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  • 1. 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 For broker/agent use only - Not for use with clients
  • 2. 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
  • 3. Market Need Positioning for Retirement Income Planning For broker/agent use only - Not for use with clients
  • 4. 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
  • 5. Expanding Professional Networks Health Care Expert Accountant Mortgage Broker Other Real Estate Financial Advisor Agent Insurance Attorney Agent Tax/Estate Expert For broker/agent use only - Not for use with clients
  • 6. Advice-Based Planning For broker/agent use only - Not for use with clients
  • 7. Pre-Retirees May Change Advisors To Get The Services They Need No change 25% Added or switched brokers and advisors within 15 years of 75% retirement Source: McKinsey & Co. “Managing Retirement Income: Innovative Strategies to Capture and Retain Retirement Income,” 2006 For broker/agent use only - Not for use with clients
  • 8. Fidelity Research • 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
  • 9. Retirement Income Management Process 5. Convert resources into income 4. Identify options for addressing gaps 1. Estimate duration 2. Identify and manage 3. Identify of retirement assets retirement risks 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
  • 10. Approach to Market Advisor More experienced, and more advice oriented MARKET More Upscale and/or Comprehensive Advisor 1. Comprehensive Plan and Product Solution Tool Pre-retirement A Development of a Simplified Plan Advisor 2. Multiple Product Solution Simple Tool Customers B Single Packaged Concept Advisor 3. Pre-defined Product Concept Simple Tool or Calculator C MARKET Less Upscale and/or Post -retirement Product Advanced Sales, Tools, Knowledge Concepts Suppor Advisor Less experienced, and more t product oriented Education Training broker/agent use only - Not for use with clients For
  • 11. Planning Tools • 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
  • 12. How To Manage Retirement Income Essential Expenses Discretionary Spending Fill Income Fill Income Gap (A) Gap (B) Lifetime Income Sources Managed Income Sources •Social Security •Taxable assets •Pensions •Personal retirement accounts •Annuities •Employment income •Other lifetime income sources •Other variable sources Source: InFRE – International Foundation for Retirement Education, 2009 For broker/agent use only - Not for use with clients
  • 13. Planning Tools Other important considerations: • Client profile • Learning curve • Anticipated usage • Back office support For broker/agent use only - Not for use with clients
  • 14. Planning Tools Calculators Comprehensive Planning Fidelity Money Morningstar Money Insmark Profiles e-Money Retirement Guide Pro Retirement Tree Wealthy & Professional NaviPlan Income Evaluator Income Wise SunGard For broker/agent use only - Not for use with clients
  • 15. eMoney Advisor 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
  • 16. 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
  • 17. Comprehensive Planning 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
  • 18. Retirement Income Module 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
  • 19. 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
  • 20. Client Personal Home Page 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
  • 21. Electronic Document Storage 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
  • 22. Methodologies Annuity Payouts Annuitization Living Benefits For broker/agent use only - Not for use with clients
  • 23. Methodologies Systematic Withdrawals Sustainable Bucket Strategy Withdrawal Rates For broker/agent use only - Not for use with clients
  • 24. Methodologies Income Only Plans Dividends Bonds CD Real Estate Life Insurance Laddering Rental Income REITs Reverse Mortgages For broker/agent use only - Not for use with clients
  • 25. Product Solutions Income Strategies Income Generating Products ANNUITIES •Annuitization – guaranteed income Fixed Annuities •Systematic withdrawals •Annuitization – guaranteed income Variable Annuities •Systematic withdrawals •Guaranteed living benefits payout Guaranteed Living Benefit Rider •Guaranteed income Single Premium Immediate Annuity LIFE INSURANCE •Tax free income* Variable Universal Life Fixed Universal Life Indexed Universal Life Whole Life MUTUAL FUNDS/UITs •Systematic Withdrawal Program (SWIP) Target date/payout funds Unit Investment Trusts (UIT) Income Funds * 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
  • 26. Product Solutions (cont’d) Income Strategies Income Generating Products MANAGED ACCOUNTS •Individually designed distribution plan Rep Managed Discretionary Managed Individual Customized FIXED INCOME •Income laddering Brokered CDs CDs Government Bonds Municipal Bonds Corporate Bonds EQUITY SECURITIES •Dividend Income Stocks/Preferred Stocks ETFs For broker/agent use only - Not for use with clients
  • 27. Product Solutions (cont’d) Income Strategies Income Generating Products ALTERNATIVE INVESTMENTS •Income generation from non-correlated Real Estate investment products/tax benefits Equipment Leasing Oil & Gas Structured Products CASH MANAGEMENT ACCOUNTS •Managing your cash flow For broker/agent use only - Not for use with clients
  • 28. Advisor Best Practices For broker/agent use only - Not for use with clients