PowerTalks Podcast

Welcome to PowerTalks, the podcast for growth-minded advisors. Today, Jack Martin, our strategic marketing consultant and founder of the Elite Advisor Group, talks with Jamie Hopkins about “Rewirement: the Path to a Thriving Income Planning Practice.” Ninety percent of pre-retirees are “clueless” about how to handle decumulation. In this episode, we’re talking about how to address those needs and build a widely successful business doing it. Jamie is an attorney, ChFC and CLU. He is currently the Director of Retirement Research for the Carson Group. He recently joined Creighton University as Professor of Practice in the Heider School of Business. Previously he was in charge of curriculum for the Retirement Income Certified Professional designation at the American College and co-director at the NY Life Center for Retirement Research. To help you start the retirement income planning process with your clients, we’ve prepared a brand new guide to deeper client conversations. It’s called “Longevity: Blessing or Curse” and it is available to download right now. You’ll find the download button right on this podcast page. It just takes a minute to get your copy. Our Advisor Development Consultants are standing by to help you turn ideas into action. Just give us a call at 800.752.0207 Stay connected with future episodes by subscribing today and keep posted on all our offerings by following InsurMark on LinkedIn.

  Host Jack Martin, strategic marketing consultant and founder of the Elite Advisor Group talks with “Coach” Joe Lukacs about how advisors can finish 2018 with a bang, and set the table for an even bigger 2019. Coach Joe is the founder and CEO of the Magellan network. For the last 25 years he’s helped the industry’s leading advisors realize more success.   SUZANNE:           00:03     Welcome to our PowerTalks podcast. Where leading advisors find the field to drive their business alpha. For those of you who may be joining us for the first time, InsurMark is an advisor development organization. This is the next step in our 35 year history of aligning the independent financial advisor with best of breed resources and services. From a dedicated professional team, product partners, technology vendors, practice management leaders and business development systems. Today Jack Martin, our strategic marketing consultant and founder of the Elite Advisor Group will be talking with coach Joe Lukacs about how advisors can finish 2018 with a bang. And set the table for a bigger 2019. SUZANNE:           00:50     Coach Joe is the founder and CEO of the Magellan network. For the last 25 years he's helped the industries leading advisors realize more success business. Now, let's join Jack and Coach Joe. JACK:     01:05     Thanks for joining us, today. This has been a pretty interesting year for advisors, what with all the volatility, regulatory and technology changes that we've seen. It certainly made it challenging for a lot of advisors to find more client time, more family time and to achieve that work life balance. Today, we're talking with performance coach extraordinaire, Joe Lukacs about how to finish 2018 with a bang. I'm curious. How did the moniker Coach Joe get started? COACH JOE:        01:37     It just came about quite frankly, Jack, after 25 years. It was just simple to say Coach Joe versus Joe Lukacs with the funky spelling that I have. Instead of having everybody butcher my last name, we just kinda eliminated it a little bit and we like to keep things simple, here. JACK:     01:53     Gotcha. In spite of all this volatility and all these changes, many advisors are having a great, let's say even record year. Joe, how are you and your advisor clients approaching your end? COACH JOE:        02:08     Jack, that's a great question and I think it depends on where we're at. For your comment, I think advisor in one to three conditions. They're having a record blow-out, excellent year. They're having an okay year and they're not having a good year. Think about the three different types. What I've always found very fascinating, when somebody has, let's just say record year, if you talk to them, one of the biggest fears is how do I do it again, next year? Or how do I surpass it? In essence it becomes a bit of a stresser. COACH JOE:        02:41     The second scenario, when you're having an okay year, could have been better, you get a passing grade. You're not gonna get an A. Question then comes, "What do I need to do better?" "What do I need to do different?" Then the third scenario is, it just didn't work out. For whatever reason. Maybe there were some personal challenges that distracted you, whatever it is. We were in survival mode the entire year. That's where you have to look and say, "What has to be different? What different dynamics do I need to bring in?" COACH JOE:        03:12     I think, a little bit, it depends on where you're coming from as you exit out of 2018. Kind of pivoting towards 2019. I think of all scenarios, like the advisors having an excellent year, you've gotta keep your foot on the gas. And here's why. The reason why you're having an excellent year is cause you're executing things. You're behaving a certain way. You're focused on certain things. Sometimes there's a tendency to start sandbagging a little bit going into