5 Steps to Building a Retirement Income Planning...

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)


Planning?

• Add assets – New clients

– Consolidation of accounts


Planning?



• Retain clients as they age into retirement– Better service

– Deeper relationships


Planning?



• 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


IRA AssetsIRA AssetsIRA AssetsIRA Assets


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


Will Be Different


• More reliance on personal savings


Will Be Different



• Low interest rates


Will Be Different




• Higher lifestyle expectations


Will Be Different




• 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




• Compounding works in reverse





• The sequence of investment returns matters






• Time is the enemy






• 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


Workshop


income management

• Get in front of groups of pre-retirees


Workshop


income management


• Make it easy for clients to bring in

referrals


Workshop


income management



referrals

• Educate clients, prospects, and



Workshop


income management



referrals



• Promote your retirement planning

services


Workshop


income management



referrals



• 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

5 Steps to Building a Retirement Income Planning...

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