Transcript For Agent Use Only

SecurePlus VIP: A Fixed Indexed Annuity
(FIA) Exclusively for 401(k) Plans
Phase 3 Training
Presented by: Shelby J. Smith, Ph.D.
Training/Service/Support by: 401k Marketing
FOR AGENT USE ONLY
For Agent Use Only
Enrollment Meeting with Employees
This training session will cover FIA only
Securities & other assets choices of the 401(k) plan will not be
discussed; however, record keepers, third party providers and
product providers generally provide materials/assistance for
conducting enrollment meetings. If ExpertPlan is your record
keeper and/or TPA please contact their internal wholesalers
for assistance or your 401k Marketing marketing
representative.
FOR AGENT USE ONLY
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Enrollment Meeting for FIA: Options
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Traditional Presentation (cameo appearance):
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On-Line Enrollment
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Employee do-it-yourself with little or no help
No relationship, trust or credibility built with advisor
Fosters lower participation rate
Only help is via 800#
Same shortcomings as traditional presentation
Outsourced – you’re not of loop & out of mind
The 401k Marketing way
FOR AGENT USE ONLY
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Typical Enrollment Meeting
• You must master information provided
at:https://www.expertplan.com/secureplusvip.jsp
Secureadvisor/Password1
Securesponsor/Password1
• Supplemental information at www.401kmarketing.com
• On-line materials & presentations can be purchased
• Ask record keeper/TPA/product provider for enrollment presentation
• ExpertPlan: guide, PowerPoint & presentation featuring on-line
enrollment
• Objective: pique interest, boost participation & foster one-on-one
meeting
FOR AGENT USE ONLY
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Planning Your Enrollment Meeting
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All employees at once or smaller groups?
Communicating the meeting & agenda
• e-mails, bulletin board,n, etc.
• Highlight: new menu, enhanced plan & lifetime income option
Order & distribute materials in advance of meeting
• FIA: 401kMarketing for materials: 877-319-2078
• Other: Record Keeper, TPA and/or product providers
• Summary of employer’s 401(k) plan or
Summary Plan Document
Schedule during business hours if possible
Duration: 30 to 45 minutes (a business meeting)
Script presentation, test equipment & prepare
FOR AGENT USE ONLY
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Opening the Meeting
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Senior management (you provide script or outline):
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The company’s commitment to their employees
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The company’s success depends on good employees
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Only happy employees are good employees
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Retirement requires advance preparation & one answer is 401(k)
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Overview of the company’s 401(k) – supplements handout
– Matching contributions/profit sharing
– Commitment to keep fees reasonable & competitive
– Dedication to offer best 401(k) plan possible for employees’ retirement
– The importance of getting sound professional help
– A new plan option for the risk avoiders & those approaching retirement
Your introduction (qualifications & background)
Your appearance and demeanor
FOR AGENT USE ONLY
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Keeping it Simple
• Assume most employees are not knowledgeable
• Avoid jargon and technical terms
• Why save for retirement using a 401(k)
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Payroll deduction is painless plus employer makes contributions
Tax deferral or tax free growth (if Roth is offered): Example
Increasing life spans means a longer retirement: Example
Inflation has averaged 4% annually for last 50 years: Example
Life spans have increased dramatically since 1900: Example
Most people approaching retirement not prepared: Example
Pay yourself first by contributing to 401(k)
Social Security will probably not be enough
• Not intended to frighten – factual presentation
FOR AGENT USE ONLY
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Examples
Compound Interest:
•Work for 30 days starting @ 1¢ a day & doubles daily: yes or no?Day
1 = $0.01, Day 2 = $0.02, Day 3 = $0.04……
Day 30 = $10,737,418.24
•Bob saves $100/month for 30 years starting @ age 25, Mary saves
$200/month for 20 years starting @ 35, and Shelby saves $300/month
for 10 years starting @ 45. If all earn 6% simple, who has the most
money @ age 55?
Bob: $100,562 Mary: $93,582 Shelby: $50,298
•Inflation at 4% annually and impact on retirement:
Gas @ $2.50/gallon today will be $5.48 in 20 years, $50,000 car will
cost $109,556 and $85 hair tint will cost $186.25.
•Life expectancy & retirement years are increasing
FOR AGENT USE ONLY
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Example: Life Expectancies & Retirement
Male and Females age 40:
If retiring @ age 65 – Average
years in retirement
Year
Males
Females
1900-20
27.74
29.17
1929-31
29.22
31.52
1949-51
31.17
35.64
1979-81
34.04
40.16
2000
37.10
41.30
2004
38.00
42.10
2012 (est)
41.40
44.50
Increase in retirement years since 1950
FOR AGENT USE ONLY
Males
Females
6.17
10.64
16.40
19.50
166%
83%
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Example: Average Savings by Age
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Workers under age 35 have < $6,000 in savings.
Ages of 35 and 44 have roughly $22,500.
Ages 45-54 have saved just under $44,000.
