Finding Sales Growth in 2014
January 27, 2014 by Harry Stout
As we begin 2014, this is the last year for members of the Baby Boomer generation to turn age 50. Per a recent article in AARP Magazine, over two million Americans will retire during 2014. The aging population creates a huge opportunity for financial advice and purchase of suitable product solutions. The key question is how do you participate in this unprecedented opportunity? I have three words for what needs to be done – focus, focus, focus.
So as the year begins, let me share ideas on where you should focus your marketing and sales efforts during 2014:
Retirement Income Checkup
Most of your clients have an annual physical to monitor their health. As they reach age 50, they should have a retirement income checkup to see whether they have accumulated the correct amount and composition of assets to generate the income they will need in retirement. We read article after article in the media about families who think they can retire, only to find out when the time comes that they are woefully short of the income needed for retirement. Ask your clients and prospects about the last time they had a retirement income assessment and how you can help them perform this very important exercise.
Solutions available to assist your clients with generating sufficient retirement income include the full range of annuity products – declared rate, indexed, variable, immediate and deferred income products. The product quiver is full of arrows that can and will provide suitable solutions.
Life Insurance Checkup
Just as retirement income needs to be periodically monitored and assessed, life insurance coverage and related policies need to be reviewed in a similar manner. We in the industry know how life insurance can be a valuable asset in an individual’s financial plan. Many of our customers and prospects do not have this same knowledge. We also know that people have life insurance needs throughout their lives, ranging from the protection of family needs to tax advantaged accumulation to final expense coverage. A great door-opener for this conversation is to ask clients and prospects if they have the old type of life insurance or the new type.
The new type is the innovative coverage that has been introduced in the last few years such as indexed life insurance, single premium whole life and fixed rate offerings with new optional hybrid benefits such as chronic care, long-term care and longevity benefits. Life insurance is a financial foundation product that fits many customers’ needs. Individuals need to keep the coverage they have up-to-date to provide the protections they have selected to meet their individual situations.
Impact on Retirement of the Affordable Care Act
The Affordable Care Act (ACA) is having a significant impact on retirement planning. These impacts are being created by the new taxes being levied to fund ACA and the coverage impacts ACA makes available. Prior to the ACA, many people postponed the start of retirement because of the cost and availability of health insurance coverage for individuals 50 and older, particularly those with health problems. With ACA pre-existing conditions no longer mattering and the maximum premiums that can be charged for older versus younger consumers are substantially reduced, The taxes and coverage changes are impacting when and how Americans retire. Providing advice to clients on these impacts is an opportunity that should be pursued.
Catastrophic Health Risk Assessment
As the boomers age, many are dealing with the care of aging parents. They are beginning to understand that Medicare does not provide total coverage of their health and long-term care needs. Providing advice on Medicare, Medicare Supplement Coverage and long-term care needs is a key service distributors should consider adding to their practices.
Having a session with your clients about how they have provided for the risks of health care financial needs in retirement and how they have protected themselves against the rising costs of long-term care is a conversation that needs to take place. Distributors have a growing list of excellent product solutions available to them to assist their clients, including everything from hybrid life and annuity product designs to fully underwritten long-term care insurance, which although having increased substantially in cost is still available for those who qualify.
On a bottom-line basis, having catastrophic health coverage is an essential element of managing financial risk in retirement that needs to be addressed and minimized.
Transition Planning
During our working lives many of us have transitioned from one job or area of specialty to another. We have learned that making these changes usually takes time, money and emotional investment. This can also be said of the transition from active working years to retirement, particularly for small-business people. An area of growing importance is to provide financial advice and counsel to individuals going through or planning transitions. Adding transition planning to the services offered by your business should be investigated.
End-of-Life Planning
An area that came to my attention this past year is the need to look at end-of-life planning. Like many others my age, I have an elderly parent in the final stages of illness and life itself. One part of this planning process was to get her financial affairs in order by making sure her will, insurance policies and other financial assets were identified, inventoried and properly valued. But just as important, we needed to discuss with her and know what she wanted done with her most important sentimental possessions. Luckily, her clarity of mind made this entire process uneventful. But what if she was unable to tell us her wishes? What if she didn’t know what her financial assets were or where they were located?
A number of organizations have developed tools to document these decisions and to inventory all these financial and nonfinancial items to assist in addressing the most important matters. This essential process benefits from the involvement and expertise of financial professionals. If you have not looked at adding this service to your practice, you should consider exploring it.
Conclusions
As the New Year begins, the industry has many areas of opportunity to build its business, increase profitable sales and help the customers it serves in 2014. The basic fundamentals of what the industry offers – a history of financial strength, strong guarantees, tax-free life insurance proceeds, deferred taxation of interest earned during accumulation and the provision of guaranteed lifetime income are more needed today than ever. The industry has produced a number of innovative products in the past decade. Focusing with our clients and prospects to use these products can make a difference in the financial lives of Americans in or approaching retirement. Best of luck in 2014 – stay focused.
