and prioritiesfor income, asset protection and legacy Determine client needs
33. Retirement Planning Factinder
34. Retirement Needs Worksheet
35. Goals vs. Needs Client goals often > Client resources Good fact-finding will reveal their actual needs and those should be addressed first. Advising is easier your client once you understand their needs. Clients appreciate good homework.
36. Evaluate Client’s Financial Status Do they have adequate: Cash Protection from HealthCare and LTC costs Sources of Retirement Income Life Insurance Do they have an estate planning attorney who has drafted a will, health care proxy, power of attorney, trusts if necessary
37. Results of Data gathering Findings determine: Income Gap Asset protection needs Legacy objectives
38. Develop and Present Your Retirement Recommendations
39. Protection Products Offer… Risk Transfer from client to Insurance Co. Peace of mind Asset protection from financial risks …in a word… Protection
40. Match-up Solutions to the Needs Annuities Lump-Sum funded Retirement Income Fixed Asset to protect from market losses LTC Products Lump Sum or Flex-pay funded Protect assets from largest risk in retirement Life Insurance Lump sum or-Flex pay funded Provides Death benefit and now access while alive to DB for LTC expenses Access cash value for income after 15 years
41. Implement Plan & ConductYearly or quarterly Reviews Build Client Trust over time Chance to uncover other opportunities Become a Center of Influence, and develop retirement referrals
42. Michael (engineer) & Mary (teacher), age 60 Retiring in 5 years Current income = $7.5k / month after taxes Current expenses Net Savings $1.5k/month ($500 to NQ savings, $1,000 to 401(k)) (2) Children – 28 & 30 years old (1) Grandchild – 2 years old
43. Retirement Budget
44. Retirement Budget - @ age 65 Non-discretionary expenses: $5,000/month (mortgage, bills, food) Discretionary expenses: $1,000/month (vacations) Pension @65 of $2,000/month Social Security @65 of $2,500/ month
45. Personal Balance Sheet $500,000 qualified plan +70,000 in additional (saved from 60-65) = $570,000 $250,000 NQ assets + $30,000 saved (saved from 60-65) = $280,000 $500k Term Insurance (5 years left), no plan for LTC $200,000 Vacation home Mortgage (Florida) $20,000 Auto loans Assumptions 4% IRR on investments, 3% inflation, 30% income tax rate Plan to retire in 5 years
46. A Thought on Reducing Expenses… Much more financially powerful than increasing income because the expense reduction (savings) double effect: Increases savings each month Permanently decreases the amount you’ll need each month for the rest of your life.
47. Michael and Mary: Goals Inflation-protected lifetime income Keep remaining assets safe Travel Help with grandkids’ College Protect against LTC costs Leave a legacy for their kids & grandkids
48. A Snap Shot @Age 65

49. Three Strategies

50. Retirement Income Use a deferred annuity with a guaranteed joint lifetime withdrawal benefit. Client retains control of account value Guaranteed withdrawals for life Withdrawals can be started when the client wants Longer deferral = larger guaranteed w/d! Annual fee ranges between 0.65% - 1.25%
51. Three Lifetime Income “Buckets”
52. Annuities Create a “Personal Pension”
53. Earning 3% every Year
54. Earning 4% Every Year
55. Pension & Social Security Income
56. Fill the Income “Gap”
57. Income Strategy Recap Client has $850,000 in assets Used $407,000 to create $823,400 of after-tax guaranteed income over 30 years $443,000 remains for Liquidity, LTC, Legacy planning
58. Asset Protection – LTC “Linked Benefit” LTC protection goals Legacy benefits if LTC not needed Transfers risk of LTC “Health Event” to Insurance Company Not an Expense, an “Asset Reposition” Once policy on each spouse
59. $200,000 LTC solution
60. $360,000Income tax-free long-termcare reimbursements $120,000Income tax-free deathbenefit for beneficiaries $75,000Money back guarantee OR OR Linked Benefit Graphic Other Life insurance tocreate a legacy Portion of savings $75,000Premium Investments &retirement income Cashsavings
61. LTC “Linked Benefit” Recap
62. ….Or buy a UL policy w/ LTC rider Buy (2) $250,000 Death Benefit UL Policies LTC Rider or Chronic Illness Rider 100% of DB available for LTC needs, tax free Guaranteed Lifetime DB Fully Underwritten, More DB than Linked Guaranteed DB = Max LTC Benefit
63. …UL with LTC/CI rider
64. $146k funding a Life Pay vs. 20 Pay (4% IRR)
65. Affect on Assets of buying Life Insurance Single Pay v. 20 Pay v. Life Pay (4% IRR on Assets )
66. Single Pay v. 20 Pay v. Life Pay (3% IRRon Assets ) Affect on Assets of buying Life Insurance
67. Results of UL with LTC Rider
68. Legacy Planning – “IRA Max” Client have spent Ability to Access Cash Value in 15 years Asset Maximization for beneficiaries/charities. Can liquidate cash value if needs change Survivorship UL (SUL) policy for $300,000 Annual Cost = $3,500 Use NQ $ until RMD age (70.5) then use Qualified RMD’s
69. Legacy - Add a Survivorship UL
70. Total Legacy - Add a Survivorship UL
71. Results of our Three Strategies

72. Thank You!