Today’s episode is on retirement income solutions. Tom Henga is a retirement income specialist. Learn more at MarkMiletello.com. Note: “Where The Insurance Pros Meet” is an audio podcast and is meant for the ear. A transcript of the audio is provided for referencing a particular section or for you to follow along. Listen to the episode to get the most out of our show. We use both speech recognition software and human transcribers to create the transcripts so they may contain errors. If you’re going to quote us in print, please be sure to check the corresponding audio.

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TRANSCRIPT

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Where the Insurance Pros Meet, Episode 2.

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If you really want to get good, I mean, you want to be the best in the business, you've got to train a little bit every single day just like the pro football players do.

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Where the Insurance Pros Meet is a podcast that brings the greatest talent in the world together: managers, coaches, and producers. The very best experts the insurance and financial services industry has to offer. Get ready to change the way you do business to have your most successful year ever. Now, here's Mark Miletello, a top one percent producer, manager, and your host of "Where the Insurance Pros Meet".

Mark Miletello

Today we're going to discuss retirement income solutions. We have on the show with us the retirement income specialist himself. He's the author of four best sellers, "Paychecks and PlayChecks", "Retirement Income Masters", "Paycheck and Playchecks for Canadians", and most recently, "Don't Worry Be Happy: Seven Steps to Retirement Security, which has played on public television to over 72 million homes in the US and Canada. Our guest specializes in creating, what I love, is simple and powerful retirement solutions based on math and science and not opinions. I've seen him speak myself. He's exciting. You should look him up. He speaks to businesses, government organizations, professional associations, financial professionals, and more importantly, clients across the globe. The road warrior himself, Tom Hegna. Welcome to the show, Tom.

Tom Hegna

Thank you, Mark. Thanks for having me.

Mark Miletello

Well, Tom, NFL season is here. I'm excited. The pros are practiced, rehearsed, the butterflies are gone. It's game time. Tom, congratulations, and thanks for being a leader, a voice, and a consummate professional in the insurance industry; and is, really, the leading speaker and coach in the financial services industry. So, thanks for coming to the show. Can you give us a kickoff of this show with a professional tip or advice just to start us off and get this game going?

Tom Hegna

Sure. I mean, since you're talking about pro football, let me ask you a question. How often do they train do you think? Do they train once a quarter? Once every six months? A couple of times a year? They train every single day. Sometimes they do doubles. Sometimes they do triples. What people don't understand is that the top producers in any business, but let's just say pro football, they're constantly training. You know what else, they've got a coach. Why would they need a coach? They're the best players in the world. Because the coach sees things they don't. The coach can come up with a game plan. And I think what both you and I do is we focus on training and coaching. Why do people in our industry think that they don't need to train every single day? And, you know, if you or I were training or coaching them, even for 10 or 15 minutes every day, imagine how much better they would be in three months, six months, nine months. And so, I guess that would be my opening pitch, is that if you really want to get good, I mean, you want to be the best in the business, you've got to train a little bit every single day just like the pro football players do.

Mark Miletello

You know, I'm even more excited now because you're spot on. As a producer, as an agent, sometimes we're out there by ourselves; and here I am, 27 years into my career, and I still have a coach. I still have a mentor. I still look for more knowledge. So, you're exactly right, and that's the type of stuff I knew we were going to get right off the bat from you. Right now, let's break for industry news. There's no secret, the Department of Labor rulings are dominating the news in the insurance and financial services stadium. Tom, help us out. How do you think the industry will or will not change with these Department of Labor rulings?

Tom Hegna

Well, you know, it's kind of interesting, I was just on a nationwide debate last week with Knute Rothstead. He's the co-founder of the fiduciary standard, and he debated for the ruling. I debated against it. And I'd encourage your listeners to listen to it. It's free. They can go to apviewpoint.com and register for free and it's in there, or just look up any of my social media. I've got the recordings posted, but I encourage them to listen to it. But to your question, I would say this. I think some good things will come out of it. We all know there were some bad products out there. We all know there were some bad people out there. But what I tried to say in the debate is, you know, Bernie Madoff was a fiduciary, but I don't go around saying all the fiduciaries are Bernie Madoff, and I don't have anything wrong with fiduciaries. But my point in the debate is, right now, it's legal in all 50 states to do business with a fiduciary. So, if you really want a fiduciary, guess what? You can do business with one, but not everybody's choosing that. I said this, "If fiduciaries were so good at what they did, if they were so good, guess what, they'd put everybody else out of business." How could State Farm do what they do? How could New York Life do what they do? How could American National do what they do? If fiduciaries are so good, everybody would have to become a fiduciary, or they'd go out of business. But here's the truth, the truth is they aren't always that great. There are fiduciaries who are not taking longevity risk off the table. There are fiduciaries who are not taking long-term care risk off the table. There are fiduciaries who aren't using life insurance to leverage wealth transfer to children and grandchildren. So, my question to them is how can you be doing what's in the best interest of your clients if you're not using annuities, life insurance, and long-term care? So, that is on their side. But on our side, I would say this, I think we are going to see products, maybe a little more leveling of the commission, which I don't think is bad. I don't think there should be necessarily you make more commission on that versus this, and then you're tilted to recommend that over that. I think that's one of the good things that will come out of this rule is that companies are going to really must look at what is in the best interests of their clients? Now I don't agree that just a fiduciary puts their best interests. I see insurance professionals or financial professionals all over the country, every day, who are putting their client's best interests first; but I think there will be some good things that will come out of it as well.

Mark Miletello

Well, the Department of Labor ruling, I mean, I agree. I think that protecting clients ultimately is the goal, and that's more important than anything, but there is a balance, and I think that's the issue that you're talking about. We must find the balance, right?

Tom Hegna

Right. And what I proposed, at the end, instead of just beating up on my opponent or just trying to trash the DOL rule, what I tried to propose was a fiduciary process. You see I think the argument about fees versus commission, that's ridiculous. I can show you plenty of places where a commission is better for a client, and they can show you plenty of places where a fee is better. So, let's just agree that the fee commission argument just depends on the client. That's a ridiculous rule. But, let's also agree that nobody knows what's going to be the best. Here's the problem with the fiduciaries. It's the best interest. Did you know that if you go to five different fiduciaries, give them your exact same set of circumstances, you will get five different courses of actions proposed?

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Exactly.

Tom Hegna

All in your best interests? I mean, that doesn't even make sense. How could five different people give five different solutions if this is in my best interest? So, what I say is let's agree that nobody knows what's going to be the best, all right? And what math and science do is when you get into a situation where you don't know what's going to be the best, there are so many variables, what math and science look for is the optimal way to do it. And all optimal means is this will be the best more often than anything else will be the best and it'll never be the worst. So, what I propose and what I talk about all the time, I don't talk about the best way to retire, because nobody knows what's the best way to retire. I talk about the optimal way. And so what I proposed at the end of the debate is something that I think both sides could agree on. What if we had a fiduciary process that said step number one you got to have a plan, and it's got to be in writing, and you need to work with a financial professional, and it needs to be reviewed regularly. That'd be step one. Step two, why don't we insist that they cover their basic living expenses with guaranteed lifetime income. That's what all the PhDs who study retirement say you should do. And then what if we said for the rest of the portfolio you optimize that to protect yourself against inflation. Or, if you weren't in the securities business, you could ladder their i