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Cincinnati Chapter FSP

www.financialpro.org

Solutions for a Secure Future (formerly the American Society of CLU & ChFC) Financial Pro

News and Information Letter of the Cincinnati Chapter www.sfsp.net/cincinnati

Cincinnati Chapter

4100 Executive Park Dr. #16, Cinti, OH 45241 Phone: 513-554-3062 Fax: 513-563-9743

[email protected] Chapter Administrators:

Lauren Estness Sandy Hatmaker

June/July 2008

2008-2009 BOARD OF DIRECTORS

OFFICERS: President Andrew F. McClintock, CLU, ChFC, RHU, REBC 513-421-2522 [email protected]

Immediate Past President Ernest J. Martin, CLU, ChFC, CFP 513-794-1095 [email protected]

President-Elect/Membership Chair Joseph F. Stenken, CLU, ChFC, J.D. 859-692-2222 [email protected]

VP Of Education John D. Dovich CLU,ChFC (513) 579-9400 [email protected]

Secretary/Treasurer Stephen P. King, CFP, CLTC 513-530-9700 [email protected]

TRUSTEES: Continuing Education/VTC Robert S. Cottrell (513) 942-1000 [email protected]

Communications Chair James LeBlond, CLU, ChFC 513-362-1504 [email protected] Public Relations Chair Sonya E. King, JD, LLM (859) 692-2242 [email protected]

What’s Inside:What’s Inside:

President’s PodiumPresident’s Podium

What Is Long Term Care?What Is Long Term Care?

6060--Day Dash for More MembersDay Dash for More Members

Retirement Withdrawal Mistakes to AvoidRetirement Withdrawal Mistakes to Avoid

SFSP MemberGramSFSP MemberGram

Build A Highly Profitable Business Build A Highly Profitable Business By Helping WorkingBy Helping Working--Class AmericansClass Americans

Messages from Our MembersMessages from Our Members

Financial Pro, Volume 28, Number 11

Congratulations to Ernie Martin for an outstanding year as president of our chapter. All of the Board, including Joe Stenken, Steve King, Jeff Martin, Alex Mills, Jim Le-

Blond, and Tom Wilson contributed their time and talent resulting in a successful year for your Chapter. A special thanks to Lauren and Sandy our Chapter Administrators.

During the annual meeting in May the Chapter recognized Bill Riffle as “outstanding member” of the year for his service to the Chapter. Congratulations Bill. Rob Cottrell and Sonya King were nominated to serve on the Board and John Dovich was nominated to serve as an offi-cer at the June board meeting.

As president of the Chapter, I will continue to empathize the Mission of FSP, “Education, Ethics and Relationships.” We will maintain the

policy of not charging our members for meetings and have as our goal to have quality meetings which will appeal to our diverse membership. Growing our mem-bership is an ongoing objective and we encourage our members to help in this ef-fort. Thanks to our 2007-2008 sponsors—Columbus Life Insurance Company, Di-versified Brokerage Specialists, Mass Mu-tual Financial Group, Ohio National Finan-

cial Group (John Zorio Agency), Ohio National Financial Services, and Wilson Brokerage Services. Your Board looks forward to another successful year for the Chapter and serving the membership. Have a terrific summer. Andy McClintock

President’s Podium

Andy McClintock CLU, ChFC, RHU, REBC

Ernie Martin and Andy McClintock Outstanding Member of the Year

Bill Riffle

Speaker: Paul A. Nidich


By Shelley Kostrunek With a few notable exceptions, many baby boomers are facing a long retirement or semi-retirement with fewer resources than they had during the working years. So they need to make the most of the retirement benefits they will actually receive. For now, that means maximizing Social Security and, in many cases, considering the use of a fixed immediate annuity. And that means making important choices about Social Security in-come. Advisors in the income plan-ning market will need to help boomers make these decisions. Here are some of the key issues to cover. Running on empty. With the aver-age longevity of American men and women on the rise, boomers need to plan for a long life. While that’s not a new idea, most planners need to help clients understand the im-portance of income planning for many years. The ad-vantage of maximized Social Security income and the use of annuities as the income portion of a time-weighted portfolio will make sense for most clients. Historically clients have been reluctant to use annuities for retirement income. However, recent economic un-certainty and the realization that people could live longer than expected could begin to turn clients toward the light. The best way to show an immediate fixed annuity to retired clients is as a component of a time-weighted asset allocation, not as a total retirement income solu-tion. This approach helps get around the objection about having to give up a retirement lump sum by tying it up in an irrevocable financial vehicle. Guaranteed enhancements, like cost of living adjust-ments and return of premium on cancellation, can help alleviate concerns, too. Some annuities also offer in-creased payments if a person enters a nursing home or is diagnosed with a life-threatening illness. Some even offer a death benefit. And the tax benefits of annuities can be appealing. These types of perks, which allow a

