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Looks can be deceiving. Nowhere is that more true than in retirement planning. The client who drives a modest car, wears jeans and eats at Bob Evans ends up being the millionaire next door, while the flashy dresser with the fancy watch has a pile of debt and little to no nest egg to fall back on.     Looks can also be deceiving when it comes to investments. All too often, clients get caught up in seeking the highest rate of return they can find in an investment. Unfortunately, many don’t always walk away with the best net return because of what’s hidden underneath: taxes and fees.     Just like a fancy watch, those attractive, high interest rates ...
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I spend a lot of time on the road. Not just for my job, but also because my wife and I both have families who live within four hours driving distance of my house. Making sure everyone’s favorite Uncle Mike makes it to the latest family event requires some flexibility. On many of those long drives through Indiana, I have found the GPS route that delivers me to my destination changes from one day to the next. Because of traffic, weather or construction, I end up taking alternate routes on roads I’m not familiar with. But sometimes the alternate route is best.   Helping clients navigate the ever-changing retirement income market means you have to be innovative. ...
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When it comes to corporate decisions, tax considerations are always in play. Given the current and potential tax laws, now is a good time to talk to your corporate clients about taking their pension obligations off the table. Aside from the tax impact, there are several good reasons, to have the conversation with your clients.    Pension plans continue to lose their status in retirement planning for a lot of small to mid-size corporations. While defined benefit plans can make sense for a lot of single-employer plans, they largely are not helping recruit talent for many businesses in America. Small pension contribution s   don’t seem to entice younger ...
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One of the definitions for control is “to hold in check.”     Another is, “to exercise restraint or direction over.” I think both are applicable when it comes to the goals of many retirement investors. No one wants to completely avoid their obligation to support our shared services, i.e., pay their share of taxes. However, everyone I talk to wants to reduce their portion or make sure the tax is used appropriately.     Let me give you an example of control. As I drive to my in-laws with my wife, many times during the three-hour drive, our definition of comfortable is different. She tends to set the passenger side of the car much cooler than I like it. ...
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At the end of May, I read a   Wall Street Journal article * about how many quants run Wall Street now. The article focused on bonus payments and regulation around algorithmic-driven trading. However, it made me think of the impact of the transformations on Wall Street.    The impact of algorithmic-driven trading can be swift, steep and game-changing. As an advisor, you’ll need to adapt to the way Wall Street trades – even if you remain in the fixed, indexed and income annuity marketplace. Clients should have a balanced portfolio with guaranteed income, equities and bonds. But, equity trading is rapidly changing. With quants driving performance and trading, ...
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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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