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This issue of Income Planning is sponsored by:
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Feature:
Some people say that client education is the cornerstone of income planning.
See what NU Senior Editor Jim Connolly found out about this
in our Feature story.
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Editorial comment: Keep filtering those “look here, not there” messages
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Letter: Monte Carlo modeling
has skeptics, too, says Yanikoski
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Factor family dynamics into
insurance recommendations, writes Jim McNamara
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Handing over the family
business
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Tax changes would give LTC
insurance buyers more flexibility, for income too
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Thomas sees 3 supports for
retirement
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Battle for retirement funds
taking shape: FRC study
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Regulators talk about annuity suitability rules
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Bryan Kettel covers the basics
of pre-retirement planning for small business owners
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Did you know?
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Take our new Income Planners Poll
(below)
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See
results from a recent newsletter poll (at right)
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write to the editor.
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Results
Of last Month's Income Planning Poll
Our question was
:
Predict the frequency with which income planners will use Monte Carlo analyses
in their work with clients in the next 12 months:
Our readers said:
Note 1:
These results reflect the views of readers who elected to respond to our poll
question. It is not a scientific survey.
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Take our new Income Planning poll:
When should the financial advisor begin educating the client about retirement
income planning?
Take the survey
To share your views, click
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editor
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Income planning education never ends…but when does it begin?
By Jim Connolly
Education really never ends, but at least for income planning a pertinent
question advisors are asking is, when does it begin?
When the question was posed to financial planners by Income Planning, there was
an overwhelming and diverse response. The planners spoke not only of when the
education should begin and when it should begin in earnest, but also of how it
should be taught, how actively financial advisors should pursue it, and how to
incorporate the education as well as the financial planning component of income
planning. ‘Start early!’ was the refrain, over and over again.
[ To comment on this topic, just click
write to the editor.]
“I’d suggest that income planning start at about age 5,,” says Norman M. Boone,
a certified financial planner with Boone Financial Advisors, Inc., San
Francisco.
“Seriously. That's when the kids start to get allowances and their training for
how to make it last until the next paycheck (allowance).” Starting income
planning education 5 years before retirement “is way too late for...
click here for entire article
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Keep filtering those “look here, not there” messages
“Don’t look at that, look at this.”
That is a common redirect, when change is in the air. The change proponents
keep trying to get you to listen to their view, their position. Right now, this
seems to be going on in the retirement income arena. So many proposals for
retirement-related reforms are floating around right now that income planners
are knee-deep in positions, as it were. What is a planner to do? Two articles
in this month’s issue illustrate how the “look here, not there” message is
playing out. In Jim Connolly’s article on annuity suitability, Utah regulator
Tomasz Serbinowski is cited as urging insurance regulators to focus on sale of
big bonus/long surrender charge annuities to seniors—rather than on what to do
about the...
--Linda Koco, Managing Editor, Products and Managing Editor, e-Publications
National Underwriter Life & Health
click here for entire article
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Monte Carlo modeling has skeptics too
Charles Yanikoski writes: I was a little surprised to see such
unanimous support for Monte Carlo modeling in the May 2005 issue of Income
Planning. As president of a software company that develops both Monte
Carlo and non-Monte Carlo income planning models, I talk with a lot of people
in the field, and I find a great deal of skepticism and discomfort concerning
Monte Carlo modeling. The main objections seem to be (in roughly the order that
I hear them): 1) The method is not understood, and therefore the results are
not persuasive to a lot of people (both planners and their clients). 2) The
results that come out of the analysis are not what they...
Charles S. Yanikoski is president of
Still River Retirement Planning Software, Inc., Harvard, Mass. His e-mail
address is
csy@StillRiverRetire.com.
click here for entire article
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Factor family dynamics into insurance recommendations
By Jim McNamara
What’s a mother (or father) to do?
Their youngest son has worked alongside them in the family business through
high school and college. Their other children took different career paths. The
parents want to give less time to the business. The son wants to take on more
responsibility. So, should mom and dad transition the management and retain
ownership, possibly for income purposes? If they transfer ownership as well,
should it be as a gift or should the son buy the business? These are the issues
that need to be addressed (with appropriate sensitivity to family dynamics)
before recommendations are offered. Consider this...
Jim McNamara, CLU, ChFC, REBC,
LUTCF, is advanced markets specialist, advanced markets, at Mutual of Omaha,
Omaha, Neb. You can e-mail him at
jim.mcnamara@mutualofomaha.com
.
click here for entire article
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Handing over the family business
By Warren S. Hersch
 Running a company is hard enough for
most small business owners. Still more challenging for many is parting with the
firm—especially when kids are involved.
