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How You Can Find More Clients with Pension Risk Transfer

Posted By Michael J. McGlothlin, CLU,ChFC,CFP,LUTCF, Thursday, April 12, 2018
Updated: Thursday, April 12, 2018
Our sales team talks with a lot of advisors over the course of our travels. Most conversations center around the need to grow the advisor’s business. As I’ve discussed before, part of The Go-Giver philosophy is the Law of Compensation: Your income is determined by how many people you serve and how well you serve them. Deploying this law through pension risk transfer sales can help you drive your firm’s revenue and increase the number of people you serve. Pension risk transfers will be a significant market over the next decade. For advisors, it’s a great way to meet new prospective clients through a business contact. It opens the door to a group of employees with the approval of the employee’s human resource department or company’s leadership. What a great introduction to new people! Companies of all sizes have pension liabilities that are at risk of hurting the enterprise. Pension plans carry longevity risk for the plan sponsors, interest rate risk for the pension fund managers and investment committee, and cost increases that concern C-suite leaders. When working on pension risk transfers, you can reduce or eliminate several problems for the employer: Reduce a liability that shows up on the balance sheet (if not fully funded) Avoid the increasing cost of administering the pension plan in the future Shift the risk of employees living longer than funds can support payments Eliminate the risk of interest rate fluctuations and equity market volatility There are several reasons that an employer would want a retirement income specialist in their office to talk with their employees about options on pension risk transfer decisions: Lump-sum distributions to employees can reduce the funding gap in many plans Employees are not well versed in their frozen pension plan and will benefit from expert guidance Employees might have better options with individual rollovers of pension assets to better fit their personal and family wealth transfer goals Individual IRAs typically have more options for beneficiary designations (Check out our white paper on the advantages of beneficiary designations in IRAs versus qualified plans) Pension risk transfers create a win-win-win scenario for the advisor, the employer and the employees. The employees gain the advantage of talking to a retirement expert on-site, which is viewed as an added benefit at no cost to the employer. The employer gains the ability to transfer their risk to an insurance carrier, and eliminate or reduce the risks to their balance sheet and cost structure of maintaining a pension plan. The advisor wins by helping more people and serving them better, which is the basis of the Law of Compensation. Winning Strategy Help more people and help them with their most complex problem – retirement. You can do both by working in the pension risk transfer market.

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