During the last few weeks we have worked on dozens of life, long term care, disability and annuity cases working alongside our Advisors.
If you are not discussing these issues with your clients then who will?
Life can change unexpectedly
If you read my last post and said a prayer, Thank You. Larry is doing fine. The tumor was outside the brain membrane and they really do think they got it handled. Larry can’t drive for 3 months so the move to Chicago will just have to wait. He works for a large firm and he is on paid medical leave – He says he will just have a nice long vacation / recovery period and the team he works with will cover for him.
Case 1
I work closely with a financial planning team that collects a fixed fee from their clients rather than a percentage of AUM. I believe this model could be superior in many aspects if you are true to the belief of trying to avoid conflicts of interest and always doing the right thing in the best interest of your clients. If you are interested in the Trusted Advisor concept, I’ll be happy to share my thoughts.
This client, a female age 70 has a nice nest egg of qualified and NQ funds and a small retirement and social security. However she was short of her income needs by about $35,000 annually and would have to draw from her portfolio. The planner on the team created her retirement income plan showing a net worth at age 100 of about $350,000 (all the normal assumptions used for average growth after fees and inflation of 3%, etc.). However, she had no long term care protection and when he factored in a lump sum allocated to this protection through the AssecCare III option, her plan failed. How often would it be in this industry that that would be the end of the case for the IMO/Planner and Client. Not with Westland… We understood that income plan was a priority and so we had to dig further. I almost agreed, but then asked a few questions to better understand the portfolio and assumptions used. In short, I took his plan and assumptions and created a new one showing him how an immediate annuity in the mix would help take almost all the stress away from the portfolio distribution requirements and allowed her remaining assets to grow. The result was that she would now project to have a net worth of over $1,500,000 at age 100 and could afford to consider LTC protection.
The financial Planner, Estate Planner and Money Manager on the team agreed and we are making this happen. Under a traditional AUM model, there would be a little more hesitancy with some planners to make this recommendation, since we were using a $500,000 portion of her NQ assets for the SPIA. Of course this would normally amount to a good chunk of the Planners ongoing income under a fee for AUM model, but have no effect on the fixed fee model. I would love to introduce you to a couple of planners using this fee model with great success – call or E-mail me. Tim Morton (800)238-8144 x127 timm@westlandinc.com
Case 2 – Annuity Income
Client is age 65 with $350,000 and wanting this portion of his money out of the market – No risk! However he needed about $1,000 per month of income from these funds, plus growth to supplement his retirement income needs. We proposed that he take $36,000 and keep this in cash and draw from it for the next 3 years. The other $314,000 could be placed in the Core 7 Indexed Annuity with an increasing payout beginning in year 4. The guaranteed payout would be about $18,000 in year 4 and likely to be $20,000 plus. With increasing income each year in the future when the index is positive. We were able to achieve what this client needed with nearly no worries about his retirement income needs for the rest of his life. Click on this link for the illustration sample – Core Income 7, 65 year old $314,000 Rising Option