Best Practices in Retirement Income Planning

Transcription

1 Best Practices in Retirement Income Planning Allen Knott-Vice President of Sales x3016

2 Best Practices in Retirement Income Planning Profile of Respondents Practice Management Provider Relationships Product Recommendations 2

3 Profile of Respondents Type of firm affiliation: Regional (8%) Other (5%) Years serving retirement plans: Insurance (8%) Independent Broker Dealer (32%) > 20 years (30%) < 6 years (19%) RIA (12%) 6-10 years (23%) Dually Registered (17%) National Wirehouse (18%) years (28%) 3

4 Profile of Respondents Total AUM: Number of retirement plan clients: > $1B (24%) < $25M (13%) > 75 clients (23%) < 10 clients (22%) $250M to $1B (23%) $25M to $99M (20%) $100M to $249M (20%) 41 to 75 clients (25%) 10 to 40 clients (30%) 4

5 Practice Management Providing income planning: No, and have no future plans (26%) No, but plan to in the future (14%) Yes, a member of my team (22%) Yes, I do (38%) 6 out of 10 provide retirement income planning services Do you or a member of your team currently provide retirement income planning to participants? 5

6 Practice Management Investing for growth: Better technology (21%) Other (4%) Hiring more people (12%) No additional investment planned (33%) Better planning tools (30%) What type of investments are you currently or planning to make in your practice as it relates to income planning? 6

7 Practice Management NOW: Time allocated to retirement income planning IN THE FUTURE: Forecasting time allocation More than 50% of time (13%) 78% Expect to spend more time (including their team) 25%-50% of time (24%) Less than 25% of time (63%) 21% Will spend the same amount of time How much of your time and resources (including your team) currently goes toward retirement income planning? 1% Expect to spend less time How do you see this changing in the next three years? 7

8 Practice Management Don t segment: Segment prospects by: Participant age, i.e. 50+ Highly compensated employees High balance participants 33% 57% 32% 23% How do you segment participants as prospects for income planning? 8

9 Practice Management Developing relationships through: 8% Other 29% 85% 74% Client/Provider Referral at Benefit Event 37% 37% Newsletters 74% 29% Group Seminars 85% 1:1 Counseling Which ways do you develop awareness and relationships with plan participants? 9

10 Provider Relationships Receiving notification at benefit event: Plan sponsor notifies at benefit event Provider notifies by or letter (21%) (17%) More than Don t find out (34%) one third are not informed when a benefit event occurs Participant is given contact information and calls (28%) How do you learn when a participant has had a benefit event? 10

11 Provider Relationships Serving participants at benefit event: Carving out prospective clients: Other (4%) ALL participants referred (60%) Provider works with ALL participants (15%) Carve out participants referred (25%) How do you prefer to work with the plan provider in servicing participants at benefit event? High comp participants (18%) Participants with $50K+ accounts (28%) Participants with $75+ accounts (10%) Participants with $100K+ accounts (40%) If you have the plan provider carve out certain participants at benefit event, which participants do you target? 11

12 Provider Relationships Valuing income planning support: Ranking provider services: Not important (17%) Somewhat important (45%) Very important (38%) 10% Call center to retain assets 14% Local service at the worksite 25% Educate plan participants 51% Equip with resources and planning tools When selecting a plan provider, how important is support of your income planning practice? What service of the plan provider is most valuable to your business model? 12

13 Product Recommendations Influencing product recommendations: Current provider relationship (53%) Best wholesaler support (25%) Current retail relationships (19%) Most competitive comp (3%) When product choices are comparable, what most influences your decision on which products to recommend? 13

14 Product Recommendations Evaluating retirement income solutions: 50% 40% Least Attractive Most Attractive 41% 30% 27% 20% 10% 12% 11% 10% 20% 9% 14% 10% 11% 8% 6% Managed Payout funds Variable annuity GMWB Dividendpaying funds Fixed income/ stable value funds Income annuity/ equity combo Laddering bank CDs How attractive are these investments for retirement income planning? 14

15 Product Recommendations Recommending in-plan guarantees: Do not recommend Proactively recommend Only if plan sponsor asks Less frequently than prior year 73% 13% 10% 4% What best describes the frequency you recommend in-plan guarantees (with GMWBs) as a plan investment option? 15

16 Product Recommendations Using annuities since the economic crisis: Increased usage (37%) Have not changed use of annuities (46%) 70% 50% 30% Recommending types of annuities: 57% 31% 64% 35% Very Likely Somewhat Likely Not Likely 44% Started recommending for first time (7%) Decreased use of annuities (3%) Still do not use annuities (7%) 10% 12% Fixed deferred 18% 18% Immediate income Annuity type 21% Variable deferred Since the economic crisis, how has the use of annuities in your clients individual retirement income plans changed? How likely are you to recommend one of these annuities to your clients? 16

17 Product Recommendations Recommending withdrawal rates: Financial professionals recommend Retirees think Say 5% (26%) Other (5%) Say 4% (55%) Think 10% or more (20%) Think 8% (15%) Think 4% (44%) Say 4.5% (14%) Think 6% (21%) What withdrawal rate from savings do you typically recommend for your clients while in retirement? Source: Q Principal Well-Being Index survey 17

18 Retirement Income Planning Takeaways 78% allocating more time over the next 3 years 34% uninformed of a benefit event #1 carve out is account balances of $100M Planning tools are most valuable There is no silver-bullet investment solution 18

19 Thank you for your time! What are your questions? 19

20 Thank you for your time! While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that The Principal is not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. Insurance issued and plan administrative services provided by Principal Life Insurance Company. Securities offered through Princor Financial Services Corporation, , member SIPC and/or independent broker/dealers. Securities sold by a Princor Registered Representative are offered through Princor. Principal Life and Princor are members of the Principal Financial Group, Des Moines, IA No part of this presentation may be reproduced or used in any form or by any means, electronic or mechanical, including photocopying or recording, or by any information storage and retrieval system, without prior written permission from the Principal Financial Group. Copyright 2011 Principal Financial Services, Inc. PD /2011 t