Income, Longevity & Client Behavior

Income Planning Resolutions

Three ways to help your clients in the New Year

by Tim Seifert

Tim Seifert is vice president and head of Annuity Sales for Lincoln Financial Distributors. In this role, Tim is focused on fostering consultative partnerships between wholesalers and advisors as they work with clients to solidify their financial futures and build portfolios based on their specific needs. For resources and more information, please visit

Resolutions are made (and often broken) each January. However, the start of a New Year is an ideal time for financial reflection. Clients should take stock of where they stand financially, determine where they want to be, and set the goals needed to get them there. A study conducted by Lincoln Financial Group1 in 2017 shows that 34% of Americans entered the New Year with a specific financial goal in mind. At year-end, 45% had reached or exceeded their goal. And while 26% did not reach their goal, they came very close.

What’s also interesting about this study is that those who set a specific goal for themselves that year, whether they had reached that goal or not, were more likely to feel that their finances had improved over the course of the year compared with those who had no goal at all.

As your clients come out of a year filled with market highs and lows, tax/regulatory uncertainty, and high interest rates, the start of the year presents an ideal time to discuss income planning and ways they can protect their assets in the New Year. Here are three ways to have better and more productive conversations with clients this year as you help them find income in their retirement.

1. Conduct an Annual Plan Review

While a plan review is not always top of mind, it doesn’t need to be a daunting task. Rather, a review can serve as an opportunity to identify possible idle assets or places where extra funds can be optimized to help clients feel better prepared for income in retirement.

Help your clients talk through and identify their retirement time horizon and the income sources they’ll expect to receive in retirement. Are they hoping to maximize growth or is protection from market losses more important? Let them set the agenda. This conversation will get the juices flowing and bring their concerns to the surface. As clients consider how to replace their paycheck in retirement, they’ll look to you for help managing uncertainty and making a plan to live comfortably. Uncover what is keeping your client up at night, and address those concerns head-on.

2. Address the Elephant(s) in the Room

Market volatility
For clients who will rely on their investments for a portion of their income, a market decline could put significant strain on their portfolio. Market volatility is one of the top concerns savers have as they think about retirement. A study conducted by Lincoln shows that 82% of pre-retirees are concerned about what will happen to their investments if the market drops.2 Discuss options they have for protection. Indexed or fixed annuities can help provide growth while offering a level of protection that will help guard against market losses.

Research shows that clients value advisors who help them prepare for taxes in retirement. In fact, more than half of Baby Boomers with $1M+ would pay more for an advisor who employees tax-saving strategies.3 April is not far off. While a client’s taxes in retirement may be uncertain, take time to discuss tax-deferred growth and tax-efficient income.

A 65-year old married couple has a 47% chance that one spouse will live to age 95.4 That’s a big number. And while our vastly improved life expectancy is an amazing opportunity for retirement, it also means clients will need to save enough money and ensure they’ll have an income stream to last 30+ years. Helping clients formulate a plan that will include protection and opportunities for growth can help them feel more confident about income during their golden years.

3. Keep the conversation going year-round with new strategies

Dollar cost averaging is a simple, disciplined and proven strategy where investors follow a regular investment schedule over time, regardless of market conditions...

Events throughout the year may throw a clients’ trajectory off its course. Dips in the market, a change in the rate environment, or even a death in the family can present an opportunity to revisit a plan or reassess income strategies, legacy planning, or investments. Take advantage of opportunities to re-connect with clients year-round, especially at times when new strategies may be beneficial to their outcome. Multiple strategies can be used in various situations, and knowing what lever to pull when can help your clients weather some of the uncertainty they may face.

For example, one way to help clients see the upside of market movement during the course of the year is to explain the value of dollar cost averaging (DCA). Dollar cost averaging is a simple, disciplined and proven strategy where investors follow a regular investment schedule over time, regardless of market conditions. Clients will buy more assets when the market is low and prices decline, and buy fewer assets when the market is yielding higher prices — generally resulting in a lower average cost per share. This steady investment pace requires discipline by clients during periods of market volatility, which may require your guidance to lead them through it.

DCA can also be an effective tool for clients with variable universal life insurance policies, particularly in large, single premium scenarios. As clients transfer funds from fixed or money market accounts into variable investment options, DCA can help minimize market volatility by allocating premiums over time. Often, carriers will also offer special DCA programs with fixed account enhanced interest rates to help with short-term returns while the client transfers funds. Similar to other financial products that may use DCA, using dollar cost averaging for life insurance is best suited for those clients focused on longer-term growth potential instead of timing the market.

Dollar cost averaging (DCA) does not assure a profit or protect against loss in declining markets. Because dollar cost averaging involves continuous investment regardless of changing price levels, clients should consider their ability to continue purchasing through periods of all price levels.

Income as the New Outcome

Providing information about annuities and income planning can help clients identify ways to help protect their income in retirement. By diversifying income strategies to include an annuity with optional benefits (for an additional cost), you can provide clients with a source of income that’s protected from market losses alongside opportunities for growth to help them keep up with a long retirement. This balance can help them feel more confident about facing some of the income challenges that may come their way in 2019 and beyond. ◊



Lincoln Financial Group® affiliates, their distributors, and their respective employees, representatives and/or insurance agents do not provide tax, accounting or legal advice. Please consult an independent advisor as to any tax, accounting or legal statements made herein.
1. Source: Lincoln Financial Focus: Goals and Reflections of Today’s Customer, Year-End 2017 study
2. Lincoln Financial Group, “Market Volatility & Retirement Income Study,” 2018
3. 4 Fidelity Investments, “The Tipping Point: Will the Coming Wave of Wealth Value Advice?” 2017
4. American Academy of Actuaries and Society of Actuaries, “Actuaries Longevity Illustrator” 2017