do your clients know what their income will be in ... e-handout 5.17.17.pdf · clay gillespie, cfp,...
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© 2017 Million Dollar Round Table Million Dollar Round Table 325 West Touhy Ave. Park Ridge, IL 60068 USA
2017 MDRT Annual Meeting e-Handout Material Title: Do Your Clients Know What Their Income Will Be
in Retirement? They Should! Speaker: Clay Gillespie, CFP, CIM Presentation Date: Monday, June 5, 2017 Presentation Time: 2:00 - 3:00 p.m. Session Room: Hilton - Orange Ballroom DE The Million Dollar Round Table® (MDRT) does not guarantee the accuracy of tax and legal matters and is not liable for errors and omissions. You are urged to check with tax and legal professionals in your state, province or country. MDRT also suggests you consult local insurance and security regulations and your company’s compliance department pertaining to the use of any new sales materials with your clients. The information contained in this handout is unedited; errors, omissions and misspellings may exist. Content may be altered during the delivery of this presentation.
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Clay Gillespie, CFP, CIMDo Your Clients Know What Their Income Will
Be in Retirement? They Should!
Retirement is not about sitting on
the beach looking at sunsets.
That is called a vacation, not retirement.
“You retire once and I help people retire every
day, so I have seen the good and the bad, both
emotionally and financially about retirement.”
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Retirement?
Transition into retirement
What to do – golf?
The first 2 years
Emotional Risks
Loss of Identity
Boredom
No longer feeling of value
Grey Divorce
Retirement Planning Issues
Longevity Risks
Inflation Rate
Market Volatility
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Withdrawal Rate Risk
Risk of Loss of mental capacity
Health Risks
Retirement Planning Issues
Life Expectancy
Male age 65: 19 years – (age 84)
Female age 65: 22 years - (age 87)
Couple age 65: 26 years - (age 91)
Therefore, you should plan for
your clients to live beyond their life expectancy.
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Inflation Rate
“You will need to spend more
every year to maintain your standard of living.”
Example:
At a 4% inflation rate, you would
need $109,556 in 20 years to buy what you can purchase today
for $50,000.
Market Volatility
When you are working and accumulating
retirement savings, market volatility is dealt with by having a properly diversified portfolio.
Different in Retirement?
Investor Behavior
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Withdrawal Rate Risk
One of the greatest risks in retirement
income planning is having the stock market drop substantially just before, or just
after, you retire.
Accumulation Math
Accumulation Math
$100,000 investment after 10 years = $196,715
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Withdrawal Math
$100,000 investment – withdraw $7,000 / year
Withdrawal Math
$100,000 investment – withdraw $7,000 / year for 10 years
Withdrawal Math
$100,000 investment – withdraw $7,000 / year
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Withdrawal Math
$100,000 investment – withdraw $7,000 / year
Mental Capacity & Estate Planning Risks
Planning versus default (Government)
Family Meeting?
Health Care Risk (LTC?)
Client Management Strategy
First Meeting
Charge a fee?
• Give them a chance to say no
• Easier Implementation
• Differentiate
• Prequalify
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Over a typical 10 year period based on investment
returns - you’re going to love us twice, hate us twice, and be indifferent to us six times.
What this actually means is that over a 10 year period the market typically goes up dramatically twice (the years you love us), goes down dramatically twice (the years you hate us) and six of the 10 times you get an average return and that’s when you think we are doing an “ok” job.
Thus, you need to have a strategy to deal with
typically widely varying investment results”
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Client Management Strategy
IPS
Retirement Income Illustration
• Real Rate of Return, Life Expectancy, etc.
Financial Planning Issues (Wills, POAs, Debt, Insurance)
Income Strategy
Income Strategy
1. Invest one year’s income in a money market account
2. Invest one year’s income in a 1 year bond or GIC
3. Invest one year’s income in a 2 year bond or GIC
4. Investment the remainder in a diversified portfolio based on the IPS (a document that analyses risk tolerance and key investment objectives)
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Ongoing Monitoring
Benchmark against the assumptions made in the financial plan
Redo illustrations every two years
Annual Meetings
Quarterly Updates
Retirement Planning Issues
Initial withdrawal rate
Stages of retirement
Life annuities
Current strategies
Conclusion
Educate your clients on both the emotional and
financial aspects of retirement.
You need to start speaking the language of retirement
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Questions?