Tuesday, April 14, 2015

How does the Rule of 100 effect your clients?

The article, “Rethinking the Shift-to-Bonds Strategy” from Bloomberg Business points out that “Low Rates and Longevity alter rules for retirement”. If you have relied on using the Rule of 100, the rule that take the clients age and uses it to determine the amount that should be in Bonds or fixed income assets, then based on the current low interest rate environment you may need to reconsider the amount of income you may have in retirement or you may need to reduce your bond or fixed income allocation percentage.

The article illustrate a New Jersey couple, ages 51 and 53 looking for $80,000 of income from their $1,000,000 nest egg. If I illustrate the SecureLiving Growth+ with Income Choice rider, using only $250,000 of premium, you can create $21,938 of income based on the past performance of the S & P 500, when starting income in year 13. This income is a joint payout that will be paid as long as either the husband or wife are still alive. This represents a 6.59% payout on a 64 year old male and a 66 year old female.

The article points out that each client’s situation can be unique, however we know that many clients may prefer to have the benefits that Fixed Indexed Annuities(FIA) offer, including:
1) protection from market declines and interest rate spikes for 100% of money allocated to the FIA
2) potential to create more income (on a guaranteed basis) than a do it yourself strategy, and
3) a personal pension plan where you don't have to stay up at night wondering where the income will come from once you retire.

Tuesday, April 7, 2015

Why Cold Marketing Doesn’t Make Sense

Attracting the wrong kind of client is like dumping trash into your sales pipeline. So why do so many advisors think that getting a huge list of cold leads rather than looking in their own backyard is the right move? If you cram tons of cold leads into your pipeline, soon it gets so clogged that you don’t have any room for the right clients.

The traditional sales pipeline has
schooled many of us to think that we
should throw as many leads as possible
into our pipeline, including so-called leads
from mailers and advertising sent to the
masses. The problem is the advisor’s
message isn’t reaching targeted groups
of prospects - the message is broadcast
to ice cold leads. If that’s your strategy,
you may as well save a few bucks and
open your local phone book and start
mailing. While you may get a few sales
after spending thousands of dollars
sending thousands of postcards out
based on a list you got out of the White
Pages or a list you bought from the
same company everyone else uses,
cold marketing strategies are highly
inefficient and never pan out the way
that you hope.

All cold leads really do is create a ton of
busy work and waste your valuable time.
To successfully market to a targeted
group of qualified people, you only
need to work smarter, not harder. The
trick is knowing how to generate more customers who are ready to buy with heartier leads. Getting the right people into your sales pipeline is what drives sales, not increasing the number of wrong people.

Your “ideal” clients will not only understand the need for your services but they naturally pass on the information to people they know. Never underestimate word of mouth and the power a client has to bring others just like them to your door. After all, people tend to associate with others who possess similar qualities, have similar financial
situations, have similar concerns and have similar planning issues. The more you associate with your “ideal” clients, the better the chance you have at converting their similarly situated friends, relatives or acquaintances into your new clients.

Advisors need to create an inbound marketing approach to building their practice. It takes some skill and specialized planning, but it’s much more sustainable and you will yield better results. By focusing on marketing channels that work, you can systemize your marketing process, increase the number of prospects you touch and dramatically increase your selling appointments.

Thursday, April 2, 2015

Can you name one of the greatest tax breaks in the U.S. Tax Code?

Thanks to the salutary effects of tax-free growth, the miracle of compound interest and tax breaks aimed
at saving spendthrift Baby Boomers from themselves, many people are going to accumulate more money in IRAs, pensions, profit sharing plans, 401(k)s, and similar plans than ever before. Why?

Some retirees may be able to sustain their lifestyles, meet obligations and still leave some percentage of their IRAs to their heirs. These individuals may want to pass on the unused portion of an IRA to a spouse, children or even grandchildren. Creating a Multi-Generational (MGIRA) or “stretch” IRA can result in substantial distributions being made over the
life expectancies of the owner, the owner’s spouse and their children.

Consider, for example, a 72-year-old married man with three children
who has accumulated $2,550,000 for retirement. By making the most
of Multi-Generational IRA planning, total distributions from a $2.5 million
retirement nest egg could exceed $11 million!

Unfortunately, putting together a successful Multi-Generational IRA
takes careful planning, as there are plenty of potential traps and pitfalls.
As Forbes® Magazine explained, “The rules covering inherited IRAs are
the most complex that ordinary taxpayers ever encounter; even the IRS
hasn’t filled in all the gaps.”

The biggest obstacle to an IRA legacy strategy, believe it or not, is the Federal Government. Congress
created IRAs to encourage Americans to plan for their retirement. However, it never intended for them
to accumulate funds and defer taxes indefinitely. Unless an IRA owner takes specific steps to continue
to defer tax liability, the IRS stands to take 35 to 80% of those hard-earned IRA funds upon the death of

the owner.