The hurdles lie not only in the
financial aspects of designing and implementing a succession plan. For
parent-owners, more fundamental issues can be excruciatingly difficult to face:
when to loosen control; how to divide business assets among competing siblings
of unequal talent; whether to gift all or part of the business; and how best to
fulfill kids’ desires while providing for their own retirement security.
“The ultimate question to ask the
client is, ‘What, in a perfect world, do you want to see happen to...
click here for entire article
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Advertisementt
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Tax changes would give LTC insurance buyers more flexibility
By Arthur D. Postal
Washington - Tax law changes that would provide incentives for long term care
insurance offered in combination with other insurance products and benefits are
being developed for consideration by House Ways and Means Committee staffers...
One proposal now being
drafted will suggest changes in tax laws needed to allow an LTC contract to be
combined with other insurance contracts to provide cash value to the consumer
in the event LTC coverage is not needed, an American Council of Life
Insurers staff official confirmed.
The proposal, which many in the
industry are hoping will soon be submitted to Rep. Bill Thomas, R-Calif.,
chairman of Ways and Means, also would outline changes in tax laws that would
facilitate transfer of funds, without paying taxes, between LTC contracts and
such other industry products as.....
click here for entire article
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Thomas sees 3 supports for retirement
By Matt Brady
NU Online News Service, June 7, 2005 - Lawmakers seeking to reform the Social
Security system must also look to the other means people use to fund their
retirement, the House Ways and Means Committee chairman says. Speaking at a
breakfast today sponsored by the U.S. Chamber of Commerce, Rep. Bill Thomas,
R-Calif., used the metaphor of a 3-legged stool in referring to the retirement
tools of Social Security, pensions and private savings. Thomas argued all 3
must be considered when crafting retirement security policy.The chairman
compared the notion of considering each area separately to giving each leg of a
stool to a different...
click here for entire article
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Battle for retirement funds taking shape: FRC
NU Online News Service, May 24, 2005
- The top priority of nearly every large financial services firm today is to
develop a practical strategy for selling retirement income products and
services, a new study concludes. The study by Financial Research Corporation,
Boston, found 88% of responding financial firms consider developing or
enhancing retirement income products and services to be “very important” or “of
vital importance” to their firm’s strategic planning over the next 1 to 3
years....FRC found 55% of respondents indicated a variety of organizational
units were engaged in developing the retirement market. It found the firms by
and large are building a...
click here for entire article
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Regulators talk about annuity suitability rules
By Jim Connolly
Boston -- NU Online News Service, June 10, 2005 - Some regulators are asking
whether they should be talking about minimum annuity nonforfeiture interest
rates at a time when some older consumers are buying contracts with 25%
surrender charges. During a discussion here of the Annuity Nonforfeiture model
regulation at the summer meeting of the National Association of Insurance
Commissioners, Utah regulator Tomasz Serbinowski said regulators should be
looking at the sale of annuities with an initial 20% bonus and a 25% surrender
charge rather than at the minimum nonforfeiture rate. “I don’t believe
consumers are really served by...
click here for entire article
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The basics of pre-retirement planning for small business
owners
By
Bryan Kettel
There comes a time when an owner of a small business must ask two crucial
questions: (1) How can I maximize the value of my business when I retire? And,
(2) will the value of my business be adequate to fund my retirement years?
Business owners who fail to ask these questions until later in life may find
themselves in shallow financial waters. But those who plan their exit
strategies early working with an experienced financial advisors hould be well
positioned to transfer their businesses to new owners. When working with small
business owners, the financial planner should focus first on family or personal
goals. This means gaining an understanding of...
Bryan Kettel, CFP, CLU, ChFC, LUTCF, is principal of Strategic Planning
Partners, LLC, an affiliate of Prudential Financial, Newark, N.J. He may be
reached at
bryan.kettel@prudential.com.
click here for entire article
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Did you know?
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Based on government data, the first baby boomers will reach age 60 on January
1, 2006, and by 2020 all 77 million will be over age 55.
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Americans already have $18 trillion invested in mutual funds, stock and bonds,
and deposit accounts, an estimated $2 trillion of which will change from
accumulation to retirement income over the next 10 years.
Source: Financial Research Corporation,
a Boston unit of the Bisys Group Inc., New York.
click here for entire article.
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