November, December and that normally allows our habits and the structure that we put in place, that got us our excellence to wither. We wanna keep things going as long as we can; keep moving forward. COACH JOE:        03:53     If you're kinda in that middle box, where it's been okay, you wanna start ... whatever changes that you think you need to make, you don't wanna wait till January 1st and say, "Okay, new year. Let's go ahead and let's make these massive changes come January 1st." Because the reality is that your 2019 needs to start, now. It's a dual mandate. Finish 2018 but look at where you have your gaps and then what you wanna do there is start working on them, now. November, December, so everything is grooved come January 1st. Then, if you're in the third scenario, I think it's really a time to be reflective and say, "Okay, is the reason why I had a poor 2018 internal, external or a blend?" What I mean by that is external. Maybe there's something. Maybe a family member, a relative was sick or something. There was a distraction and some adversity, if you will, that was external. COACH JOE:        04:48     Or, was it totally self sabotage. You just kind of you dig out of the blocks really well. We'll talk about that in a little bit. You defaulted back in survival mode and for some advisors, Jack, this is their entire career, is like 20, 25 years of start up. Every year it's a new year. Every year it's gonna be different. It really doesn't do that. It really doesn't become that. I think it really depends on where you're at, but in any of these three scenarios, the one common theme is gonna be this. 2019 starts today. The prep for it, the habit building. The formation of the systems need to start now so you enter the New Year the way that you need to. JACK:     05:32     With your advisor clients, do you typically have a checklist of things that you want them focused on at year end? Is there a set of tasks or strategies that you're keeping in front of your folks? COACH JOE:        05:50     Yeah, there is Jack. Actually I called the year end punch list. So, some of the elements on that, would be, "Hey, where are we with our CE credits? Are we good to go on that? Are we gonna get any surprises come January? We wanna have a good look at that. On the client side, obviously RMD's, tax loss harvesting, if that's appropriate. We wanna make sure that's happening. From a team perspective, we wanna schedule a team offsite towards a latter part of the fourth quarter, maybe kind of as we wrap up December, to bring the whole team together, do an offsite, go over the year, make sure everybody's on the same page. What needs to be better, different, enhanced for 2019, we wanna be doing that. COACH JOE:        06:33     In addition, what are we doing for the clients for the holiday, if anything? Are we doing Thanksgiving cards, holiday cards, open house, gifts, that needs to be decided if it has not already been decided. Then, quite frankly what I love, is planning for a 2019 event. In early January, welcome to 2019 event. We started testing these about four years ago with clients. A huge success. I really like the idea of all my clients in the second week of January hosting some type of educational type event, kind of gets us off to a great start in the year. COACH JOE:        07:11     Those are some of the deliverables in that punch list. Probably the most important thing is how you gonna handle business planning? Again, if you had a great year this year, what's the plan to be even better next year? If you had an okay year, what's the plan to have a breakthrough to the next level? If it was not a good year, what's the plan to be different? You have to change things. COACH JOE:        07:33     Those are some things we look at and I start talking to my clients about this actually, early October. That way, we're all on the same page and we leave nothing to chance. JACK:     07:45     We've learned in the last few years how important the psychology is to business success. So, mindset has a big role to play in how we position ourselves and how we execute. And how we ultimately succeed or not. With your folks, what are the things that you're talking to them about with respect to mindset? COACH JOE:        08:09     Jack, great question. The first thing we have to tackle is how do you even define mindset? Because that's a big word. It can mean so many different things to so many different people. The first thing and this is relatively new work that I've done for the last 18 months or so, is I've taken mindset and actually broken it down to components. What I do with my client, we work on each component. These are in no particular order. I call it the four plus one. The first thing we'll look at is what is the advisor's beliefs? Beliefs around success? Beliefs around failure? Believes about what they think they deserve? COACH JOE:        08:45     Those are just some of the examples. Because if you're an advisor or any human being and your whole belief set is, "I just wanna make enough money to survive," well, that will become a self-fulfilling prophecy. If you have a belief that it's hard to get new clients, it will become a self-fulfilling prophecy. Or, "I'm not good at workshops." "I'm not good at this," you have this internal ... you have this belief set going on so we wanna examine what it looks like. The second thing we're gonna look at is what's important to you, your values. For example, if I'm an advisor and looked a lot of advisors in our space, if you asked them what's important to them, they're gonna talk about things like success and freedom and all those things. COACH JOE:        09:27     Think of it this way, if I'm very freedom oriented and every time I take on a new client, I feel like I have less freedom cause I don't have the right business model, the advisor will self sabotage bringing on new clients because yes thing with the economics. But on the other side, it's like every new household there's another set of reviews, touch base calls, things like that. We get b

