In Profile

A Conversation With Jim Poolman

Getting In The Game

by P.E. Kelley

Mr. Kelley is managing editor of this magazine. Connect with him by e-mail: [email protected]

The longevity-risk may be a familiar concept to most of us in the industry, but for many pre-retirees and, sadly, new retirees, its stark reality is suddenly becoming crystal clear. There may be a high probability of ‘running out of money before you run out of breath.’ As employment and accumulation trends shift, and the financial safety nets of our parents day fall away, the challenge for advisors is to bring better solutions to the difficult job of generating adequate retirement income.

Jim Poolman is the executive director of the Indexed Annuity Leadership Council (IALC), a coalition of life insurance companies ‘dedicated to helping Americans plan for retirement and increase the dialogue surrounding fixed indexed annuities.’ He spoke with Advisor Magazine about how today’s clients perceive retirement, about the wealth of products coming out of the annuity markets and the recently legislated SECURE Act and about ‘Game Ready, a video series developed by IALC that ‘encourages Americans to treat their financial health just like their physical health’… in other words, to prepare for whatever retirement may bring to you.

PEK: What is the IALC doing to educate people about annuities and help them plan for retirement? Are there any specific IALC resources you recommend?
JP: The Indexed Annuities Leadership Council (IALC) is a consortium of life insurance companies that is committed to educating consumers by providing factual information about the use of fixed indexed annuities, or FIAs, to help people prepare for retirement.

Most recently, we launched a video series, titled “Game Ready,” that encourages Americans to treat their financial health just like their physical health, as well as think about how they can prepare for wherever retirement takes them. Additionally, our website, www.fiainsights.org, contains several tools designed to help set goals and create a path to get there, including retirement calculators, fact sheets, questions to ask your financial professional and other educational videos.

PEK: What do you think are the biggest changes people have had to deal with now when planning for retirement compared to decades ago?
JP: In recent years, the retirement planning landscape has undergone sizable change, as full-time employment has been replaced by part-time, temp or “gig” work—the kind of jobs that typically don’t offer retirement options, like a 401(k), but can be appealing for workers craving flexibility. But for people who do receive substantial support from their employer, many feel it won’t be enough: More than 50% of America’s workforce reports their access to retirement plans and products has flatlined or decreased in the last decade.

This do-it-yourself retirement can cause stress for many employees. Yet, while it can be easy to fall prey to the anxiety that accompanies thinking about the future, preparation doesn’t have to be scary or overwhelming. In fact, everyone has the tools they need to move in the direction of their ideal financial outcome.

PEK: Do you have any time-tested retirement planning strategies that can benefit all generations of savers?
JP: While each person’s path to retirement is unique, there are several best practices that can be put in place as a guide. First, it’s important to set goals and schedule annual check-ups to ensure you are on track to meeting them. Whether you want to travel the world, move to a warmer climate, or stay put and have a financial cushion to account for things like unexpected health care expenses, deciding the direction of your future is a crucial first step.

Second, no retirement product is risk-free, and except in cases of rare luck, no retirement plan can be maximized with just a single strategy. Products like FIAs, when accompanied by other options such as pensions and Social Security, provide healthy diversity to your portfolio, helping reduce risk and boost security.

Finally, it’s a good idea to talk with family, neighbors and friends about which financial professional they trust. We could all use a little expert help from time to time, and in-person referrals are one of the best ways to finding most qualified person for the job.

The Game Ready series helps remind pre-retirees that by planning for their retirement now with the right financial products, the better prepared they’ll be for a more financially secure future. Whether that includes giving their retirement plan a check-up, preparing for a retirement that’ll be built for adventure, or spending more time with loved ones...

PEK: What resources does the IALC recommend to help agents and financial professionals show their clients if fixed indexed annuities are a good fit for their retirement portfolios?
JP: The IALC understands that while everyone’s idea of retirement may differ, we all want to spend more time with the people we love. That also includes pursuing activities we love, and may include creating a retirement plan that is built for adventure or spending more time with family and friends. The IALC has created a series of videos, titled, Game Ready, that any financial professional is welcome to use. Game Ready can help clients in a number of ways. It is a reminder that every pre-retiree should get a financial check-up on their road to retirement. The videos can also help your clients visualize and explore ways they can spend their retirement and how the benefits of an FIA can provide them with peace of mind, a stable income that will last throughout their lifetime, and protection against the ups and downs of the market. IALC research has shown that outliving your savings is a top fear among pre-retirees.

The Game Ready series helps remind pre-retirees that by planning for their retirement now with the right financial products, the better prepared they’ll be for a more financially secure future. Whether that includes giving their retirement plan a check-up, preparing for a retirement that’ll be built for adventure, or spending more time with loved ones. The Game Ready series is here to show that by planning now, pre-retirees can be ready for those good times ahead.

PEK: What economic indicators and risks should people keep an eye on when it comes time to update or re-evaluate their retirement plans?
JP: There are two ways to look at this. First, changes to the market—which include economic indicators such as changing interest rates, stock market volatility, economic news and talk about impending changes to the economy—can all have an impact on a person’s retirement portfolio. Working with a qualified financial professional can help you keep track of these changes and adjust your plan accordingly.

The second thing to keep in mind are changes that result from aging into a new period in our lives. As we get older, the ability to take on risky investments is lower because we have less time to make up for economic swings. Thus, many people manage their retirement plan differently at 30 than they do at 55. For those looking to lower their risk, products like FIAs can be a good solution because they are protected from market volatility.

PEK: What are the biggest mistakes people often make when creating a retirement strategy? What tips do you recommend for helping give people a boost in their retirement planning who may feel discouraged or don’t know where to start?
JP: The most common mistakes people make when planning for retirement include starting too late (or never starting at all) and putting too much attention into a single asset or product. Ideally, retirement plans are put into place early in a person’s life to take advantage of time. That said, it’s never too late. Whether you’re 21 or 61, having a plan in place is always better than having no plan at all. Additionally, the best plans and portfolios are the most diversified, which helps lower risk.

PEK: One of this year’s bipartisan success stories in Congress was passage of the SECURE Act in the House. It’s anticipated to pass in the Senate this year. What impact do you think this legislation will have for retirement planning experts and future retirees?
JP: When you study the details, it’s little wonder the SECURE Act received support from both parties in Congress, as well as the retirement product industry. Contained within are sweeping changes designed to encourage Americans to save for retirement by improving access to more types of financial products.

For example, the bill would allow employers to offer annuities, including FIAs, paving the way for greater access to lifetime income. The bill would also create incentives for employers to expand access to 401(k) plans, particularly to employees of small businesses and part-time employees—two groups traditionally left out of the employer-sponsored retirement planning landscape.

Finally, the SECURE Act would allow pre-retirees to receive an annual statement that breaks down their current balance into monthly paychecks. Combined with improved access to annuities, this change could help clients understand their savings in terms of lifetime income instead of a single lump sum.