client’s money to serve double-duty as a protection vehicle, make the immediate annuity product more client-friendly than the typical deferred annuity. The chart provides an example of how dramatically an immediate annuity can increase the longevity of a retirement portfolio for a 65-year-old man who plans to take out 4% a year for retirement income. The chance of the money lasting to age 100 is as

high as 96% if the assets are evenly split between a lifetime annuity and a stock/bond portfolio; the percentage is lower when the annuity provides a smaller percentage of the income . Waiting to maximize benefits. As men-tioned previously, the decision of when to take Social Security income can also have a big effect on payouts, especially if the client is married and has a spouse who did not earn a substantial living by comparison. One strategy may be to delay benefits for the higher earning spouse by filing

and suspending benefits until age 70 to provide an increased benefit. The lower earning spouse can take early Social Security retirement benefits based on his/her work record at age 62. If there is an income gap, it can be filled with an immediate income annu-ity with a period certain benefit. Assuming the lower earning spouse is the female (which is statistically likely to be the case), she will receive an increase in benefits if the higher earning spouse predeceases her. If the couple does not need the increased income, the money can be used to cover the cost of long term care or life insurance premiums to enhance protection or estate planning. Too much, too soon. What is the appropriate annual withdrawal rate from a portfolio during the retire-ment years? A lot of research exists on this issue, and also more than one method. The general idea is that retirees who anticipate long payout periods should plan on lower withdrawal rates. If there are fixed rate assets in the portfolio, these increase the success for low to mid-level with-

Retirement Withdrawal Mistakes to AvoidRetirement Withdrawal Mistakes to Avoid


drawal rates. However, the presence of stocks, mutual funds or variable products provides upside potential—and the promise of higher sustainable withdrawal rates. Most retirees would likely benefit from allocating at least 50% to common stocks in some form. Retirees who demand inflation adjusted withdrawals in retirement must accept substantially reduced withdrawal rates from their initial portfolio. Here, with-drawal rates of 3% and 4% represent conservative (and likely successful) choice. At these rates, retirees who want to leave money to heirs have a greater chance of being successful over the long term. Late savers and other retirees facing a retirement deficit need all the help they can get from an advisor. Planning Social Security income and utilizing annuities strategically in a time-weighted portfolio are among many worthy strategies to consider. The advisor’s job is to provide as much value to clients as possible at this time. Shelley Kostrunek, CMFC, CRPC, IAR, ChFC, is an advanced markets specialist at Mutual of Omaha specializing in retirement accumulation and distribution planning, in the Omaha neb office. Her e-mail address is [email protected]

Retirement Withdrawal Retirement Withdrawal Mistakes to Avoid continuedMistakes to Avoid continued


By Rick Kent As financial advisors, we hear advice from industry consultants encouraging us to “move up market,” to abandon the working-class American and cultivate rela-tionships with the affluent. As a financial advisor in Atlanta, I had considered this advice and decided to prove a profitable business could be built by serving every-day employees. And this business model has worked. By industry standards, I feel I’ve been successful in that my company now man-ages more than $150 million in assets, primarily for middle-class Americans. What’s more, I got to this point in 6 short years. I hear stories all the time about peers who work for 10, 12 or more years, promoting themselves as wealth managers and investment advisors for the affluent, who seem to plateau at the $70 million or $80 million mark. So what am I doing differently to get to the $150 million mark? I’ve found a way to profitably serve people while they are still working by providing advice on their 401(k) and other employer-sponsored retirement programs. Probably the most beneficial result is that by securing these clients today, I earn their trust and become the advisor of choice when they retire and need help man-aging their lump sum distributions. This, for me, has proven to be the ultimate niche marketing strategy. Leveraging the methodology My strategy was to select one major company and work with its employees to promote my company’s services. The company I chose to penetrate was Bell-South, now AT&T, which also happens to be the sec-ond largest employer in Georgia. I knew I had to take a

unique approach to this company because I wasn’t the only advisor trying to get in. My approach to the employees was not through the regular human re-sources channels (although you could certainly try that route).