In the inaugural episode of the PowerTalks Podcast, host Jack Martin, strategic marketing consultant and founder of Elite Advisor Group, talks with Dr. Roger Ibbotson about his latest research and why financial advisors should consider Fixed Index Annuities as a bond alternative. Dr. Ibbotson is an economist and creator of the iconic "Stock, Bonds, Bills, and Inflation" chart. He is Professor Emeritus of Finance at the Yale School of Management. He is a Member and the Chairman of Zebra Capital Management, LLC. We are also joined by John Holmgren who is the President of Zebra Capital Management.     FULL TRANSCRIPT Suzanne Lynn:    00:01     Welcome to our PowerTalks Podcast, where leading advisors find the fuel to drive their Business Alpha. InsurMark is an advisor development organization. This is the next step in our 35 year history of aligning the independent financial advisor with best of breed resources and services, from a dedicated professional team, product partners, technology vendors, practice management leaders, and business development systems. 00:31     Today, Jack Martin, our Strategic Management Consultant and Founder of Elite Advisor Group will be talking with Dr. Roger Ibbotson about his latest research, and why financial advisors should consider the fixed index annuity, a bond alternative. Dr. Ibbotson is an economist, and a creator of the iconic Stock, Bonds, Bills, and Inflation chart. He is Professor Emeritus of Finance at the Yale School of Management. He is a member and the Chairman of Zebra Capital Management, LLC. 01:05     We are also joined by John Holmgren, who is the President of Zebra Capital Management. And now, let's join Jack and Dr. Ibbotson. Jack Martin:        01:14     Hello, Dr. Ibbotson. Hey, thanks for joining us on the Jay Talks Podcast today. It looks like Yale might win the Ivy League in football again. Roger Ibbotson: 01:23     Well, I'm certainly hoping so, but I'm not gonna be an expert on that although I have attended a game already, so. Jack Martin:        01:30     Yeah, so today what we wanna talk about is your white paper. We wanna talk about Fixed Annuities and Bond Alternatives. You started your career as a Bond Manager at the University of Chicago, right? Roger Ibbotson: 01:45     Yes, I actually managed the bond portfolio at the University of Chicago, and it was a very interesting time. It was a time when bond deals were still rising, but they were about ready to hit their peaks in the early 1980s. And they got into the double digits, so it was an interesting time but not exactly like today, because today's yields are much lower of course. Although we may have the rising yields. Jack Martin:        02:10     Right. So what's your thinking about where interest rates and the bond market are today? Roger Ibbotson: 02:16     Well, you know I think they are really low actually, because bonds have actually, yielding around three percent today. And this is after a long drop in yields from the early '80s when they were double digits, falling all the way to three percent, so it's been a time when people historically have really yielded great returns on bonds. Because during that period of drop, they actually had a high yield, plus they actually got a capital gain from the drop in yields, but the way a bond works is, you get the yield and then when the yield drops, you're practically, you're holding the higher yielding bonds and your bonds go up in price. So, people for decades have really realized not only that yield, but substantial capital gains in bonds. Jack Martin:        03:09     In the title of your white paper, you use the term bond alternatives. So, help our audience understand what that means and why we need to be thinking about those today. Roger Ibbotson: 03:17     Well, you can see why we might need the bond alternative when you think of today's yields now, because now they are at that three percent, where are they gonna go from here? They're much more likely to go up than down. And if they go up, you end up with a yield plus a capital loss. And so you financially have negative returns on your bonds. So, we need an alternative actually, and that's why we looked at this whole situation because we need to look at some other way of actually taking less risk, at the same time getting a decent return. So we need another way to do this, which we don't wanna have capital losses in our bonds, which we might very well have. We need an alternative. Jack Martin:        04:02     Do you think investment advisors and investors generally maybe have a little bit of a blind spot about those bond risks? Roger