It can be a tricky job to choose the right retirement strategy for each client’s temperament and personality. For this reason, Securities America, one of the country’s largest broker-dealers, created a system to simplify this process and enable its advisors to tailor plans to specific clients.
“I think this service, and the other support that we offer, is what attracts advisors,” says Zachary Parker, first vice president of income distribution and product strategy at Securities America. With it, “the only thing [advisors} need to do is to bring clients to the table and we can help them do the rest.”
Securities America, and other firms of varying sizes, are offering comprehensive support programs to lure new advisors, many of whom are trading commission-based firms for independence. Earlier this week, John Lindsey, of Westlake Village, Calif., made the jump from Edward Jones to Securities America. The Securities America pipeline is full right now with more advisors like Lindsey queuing up to take a similar leap and, Parker says, Securities America is discussing its retirement program with all of them.
The program begins with a multiple choice questionnaire to gauge a client’s risk tolerance. The more emotional the client, the more he or she may benefit from a variable annuity to lock in guaranteed income regardless of what is happening in the markets, Parker says. Simultaneously, the BD found that many clients benefit from combining a “time-segmented” investment strategy with that annuity. In this way, advisors can secure, for example, 10 years of guaranteed income in a variable annuity for a client and invest other sums of money more aggressively for use 10 or 15 years down the road.
The thinking goes that, when it comes to funds they won’t touch for a decade or longer, clients will be more willing to tolerate market volatility in the short term.
He offered an example of how the program can help.
“A couple of weeks ago an advisor called me up,” Parker says. The advisor was proposing such a plan to a prospective client. The advisor explained the strategy to the client who, he knew, was hearing from other advisors elsewhere that they could generate the client higher returns. Despite the fact that he projected lower returns, he ended up getting the business anyhow.
According to Parker, “The client said, first of all, I trust you. All everyone else talked about was the way to invest money. But I like the way you laid out the way this is going to work.”
Parker believes the program empowered the planner to explain this retirement strategy in detail and in a way that made the big subject understandable to the client.
For many advisors, he says, “This program solidifies what they have done on a yellow pad.”