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Are Your Retiring Clients Confident?

The Comprehensive Advisor Newsletter

November 2018


Retiring in today’s world poses new challenges and risks compared to prior generations. The days of working for a company for 30 or 40 years with the gift of a pension in retirement rarely exists.  With the absence of pensions, how confident are your clients with their retirement income plan? At The BluePrint, our commitment is to help you be a more comprehensive advisor. Having conversations about protecting a client and mitigating risk is a big part of providing comprehensive financial advice. Our goal is to help make those conversations easier by providing perspective and actionable ideas. In this month’s The Comprehensive Advisor Newsletter we address retirement, annuities, and changing the retirement conversation with clients.

A Change in Thinking

Our clients are RIAs and advisors that have adopted a fee-based business. A fee-based advisor fiduciary approach provides several benefits to the client, but one benefit of the business model is the consistency of income it provides the advisor. So, it is interesting the amount of pushback we receive when we introduce the idea of using an annuity to meet client income needs in retirement. It is sometimes hard to see the comparison, but we believe a client is no different than a fee-based advisor. The same way a fee-based advisor probably appreciates the consistency of fee revenue to meet their life needs, an annuity can provide the same comfort for a retiree. We believe the RIA industry will begin to shift their mentality and perspective in this area. Most advisors have taken clients through accumulation; however, even some of the most experienced advisors have yet to have any client live off their money for 30 years or more. We believe as more clients retire, live longer, and can depend less on a pension and social security the use of an annuity will be a more widely accepted solution to address income needs, longevity risk and behavior risk. This will require a change in conventional thinking, but we believe demographics and the aging of an advisor’s book of clients will help in the mind shift. The attached article touches on this topic. Click here.

A Change in Perspective 
When we ask why advisors don’t like using annuities the answer is usually cost or performance. There is a perception that the cost of an annuity is so great that it outweighs the benefits. While you may be able to put a dollar figure to their costs, we happen to think the cost of not using them is what really matters. When clients retire with little to no guaranteed income and they spend down their assets the conversation usually turns to lifestyle. The retiree is required to “downsize” so they don’t run out of money. This “cost of lifestyle” is real and it happens more often than people talk about. The discussion is usually around how performance, overspending, or some unlucky event has put them in a position where a reduction of lifestyle is now required. Whatever the “reason”, the client is faced with making sacrifices that they may not have considered possible when retirement began. For this reason, we believe the conversation around “costs” in retirement needs to change. A well thought out income plan using the right amount of guaranteed income can help retirees not only have confidence but address overspending and less reliance on performance for the plan to work.

Changing the Conversation

Part of the problem is the stigma of annuities*. Some advisors have misrepresented them as the “silver bullet solution.” They are presented as the only thing a client needs to be successful. Like all investments, without proper diversification, it can be harmful. Some advisors focus their annuity recommendation based on compensation rather than client needs. These behaviors are not OK. Unfortunately, the focus on these behaviors has taken the spotlight away from the real benefits they can provide a client and their portfolio. The conversation needs to change from what they are to what they do. We have developed a simple approach to helping our advisors change the conversation that is process and planning driven. Fidelity has an older white paper that addresses the changing world of retirement. It is the foundation for our approach. If you are a retirement planning advisor this whitepaper is a great tool. For your convenience, we attached it here. Click here.


*There are several types of annuities (immediate, deferred, fixed, index, variable, QLAC, etc.) There are commission products and products for fee-only advisors. We take a consultative approach and educate you on the solutions available, so you can decide what works best for the client and their specific needs.


Helping you is our primary focus. If you would like to review any of the topics above, please contact us at 855.204.6353 or let's set a time to talk here.