Baby boomers (55-64) approximately $65,000
Those 65 and over have savings of $56,000
Source: Employee Benefit Research Institute
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Cost of retirement varies widely
- Medical expenses for retired age 65 couple = $240,000: Source Fidelity Investments
2012
- U.S. Census: Average income of households headed by age 65+ was $49,000 in 2010
75% x $49,000 x 18 years = $661,500: P.V. @ 4% = $465,230 (before inflation)
FOR AGENT USE ONLY
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Presenting the FIA Option
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FIA unfamiliar to most employees – keep it simple
Features & benefits:
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Two separate accounts: Accumulation & Income
Accumulation: Contributions + earnings (explain)
Income: Annual increase is roll up rate (GLIR is optional)
Minimum rate guaranteed on accumulation account
Income & accumulation compared & adjusted at 5 year intervals
Surrender period/penalties – (explain additional premiums)
Penalty free withdrawals/inside transfers after year 1
Clearly explain Guarantees
Worth considering for some of your 401(k) money
FOR AGENT USE ONLY
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Guaranteed Lifetime Income Rider
• The GLIR is optional (may appeal to near retirees & risk averse)
• Cost is 0.7% annually & fixed for first 20 years
• Cost increases to 0.8% in years 21 – 30
• GLI determined by age-factors starting at age 55
(specify percentages)
• Roll-up rate guaranteed for first 10 years only – varies thereafter
• GLI will be paid for life unless withdrawal option exercised
• Joint life option for spouse is available – reduced pay out factor
• Nursing home benefits in some state (omit if not state approved)
• Provide details of requirements
• Not available if joint life option chosen
• Provide other details of GLI
FOR AGENT USE ONLY
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Video explaining FIA and GLIR
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Two versions:
• LSW Animated
• NAFA approved
• Available from 401k Marketing or on-line @
• http://www.401kmarketing.com/mktg.html
• Consumer e-brochure (p. 3 & 5) & consumer video
• For your information 401k Marketing offers:
• PayCheck for Life video
• Retain Your Gains Video
• Available on-line @
• http://www.theretirementpros.com
FOR AGENT USE ONLY
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Enrollment Aids from Record Keeper/TPA
• ExpertPlan:
• PowerPoint presentation for on-line enrollment
• Enrollment Guide for employees & tutorials
• Private label site for sponsor/participants (review)
• https://www.expertplan.com/secureplusvip.jsp
– (username/password) Securesponsor/Password1 (case sensitive)
• If not ExpertPlan
• TPA or Record Keeper generally assist with enrollment
• May have written materials and/or website
• Master the materials/sites
FOR AGENT USE ONLY
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Your Objective in the Enrollment Meeting
• Make favorable impression & stress your availability
• Encourage one-on-one meeting for further details
• FIA option will be new and meeting not sufficient for details
• FIA target should be those approaching retirement or fearful of risk
of loss
• Volunteer to help participants understand the on-line enrollment
process
• Provide your contact information for future reference
• Handout materials should provide access to FIA video(s) you
showed
• Lots of good videos at www.theretirementpros.com
• Briefly explain diversification – ABC approach works well
• Stress why participating, starting early & contribution targets are vital
• Explain how combined Social Security & GLIR would work (example)
FOR AGENT USE ONLY
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Example: Social Security & GLIR
• Annual SS benefits at retirement will be $24,000
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http://www.socialsecurity.gov/planners/benefitcalculators.htm
Desired annual retirement income estimate is $55,000
Shortfall is $55,000 - $24,000 = $31,000
Now 45 & retire @ 65: needs $31,000/year from 401(k)
Age 65 GLIR factor 4.5%: $31,000/0.045 = $688,889 from 401(k)
Current 401(k) is $100,000 & all annual contributions = $10,000
At 6% roll-up FIA income balance $710,641 at age 65
Need $689K, got $711K – goal reach & mission accomplished
Don’t forget inflation & possibly higher taxes
FOR AGENT USE ONLY
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Five Facts to Boost Participation with FIA
AT EVERY OPPORTUNITY STRESS…
•FIA has no fees that come out of employee’s money
•401(k) offers tax-deferred or tax-free (Roth only) growth
•Value of FIA is always up or sideways, never down
•Guaranteed Lifetime Income (optional) is predictable
•Start at any age 25 or better
FOR AGENT USE ONLY
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Assuring an individual meeting
• Your fiduciary responsibilities are…
• Your service includes:
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Help in understanding the investment choices, including FIA
Assistance with retirement & 401(k) contribution goal setting
Guidance in assessing risk for individual circumstances
On-going availability as circumstances change
• 401(k) reviews and progress assessments
• Will schedule private, confidential meeting upon request
• Will schedule routine meetings to review 401(k) matters
• You’re their pro-bono personal 401(k) professional ready to help
• Always available for non-401(k) financial advice if needed
• Helping employer make 401(k) even better
FOR AGENT USE ONLY
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Questions?
Call Help Desk at 401k Marketing at 877.319.2078 for
details. Talk to your marketer: Andy Alvis, Celeste
duPreez or Rebecca Brundage
To do list:
1. Start prospecting for 401(k) plans to add FIA
2. Training session #4: follow up & servicing
FOR AGENT USE ONLY
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