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Annuity Awareness Month allows me to continue to talk about why I remain bullish on annuities after June 9’s implementation of the Impartial Conduct Standard. Many advisors said they planned to stop writing annuities after the rule went into effect. I argue that annuities should become a larger part of the product mix for many Americans, especially today.     Close the Gap A recent Merrill Lynch study indicated that the average American would need more than $700,000 in income for their retirement years. 1 At the same time, LIMRA’s 2016 Fact Book reported the median long-term savings in the United States is $130,100. 2   As planners, we will have ...
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Annuity Awareness Month means different things to different people. Personally, I like to concentrate on the proper uses of annuities, regardless of the economic environment.    Too often, especially lately, I hear advisors talking about rates being too low to consider annuities. But, I think low interest rates provide a unique opportunity to show how annuities create tax efficiencies in income planning.     As planners, one of the obstacles we face is the misuse of social systems for income. Today, only 4 percent of women and 2 percent of men elect to take Social Security at age 70 so they gain the maximum income for life on an inflation-adjusted ...
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Implementation is here. The U.S. Department of Labor did not pursue another delay to its fiduciary rule, and the deadline has come to pass. Even though many people in our industry would have preferred more time, I believe now is the right time to refocus our attention on our clients. The fiduciary rule will be a change, but the transitionary period offers relaxed rules in order to comply.     For the past 14 months, I have been writing about redefining your business. Now that we are crossing the threshold to the rule, my message is the same. This transitionary period offers a chance to continue the thought pattern around how your business should look in ...
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Recently, our division sponsored Wendy Boglioli as a speaker for one of our partner firms. I always enjoy being around Wendy. She is an Olympic champion swimmer, a long-term care advocate and a genuine professional. If you need a great, motivating speaker, I highly encourage you to consider Wendy.   During the event, Wendy spoke about how her swim coaches prepared her team for races. They were ready for anything to go wrong. And, a lot of things can go wrong: The starting block might be slippery and you can get off the block awkwardly Your goggles can fill up with water You can be off a few inches on your turn at the wall You can miss a ...
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These days, it seems there is a holiday for every event and every little occasion. At times, I think because everything is a higher priority moment, then nothing is important in this world any more. The financial service industry is no different, with a several months highlighting products throughout the year.    That said, June is Annuity Awareness Month. While I’m biased as an income planning specialist, I think it’s important to highlight why annuities are so important to consider with clients.     A recent ThinkAdvisor article 1 highlighted the growing number of people aging to 100 …  In 1900, only 31 people out of 100,000 had reached ...
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While you might be afraid of the fiduciary rule and its effects on your business, there are so many reasons to be optimistic about the future of our profession right now. Below is a list of just a few of the changes I believe will continue to impact our industry – and increase the need for quality financial professionals – for years to come.     Defined Contribution Plans Defined contribution plans offer better choices, potentially lower fees, and tax-favored investing. However, few plans have mechanisms to provide lifetime income, so the vast majority of Americans need advice on converting their accumulated wealth into sustainable income. The loss ...
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When you grow up in Indianapolis, you naturally follow racing to some degree. I’m not a huge racing fan, but I do follow the sport. (Actually, I follow just about any sport offers an opportunity to make an analogy with our industry.)    As Memorial Day and the 101 st running of the Indianapolis 500 approaches, I thought I’d share some statistics from the first race of this year’s IndyCar Series.     For the St. Petersburg race, the winning margin was just 10 seconds. Now, on a race track, 10 seconds may seem like a massive win for the first place car. But, think about how narrow that margin really is over the entire race, when things could have gone ...
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You likely spend a lot of time talking about the importance of longevity planning for your clients. But, have you thought about longevity for your practice?    Recently, I was reading an article from a practice management expert who was answering some questions about an advisor’s succession planning. It made me think how prepared we are as an industry to provide ongoing service to our clients in the event of catastrophic events. We talk to our clients about mitigating risks in retirement, but we don’t necessarily talk about the risk of losing an advisor.    I think it’s an important consideration for us to evaluate, especially now. Part of working ...
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A couple of weeks ago, I was talking with my business coach, CJ McClanahan, and he said something that struck me: “People don’t have a vision for what the effort is going to deliver.”   If you think about that statement, it applies to several parts of our lives as financial planners.     Vision for Your Practice In today’s increasing regulatory environment, we tend to focus our attention on fighting the U.S. Department of Labor rule. In practice, the rule has already taken effect as clients are already asking planners if they are fiduciaries. For the last nine months, banks and wire houses have been converting their clients, for better or worse, to ...
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In 2014, the U.S. Treasury Department released new rules around Qualified Longevity Annuity Contracts or QLACs. After an initial increase in utilization, the focus and attention dwindled over the past two years. Today, the sale of all deferred income annuities remains stagnant and far below expectations from 2014. This gift that the government provided remains largely unused in the planning community.    As I prepared for a presentation recently, I asked our team to update our research on the use of QLACs at different ages and for different risk allocation models. The results were similar to an earlier study we did in 2015. In fact, the results from 2017 ...
