When preparing clients for their golden years it’s important to provide not only a detailed plan, but also sensible guidance. Retirement is one of the most important phases of our lives, both personally and financially, and as advisors we need to ease our clients into the transition as smoothly as possible. We have an extraordinary ability to literally change multiple generations for years to come by helping with their financial, life insurance and estate planning needs. By focusing on the design, implementation and management of a retirement plan, it allows us to best prepare for our clients’ present and future needs and wants.
The financial industry continues to enhance product design. In the past, the general rule of thumb was no matter what asset class you were in, whether stocks, bonds, variable annuities or mutual funds, there would be a withdrawal rate in the four percent range. Statistically, you would not outlive your assets. Since the financial landscape progressively changes, companies are developing products with built-in income generation mechanisms such as guaranteed income benefits and guaranteed withdrawal benefits with fixed rates between five to seven percent. With these types of products there is less need for a client to focus specifically on making sure they don’t exceed four percent. A majority of the time, with a guaranteed income benefit, the highest withdrawal rate for income protection is five percent regardless of overall market performance. With today’s new product designs, it’s important to remember there is no one-size-fits-all solution, because every situation is entirely different.
When planning for retirement, clients harbor a lot of worry. The biggest concern weighing on the minds of many of our clients is whether or not the market performance is going to continue to decline. When combining outside influences and the fact that the Baby Boomer generation is rapidly reaching retirement-age, many believe our economy will remain strained for the immediate future. This means we as stewards of this industry have an even greater responsibility to ensure we are proving sound advice and exceptional council to our clients to help instill confidence when entering the next phase of their life.
I have had the blessing of seeing both what good planning does, as well as seeing in my own family what partial or lack of complete preparation can do. My father was a past CLU in the financial industry and helped many people successfully prepare for their retirement. He made sure to carefully listen to client’s needs and wants in order to successfully help in their future plans. But like most people, he put off preparing for his own situation. Then in 2000, my father passed away at the age of 52 from a sudden accident. My mother had always worked for my father without earning an income, and never planned financially if an unexpected incident was to occur. When she became a widow at 52 she had no Social Security or means of income. Watching how my mother struggled showed me how valuable retirement planning is, and not only the importance of discussing it with my clients, but also safe guarding my own family.
As a 10-year member of the Million Dollar Round Table (MDRT) I’ve been afforded the opportunity to mentor aspirants and impost the significance of retirement planning so my father’s legacy lives on. The financial industry’s foundation rests upon the integrity and the nobility of what we do, and we have a tremendous responsibility to help clients in planning for today and tomorrow.