You’ve helped families save and accumulate throughout their lives. You understand bucket strategies. Now you’re ready to put together your first retirement income proposal and meet with your clients, but what will it be like?
We sat down with an advisor who recently adopted IncomeConductor into their practice to talk about their first case experience. Randy Grose of Sheridan Road Advisors, LLC, a registered investment advisor based in Colorado explains what drew him to IncomeConductor, the process of analyzing and creating his first proposal with case assistance from our co-founder Phil Lubinski, and the work with a couple seeking his guidance as they prepare for retirement.
How did you hear about IncomeConductor and what interested you about it?
Randy: At Sheridan, we have periodic conference calls as well as mid-year retreats where we get together to discuss our practices and share new ideas, products or tools that we’ve been considering. We held one of these retreats at the University of Chicago back in January of this year where I listened to Sheryl O’Connor speak about IncomeConductor.
I manage about 30 retirement plans here in Denver and one of the things that I’ve found is that we do a good job with accumulation but a poor job with distribution, so I’ve always wanted some kind of a tool to help with that distribution problem.
My passion is trying to help people retire. I have many plan participants that I’ve gotten to know and helped them save, and now I’ve got quite a few lined up who are thinking about retirement. I need to help them distribute their money over the rest of their lifetime, and this is where IncomeConductor becomes very beneficial to have. According to Cerulli Associates, a large retirement plan consulting firm, there are more assets leaving qualified plans than contributions coming in, and that delta is going to increase as time goes on, so I need a strategy to serve those folks rolling out.
In your first case, what were you client’s initial concerns about retiring?
Randy: The husband and his wife had done very well for themselves in their careers, so the husband was already retired and wanted to set up a plan for their income when his wife was ready to retire. However, the wife was hesitant and wanted to keep working for three more years.
The wife has an executive director role at her firm, and works very hard. Her position was very demanding, and between the stress of the job and other health concerns she had, I really wanted to help her become comfortable with retiring. It was important to me to make sure that they both agreed upon a plan that brought them income, as well as peace together at home.
How did you address the client’s concerns and planning challenges of their case?
Randy: Because the wife was so hesitant to retire, I started by making some pretty conservative assumptions in the plan involving the segments’ targeted rates of return. I was able to show in the illustration probabilities of not only her husband’s retirement plans, but for her retirement goals as well. I think that even with conservative assumptions, she had options to consider.
The proposal that I put together was very simple for them to understand. I’ve done lots of financial plans over the years and usually you’re going through 32 pages with the client, but the IncomeConductor report is very concise. It’s only about ten pages, it has a ledger that shows their potential future income, and makes it clear that they have options.
Because their money is compartmentalized, they know where their income is planned to be coming from in 15 or 20 years, unlike with systematic withdrawal. If the market drops, they can be less concerned about that later aggressive bucket losing value in the short term. You and I both have seen a lot of folks after 2008 and 2009 that had to continue working, or go back to work because they didn’t have a plan that attempts to preserve in the form of segments. They didn’t have any money set aside more conservatively, and their whole ship went down rather than just part of it.
Did you find the case design help offered by IncomeConductor beneficial?
Randy: It was extremely beneficial. To have someone on the line to help who has not only years of experience working with clients, but lots of experience with IncomeConductor was very beneficial. I’ve never used another tool or program that offered that kind of personal service. I really appreciate that I can schedule a time to talk and review the output before I present.
What are your plans on marketing IncomeConductor as a solution going forward?
Randy: I do both institutional and retail business, and I plan on trying to incorporate this more into my institutional plans. From a marketing standpoint, we really already have a target market figured out with the plans we have here in Denver. My team is hoping to have an information exchange with the plan recordkeepers to be able to identify all the participants in our plans that we work with who are near retirement and could benefit from a strategy like this.
I’ve been working with retirement plans since 1995 and distribution planning is not done very well. I don’t see a lot of people rolling out of plans and actually feeling comfortable with what they’re doing. We’re kind of innovative in nature and don’t want to participate in the “race to zero ” in the institutional consulting business. We’d rather offer great value that clients are willing to pay for.
I’m also planning on presenting this strategy to accountants and CPA’s in the area to form strategic alliance partnerships. When I speak to CPA’s about this, they are very interested in distribution planning and their client’s goals (or desires) for preserving their assets. I’ve also been teaching classes with other Sheridan Road advisors to bring educational content to retirees and pre-retirees seeking help. Bringing in existing clients to these classes can also help drive referrals as well.
Example is for illustrative purposes only. The client experiences described here may not be representative of any future experience of our clients, nor considered a recommendation of the advisor’s services or abilities or indicate a favorable client experience. Individual results will vary.
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