Instead, I went directly to the employees themselves. It all started with an informal con-versation about the company benefits of a Bell South em-ployee who came to our of-fice on a service call. From that conversation, I began to strategize how to offer my services to the company’s employees—without going through normal corporate channels. I started by going to facilities where the service trucks re-turned each day. As the driv-ers arrived, I simply invited

them to a seminar at a local hotel. Many of you likely hold such seminars; this is just an unusual way of reaching prospective attendees. After a few conversations, it was apparent that most of the employees needed help understanding their benefits package and welcomed advice regarding the options in the 401(k) plan. More than 90% did not have a clue how to properly diversify their portfolio or in what funds they should invest. Educating em-ployees on the basics of their plans, not financial planning, became the topic of the seminars. It was not long before my database began to expand, and I was quite busy conducting educational classes. I soon became known as a professional who under-stood how to help employees of this large corpora-tion.

Build A Highly Profitable Business By Helping Working-Class Americans


I specifically targeted employees in their 50s who would be retiring within 7 to 10 years. As I built a database consisting of these clients, I found myself busy regu-larly serving people moving into retirement. Because BellSouth has a pension and 401(k), my average investment amount when one of the firm’s employees retired was approximately $400,000. Becoming successful within this niche required more than building relationships with service truck drivers; I also had to communicate one-on-one with employees. The methods of outreach used—telephone calls, e-mails and direct mail—showed employees I was interested in offering value to them personally, rather than just being part of a company-sponsored plan. Once I made initial contact with an employee, I conducted personal interviews to determine the individual’s needs. After a few interviews, I could identify common employee concerns. That helped me to create a process unique to BellSouth that was easy to understand and consistent with the Bell-South plan. This program, which I subsequently branded for the benefit of other advisors, encompasses work-shops, one-on-one meetings, our web site, brochures, letters of introduction and other marketing tools. Key take-aways My experience with BellSouth taught me that one doesn’t need to target affluent clients to build a sub-stantial financial planning practice. Serving middle America is a great way to accumulate assets under management. Also, providing advice on employees’ 401(k) plans will inevitably lead to other planning needs and product placement opportunities, even before there is a substantial amount of money to manage due to rollovers. Americans need help with their largest savings ac-count: their 401(k)-type savings plan. Offering a value proposition that makes sense while someone is still working is a great way to build relationships. Our business as financial advisors is built on trusting relationships. I have now built a significant database of trusting clients who will have future assets to invest. The process is simple: offer plan participants profes-sional, affordable advice while they are still employ-ees and wait for the assets to start rolling in. Rick L. Kent, ChFC, CFP, AIF, is founder of The Merit Retirement Advantage, Alpharetta, Ga. You can contact him at [email protected]

Build A Highly Profitable Business By Helping Working-Class Americans continued


Messages from Our Members

Read what our members have to say about their SFSP membership: May 14, 2008 Recently I had the opportunity to thank the Board of Directors of our local SFSP chapter for the work they do on behalf of our membership. 32 years ago I was encouraged to join the Soci-ety of FSP (at that time known as the Society of CLU). I am very glad that I did. The monthly meetings gave me the opportunity to rub shoul-ders with some of the greatest people in the in-dustry not only from Cincinnati but from around the United States. They helped me learn and un-derstand the value of our products and services. I often left meetings with a new relationship and/or a new sales idea that kept me growing in this wonderful business. Membership in the chapter is a great way to learn the traditions of this fine industry and discover new and creative ways to help people secure their future. Get involved in SFSP. Become part of the tradi-tion of service to the membership, you will grow faster and become even better in your chosen profession. Sincerely,

Terence L. Horan, CLU, ChFC

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