Ibbotson: 04:09     Well, they do because they've been so used to actually getting positive big returns on their bonds. So, they've viewed bonds as a really a substantial source of returns. But that's not what's gonna happen going forward. Even the three percent is probably a high estimate of what you'll get going forward, because as bond yields rise, you're gonna have capital losses. So, yes they do have a blind spot, and for good reason. They're looking at history, and certainly bonds have served everybody very well, historically. It's just that today, times are a little bit different, and that today at that low yield, you're not gonna get those high returns anymore, and you may even have capital losses. Jack Martin:        04:53     So, is there something in the way that we're wired or is there something behavioral, you know behind why people are still so in love with bonds, based on what you just said? Roger Ibbotson: 05:05     Well, people tend to extrapolate of course. Whatever happened to them last year or last decade, they expect that to happen again. But what actually, you know bonds have a structure to them. You know that's not gonna happen again. We actually know what the yield is today. So when you actually know what that yield is, you know that the only way you're gonna get a capital gain is if the yields fall further. There's not too much further they could actually fall. But they could rise definitely. So behaviorally, people tend to look back at the past and think that's the future. But obviously that's not the case in the bond market. Jack Martin:        05:42     When you were at Ibbotson back in 2007, you wrote a monograph titled, Lifetime Financial Advice, and in that you discussed investing over one's life cycle. So, should investors be concerned about longevity risks with that in mind? Roger Ibbotson: 05:59     Well, they certainly should, and actually you know when you think of the whole life cycle that somebody invests in, actually the insurance can kind of play a role in every piece of it. In the early years, people have steady wage income typically, and they could take on a lot of equity risk. But the other thing they often need is life insurance. So, life insurance pays a role. Roger Ibbotson: 06:21     Now, as you start approaching retirement, you actually have to take less risk and here again, insurance can play a role, and here now we're looking at accumulation annuities, such as FIAs can play a role in accumulating your capital in a less risky way. And then when you get into retirement, annuities can also play a role, because here the retirement people need continual income streams. They can have payouts. They don't know how long they're gonna live though, because that's part of the ... that's what longevity risk is all about. Of course, we want to live for a long time, but if we do there's some chance we would run out of money, and actually the pay out annuities actually help to solve that problem because they pull everybody together, so that each one of us can actually get an income stream for the rest of our lives. Jack Martin:        07:14     So, just to follow up on that, conventional wisdom says that as we approach retirement, we wanna invest a little bit more conservatively. So, what makes those years right before retirement so critical? Roger Ibbotson: 07:26     Well, those years are, we've been saving up for retirement and actually, those are the years to actually have your sort of your maximum financial wealth because as you start into retirement, you start withdrawing from that, and paying for your retirement. Now, if you have a loss when you have the biggest amount of money at stake, that loss actually can ruin your retirement really. So, they're really important years. And that's why we're recommending in general, and I've always recommended, that as you start approaching retirement, you need to de-risk. You need to take less risk in that portfolio, and of course the conventional way that's been done is with bonds. But I guess now, now we have other instruments like Fixed Index annuities. Jack Martin:        08:14     And so, there's been a lot of conversation about those first few years after retirement, and the risks associated with that sequence of returns and those kinds of things. So, are the risks different? Should we have a different perspective on those first few years after retirement? Should we invest a little differently? Roger Ibbotson: 08:33     Well they are especially critical because we no longer have the wage income, and we are actually typically making these withdrawals. So, the combination of having that relatively large financial stake and withdrawals taking place, and then superimposing it on a return, if you have a bad return here, it's actually gonna take a large chunk out of your financial wealth. If you have a bad return much later, it doesn't matter as much because you won't have as much financial capital anyway at that point. Jack Martin:        09:08     We've been throwing around this term, fixed indexed annuities. What is a fixed indexed annuity? Roger Ibbotson: 09:15     Well, first of all it's based on an index and actually, it's based on ... and it's an insurance contract that is participating in an index. So, in our case, we'll talk about that later, but in our case it's actually an