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We’ve been talking about the market forces within the financial services industry that are moving us toward a new fiduciary environment. Because even though the U.S. Department of Labor Fiduciary Rule seems to be delayed until summer, what started in late 2016 continues to gain momentum.    What We’ve Already Seen At the end of last year, several firms announced strategies to mitigate conflicts of interest, and news articles have been asking consumers to ask their advisor if they are a fiduciary. Several advisors have told me that prospects have asked them on the phone if they are fiduciaries before making an appointment.    It is clear that changes ...
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As I was traveling around the country attending conferences, The New York Times published an article that caught the attention of many people in our industry. The 21 Questions Youre Going To Need To Ask About Investment Fees, points out questions we all need to get comfortable answering.* Better yet, we should prepare to discuss them upfront with our clients The article is a perfect example of the market effects taking place in the financial services industry. While the U.S. Department of Labor Fiduciary Rule has been delayed, our industry has already started a transition that is unlikely to be reversed. Our clients have been exposed to many of the ...
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On April 7, the U.S. Department of Labor (DOL) will likely publish an official delay of its fiduciary and conflicts of interest rule. Many in our industry have been waiting for this rule to be delayed, but several points around the fiduciary rule remain uncertain. Industry experts predict a further delay, allowing the DOL to fully complete President Trumps requested review of the rule. I want to stress to all who work in our industry that many aspects of the rule will go into effect June 9, 2017. Most notably, impartial conduct standards must be adhered to on any qualified sale after the delayed implementation date. Although the Best Interest Contract ...
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March Madness is the most exciting time of the year for me even more exciting than Christmas. You see, this time of year always brings back memories of Indianas run to the national championship in 1987. As a student manager, I can remember preparing the bench for the national championship game at the Superdome in New Orleans, Louisiana. I was extremely anxious everyone was. And, as I walked back into our locker room for the last time before warm-ups, what I saw made me even more anxious. Coach Bob Knight was laying on the training table. Hed folded his famous red sweater into a nice, neat pillow I couldnt believe he seemed to be resting peacefully ...
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If you read much about the U.S. Department of Labor Fiduciary Rule, you know many people are saying its unworkable. While I agree the rule may be overreaching and it will be difficult to meet all the disclosure requirements, I think its clear the effects of the rule are making a difference already. FINRA has fined an institution for creating conflicts and incentives to sell one product, and clients are asking prospective planners if they are a fiduciary. Still, many advisors feel like cannot work as a fiduciary. I believe with the right focus, you can. Defining Success As a student manager at Indiana, I worked in one of the most competitive ...
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Last year, I heard Robbie Bach speak at a carrier meeting. His story stuck with me it might stick with you, too, and inspire you to change your business model for a post-fiduciary world. If youve never heard of Robbie, hes the former leader of Microsofts Mobile Entertainment and Device division and was responsible for developing and bringing Xbox to the market. The console was eventually a success, but at one point, Robbie thought about resigning. Hed lost nearly $6 billion and was unable to penetrate the Japanese gaming market. To better fit his markets wants and desires, Robbie created an interactive, subscription-based business model. For ...
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Since Feb. 3, when the president signed a memorandum asking the Department of Labor to review the Fiduciary and Conflicts of Interest Rule, Ive talked to agents and advisors from around the county. Many feel a great sense of relief that the rule is likely to be delayed many believe this is the beginning of the end for the rule. Regardless of a potential delay or revision, I don't believe we can afford to move backward in how we interact with our clients. The fiduciary standard is here to stay market forces and regulatory agencies already act as if the rule is in effect. I think its vital to prepare for running your office as if you are a fiduciary. ...
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Today, the U.S. Department of Labor (DOL) is likely to post the proposed delay to the Fiduciary and Conflicts of Interest Rule on the Federal Register. You can read the full 31-page document at www.federalregister.gov . The delay pushes the applicability date to June 9, 2017, which amounts to a 60-day delay to the rule. This is significantly less than what many industry professionals hoped for after President Trumps memorandum on Feb. 3, 2017. As the Fiduciary Rule continues to evolve, I want to stress that many aspects of the rule have already been implemented by the marketplace. Firms have created policies and procedures to mitigate the conflicts ...
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Ive been traveling this past week to several different conferences, and have already picked up some great ideas to share with our advisers. Through my travels, I was struck by a couple of comments that really hit meabout the simplicity and authenticity of business. Im always surprised about how the simplest and most direct statements are often the most valuable. I had the great honor of speaking at The Society of Financial Service Professionals (FSP) Arizona Institute. As I was preparing for the event, I remembered that FSP played a large part in one of the largest sales during my retail career. After receiving a large lump sum of money that increased ...
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The 10-year Treasury has jumped nearly 75bps since Donald Trumps election. If you talk with some economists, theyll say the rate increase will continue; others predict a softening of rates back to the average over the past three years. The Fed has indicated they would like to see rates above 3 percent by 2019. In reality, we simply do not know where rates are goingshort term or long term. So, what should you do with your clients in an uncertain rate environment? I suggest you take advantage of this uncertainty and talk to your clients about how to properly mitigate interest rate risksnow and in the future. As rates were falling In the first half ...
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