How formal retirement planning can help improve client confidence & boost your practice

So many of the most important undertakings in life benefit from formal, written plans. Business owners write formal plans to secure funding and launch companies. Home renovations depend on detailed design planning, budgeting and timelines. Health and fitness goals can become more achievable with a structured plan.

That’s why it’s startling that only one in five retirees and non-retired workers has a formal, written retirement plan in place.1 Considering that for many, retirement may span decades, clients without a formal plan may stand to improve both their long-term financial security and their retirement confidence by putting their plans in writing.

The distinction between formal planning and ad hoc planning services can be key for financial professionals, too. Formal retirement plans can help you clarify saving and investing goals based in advance, and better prepare them for the transition from earning to decumulation.

Creating and regularly revisiting clients’ written retirement plans can also create opportunities to clarify the benefits of financial products like annuities. In these conversations, you can explain in detail — and show examples based on clients’ lives — how options for guaranteed lifetime income can help meet their objectives.

Developing formal plans with clients can also help shift the financial professional’s service model from order-taking toward more strategic and consultative relationships. As you help clients address changing financial circumstances through all of life’s stages, you can build loyalty as you strengthen clients’ retirement confidence.

Formal, written retirement plans may be as vital to the success of financial professionals as they are to clients.

Informal retirement planning vs. a formal, written plan

An informal plan might include a saving target, a few investments and a goal to roll over an employer-sponsored retirement plan. It may be based on a ballpark figure of what a person thinks they’ll need later in life — and that’s often based on some general guideline. It may or may not include a plan for turning savings into steady, dependable income.

In contrast, a formal, written retirement plan is like a map for the client’s entire life journey. It lays out income sources, asset allocations, projected expenses and specific retirement goals. The level of detail and customization brings clarity and direction to help move clients away from guesswork.

Formal planning: high-impact, yet uncommon

Considering the difference a formal plan can make, one might expect written retirement plans to be the rule, not the exception. But while many investors may claim to have retirement plans, the plans they’re referring to are likely informal, given LIMRA’s findings that just one in five retirees and non-retired workers has a written plan.

Potential benefits for clients

The difference in retirement readiness between those with and without formal plans is stark. Those with written plans are significantly more likely (87%) to say they feel confident in their ability to achieve the lifestyle they want in retirement than those without (70%).1 

Investors with formal plans were much more likely to complete these important retirement planning activities than their peers working with informal plans or no plan at all:1

  • Calculate available assets and investments for spending
  • Determine Social Security benefit amounts at different retirement ages
  • Quantify expenses in retirement
  • Estimate how long assets and investments will last
  • Evaluate healthcare coverage options
  • Develop a strategy or plan for generating income from savings

When clients and financial professionals dig into these details together, clients can gain a clearer understanding of their broader financial picture in retirement. That awareness, coupled by the sense of taking concrete steps, can boost clients’ confidence and reduce their financial stress about what’s ahead.

LIMRA reports that 36% of investors with formal plans own one or more annuities, compared with 27% of investors with informal plans and 16% of those with no plan. Among investors with formal, written plans who own annuities, 70% said they purchased annuities because of the plan.1

Advantages for financial professionals

Implementing formal retirement plans can offer several advantages to financial professionals, too:

  1. Strong client relationships. Detailed planning shows a commitment to clients’ long-term financial well-being. Getting to know clients over years and decades also creates opportunities to cultivate and retain relationships with younger generations and generate valuable referrals.
  2. Enhanced service value. Offering structured, personalized strategies and leading clients through planning can help differentiate and distinguish your practice.
  3. Broader insight and opportunities. A formal plan allows you to get greater insights into clients’ financial situations. A deeper understanding can reveal additional opportunities for portfolio diversification, advanced tax strategies or estate planning needs.

Get help integrating annuities into your retirement planning strategies

Encouraging clients to engage in formal retirement planning is a great first step toward cultivating long-term relationships and all the advantages they entail. 

For clients, a formal plan provides clarity, confidence, and an improved outlook on financial security in retirement. For financial professionals, planning can offer a way to strengthen client relationships, enhance the value of financial services, retain clients through various life stages and build greater visibility into opportunities to help clients address their retirement goals with products like annuities.

Find out how a long-term approach can help maximize client relationships and grow your business. Our Acceleration® program was created to help financial professionals focus on high-impact ways to demonstrate value, increase client rosters, guide client decision-making and more. Learn more about Acceleration by reaching out to your wholesaler or the TruStage™ Annuities Solutions Desk at 877.345.GROW (4769), option 1.

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