Category Archives: Retirement

The Challenge of Improving Wholesaler Performance

Suffice it to say, sales leaders in the asset management, insurance, and retirement industries are under un-relenting pressure to enhance wholesaler performance.  Brands that want to win the trust of their channels and be perceived as a valuable, priority relationship, must deploy effective Intermediary Relationship Marketing (IRM).  Today, many brands deploy a version of IRM, most of which neither generate trust or add value to their relationship with their important intermediary partners.

What is Effective IRM?

In the context of the asset management, retirement, and insurance industry, IRM creates leverage and scale for distribution platforms targeting intermediaries and distributors. An IRM initiative augments the productivity of internal and external wholesalers through a pragmatically developed plan of systematic and integrated marketing activities. These activities:

  • Create a compelling, consistent and coherent narrative with target channels
  • Generate new qualified leads
  • Keep target channels engaged with your brand and products
  • Pave the way for more effective wholesaler interactions.

Instead of focusing on a single campaign, or a series of disconnected interactions, effective IRM initiatives plan and deploy integrated inbound and outbound communication streams — guided by the stage of your brand’s relationship with the channel, individual level data (e.g., behavioral, self-reported, firmographic), and your brand’s narrative. These communication streams increase the probability that your products and brand are selected by your target intermediaries and distributors. IRM builds mindshare, reinforces the value of the relationship with your brand, fosters trust, and provides your wholesalers with richer and timelier intelligence. IRM must also integrate seamlessly with existing sales force automation and CRM tools.

Annuity Warming and Convenient Truths

Annuities solve two major household financial challenges: asset preservation and income in retirement.  And they often solve the problem at a lower cost to the consumer than capital market alternatives.  Consumers and advisors want a solution to these problems; most, however, reject annuities as a component of the solution.

Have we arrived, at last, at a tipping point?  Here’s more evidence that we may have:

An article in Barrons today is entitled “Special Report – Retirenment: With their steady income payments, annuities are suddenly hot.  Hot?  Hot?  Annuities?

http://online.barrons.com/article/SB50001424053111904472004576392401608661120.html?mod=BOL_twm_ls#articleTabs_panel_article%3D1

This follows another positive article in the New York Times two weeks ago about the unique benefits of annuities. http://www.nytimes.com/2011/06/05/business/economy/05view.html

A tipping point?  Are annuities now “in”?  As consumers read more and more positive press about annuities, advisors will find the annuity recommendation more appreciated than in the past.    Annuity manufacturers need to take full advantage of this thawing.

This annuity warming is a very convenient truth for the annuity industry!  Marketers and sales professionals must prepare to win their share now!

The Retirement Income Conundrum

A day doesn’t seem to pass without a new, alarming headline about retirement in America.  I was reminded of this today when our head of research sent me this link about the decline in the “Retirement Optimism” index (perhaps an oxymoron these days)  https://www.wellsfargo.com/press/2011/20110602_Retirement.  And consistent with other research, retirees maintain a consistently higher level of optimism than non-retirees.

Despite this morose pre-retiree outlook about retirement, the study reports that about 3 in 4 have no formal plan for retirement.  Why are households unable to address such an important personal challenge and prepare for the days of retirement?  Well, there are many reasons for this, including:

1) The definition of retirement.  What’s retirement?  Has the norm ever been 15-20 years of golf, world travel, and endless vacations on a private yacht in the Aegean?  Maybe “retirement” is a more transitional period of life, when earned income declines, new expenses emerge (e.g. health), and guaranteed sources of income from accumulated financial assets are required to match consumption  liabilities.  So maybe “planning for retirement” is not exactly the caracature we all imagine.

2) Savings.  As we near completion of the transition from a defined benefit to a defined contribution work place, have households accepted responsibility for postponing consumption and saving for a time when they’ll need new sources of income?  This will require a cultural change in how households budget.

3) Investing.  How many consumers know how to build a retirement portfolio?  How many understand the benefits of an annuity and how to select the most appropriate product?  How many understand how to use capital market products to create a stream of guaranteed income?  The accumulation model alone based on risk and return just doesn’t solve the retirement problem yet the airwaves are filled with messaging that encourages this.

4) Advice.  Despite the dramatic increase in advisor clients requiring retirement income portfolios, there is still no acknowledged consensus on the best approach.  Moreover, compensation models based on AUM often conflict with what’s best for the client.  Systematic Withdrawal Plans, Annuities, Time Segmented Allocation Models, laddering with strips….or plain old risk and return…where’s the consensus and why isn’t there one?

5) Insurance.  To some degree, most consumers need income “insurance” in retirement.  Typically, insurance products are sold, not purchased.  Given this paradigm, the financial advisor is key – he/she needs to recommend the right product for the right purpose.    This brings us back to the point 4 – advice.  The financial intermediary is going to be key in helping households efficiently use their savings to create income for retirement.  Manufacturers of retirement income products are going have to educate financial advisors on the benefits of their product from an outcome point of view and when the advisor should incorporate them into their client portfolios and financial plans.