Products October 10, 2011

JHFN to Offer Advisers Retirement Income Program

John Hancock Financial Network (JHFN) is planning to launch a retirement income program for its advisers, called Retirement Ready.
Reported by

The turnkey retirement income program is designed to help JHFN advisers maximize sustainable retirement income for their clients and potentially minimize the risks clients may face, according to the company. It includes a Web-based product allocation analysis tool, an array of multi-media educational and training materials for clients and advisers. The materials have been submitted to FINRA and JHFN is awaiting its review.

The foundation of the Retirement Ready program is a product allocation tool called the RSQ (retirement sustainability quotient) Analyzer. An RSQ can range from a score of 0, where there is no likelihood of obtaining the desired income at retirement, to a score of 99, where the income stream is highly likely to be sustainable for life.

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The RSQ Analyzer tool leverages a methodology developed by Moshe A. Milevsky and The QWeMA Group to determine each client’s optimal product mix and provide a quantitative measurement of the relative likelihood that their portfolio will generate the income they desire for the rest of their lives. The tool employs a product allocation strategy, which involves placing assets into distinct product categories to create an optimal mix of products, based on a client’s personal needs, which tap into each product’s features and benefits, the company said.

“Traditional strategies such as asset allocation, where clients invest in different asset classes according to their risk tolerance, may work well when accumulating assets. Alone, however, they are often not enough to help protect clients from key retirement risks such as volatile equity markets, inflation, sequence of returns, and longevity,” said Bruce Harrington, head of retirement sales and strategy, JHFN.

The tools available on JHFN’s Retirement Ready microsite include the RSQ Analyzer, multi-media educational and training materials, an expense calculator, worksheets, promotional literature, and a way for advisers to create personalized client reports.

A dedicated team of director Greg Melton and retirement income sales consultant Danny Francisco will support advisers in the retirement income effort, along with shared support staff members. Additionally, JHFN will be holding a series of training sessions during October and November in locations including Boston, San Francisco, Newark, Washington, D.C., Detroit, and Orlando.
 

 

In Practice October 7, 2011

Helping Insurers Capture More Retirement Assets

LIMRA has suggested five things insurers can do in order to capture more retiree assets.
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A recent LIMRA study reveals that 45% of retirees still have their assets in their retirement savings plans with their employers, most frequently in their 401(k) plans, and almost a fifth of retirees own three or more IRAs in their households.  

Among the survey respondents, 23% said they have relationships with insurance companies. The mass affluent retirees with assets of $100,000 to $500,000 are more likely to have relationships with insurance companies than any other market segments. However, as a whole, retirees have only 9% to 10% of their assets invested in products and services offered by insurance companies.  

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LIMRA suggests: 

  1. Provide online resources.  According to LIMRA consumer surveys, retirees start to think about the decision of what to do with their retirement plan balance well in advance of retirement.  Providing online resources like retirement calculators and checklists can help insurance companies develop relationships with employees approaching retirement and build brand awareness. 
  2. Be responsive and ready to react quickly. Once they retire, those that do roll over their assets move their money fast. Earlier LIMRA research shows majority of retiree assets leave their employer-sponsored plans within the first 12 months of their retirement.  
  3. Provide a comprehensive plan which creates a retirement income stream and addresses other risks retirees face.  Retirees and pre-retirees will typically need to make a series of retirement-related financial decisions starting at age 59 ½, the age at which they can withdraw from their tax-qualified assets without penalty, to age 70 ½, when they must take IRS required minimum distributions (RMD) from their qualified savings. In between, they have to evaluate when to take Social Security benefits and enroll in Medicare and its supplements. All of these financial decisions can be part of a retirement plan.  LIMRA research shows that many investors are buying guaranteed income annuity products at these key age-based financial decision points. 
  1. Reach out to pre-retirees and establish a relationship before they enter retirement.  Existing relationships are critical to securing rollover business. A financial planner or advisor is often the first person retirees or pre-retirees consult regarding the rollover decision if they have an existing relationship. If possible, offering personalized investment guidance can be a way for companies to strengthen relationships and increase their chances of retaining assets. 
  2. Offer guidance about taxes and other required distributions. Retirees both under and over age 70 need help managing their retirement plan assets to ensure they comply with all legal requirements.  Sixty percent of retirees above age 70 who are taking withdrawals are only doing so to meet IRS required minimum distributions and they often take withdrawals through systematic withdrawal plans. The current research finds that most retirees get help from a financial professional or a phone representative to set up the plan. 

The online survey of retirees was conducted in October 2010. Qualified respondents were ages 55 to 79; had been retired for at least one year and had not worked for pay within the past year; and had household incomes of at least $35,000. Furthermore, qualified respondents were personally involved in making decisions about their household savings and investments.

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