section 1 - The American College Online Learning Center

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a. The client may not be clear about what he or she wants from the relationshipwith the financial advisor.b. The advisor may need to help the client define the relationship.c. Clients may have the following concerns:(1) Can they retire?(2) How to retire?(3) Can you help me through the retirement phase?d. Individuals do not seek help from an advisor unless there is some event or needthat has driven them to seek advice.e. With an ongoing relationship with a client, sometimes the advisor identifies that itis time to consider retirement income planning as the next step.f. Regardless of the task to be performed, the financial planning process of buildingrapport, gathering data and the other steps remains the same.2. Gathering data for the retirement income plan (Video: Gathering data for the retirementincome plan: Littell, Tacchino, Kitces, Guyton)a. Clients have not lived through this before so they do not have any experiencewith this stage of life.b. Those without a clear vision will tend to plan around their current lifestyle.c. Those with a clearer vision may be able to identify what will be different abouttheir retirement lifestyle.d. Clients are going through a difficult life change which can have an impact onthe plan.(1) More time with a spouse is a big change.(2) No longer having the meaning associated with work can be traumatic.(3) This might translate into a changing or unpredictable course of action.e. Are clients forthcoming about their personal data?(1) Generally yes if they are looking for help.(2) The more difficult issue is that there are many questions that the clientsimply cannot answer about this new stage of life that they have neverexperienced.(3) A client may, for example, be the one person who is least able to identifythe costs of retirement.(4) Clients can be a couple, in which case each partner may have differentvisions of retirement.(5) Many find the forthcoming retirement period quite frightening.(6) If one spouse has been handling the finances, he or she may be concernedabout whether judgment will be passed on the job he or she has beendoing.f. Couples may have very different visions of retirement.g. Be sure to spend enough time to understand your client’s goals and aspirations.Once you begin to focus on the facts, this part of the conversation becomes moredifficult.h. Ask questions to help understand how the client feels about scarcity such as, “Howhave you decided in the past whether you have enough money to do something?”7.24
i. Data gathering about goals may continue over years and retirement is in part trialand error. For example, a client plans to retire to the golf course and six monthslater decides that it is not a satisfying life and decides to go back to work.3. Analyzing data for the retirement income plan (Video: Analyzing data for the retirementincome plan: Littell, Tacchino, Kitces, Guyton)a. The evaluation usually begins with a software program helping to determinewhether the client’s objectives can be met.b. A limitation of software is that it assumes no future intervention (which is quiteunrealistic).c. However, it is still a necessary starting point.d. What happens if there is a shortfall?(1) A good strategy is to identify three key elements that the client wants andindicate that the client may be able to have two of the three.(2) Since planning often requires trade-offs, it is not a good idea for theplanning to be done in “the back room.” It is better to model alternativeswith the client and use the tools to instantly identify the impact of eachalternative.(3) It is not easy to identify the impact of a change in the plan (for example,retire a year later or earn more on the portfolio) without trying out thenumbers.(4) Determining what trade-offs the client will be willing to make begins inthe data gathering process.e. Decisions focus around only three major areas:(1) When to retire?(2) At what level of income?(3) What risks (that the goals will not be met) are acceptable?(4) Planning Point: Try to summarize with a simple presentation such asa single PowerPoint slide.4. Communicating the retirement income plan to the client (Video: Communicating theretirement income plan to the client: Littell, Tacchino, Kitces, Guyton)a. Make it a conversation and not a presentation.(1) You are not presenting a plan — you are planning with the client.(2) It can take pressure off the client and the planner to realize that it is anongoing process.(3) The plan is often chosen by the client as alternatives are presented.(4) Some use mind mapping software to capture the client’s decisions of themeeting.b. How many client meetings are required to develop a plan?(1) An initial “get to know you” meeting(2) A second meeting for data gathering(3) A third meeting to present alternatives and determine a course of action5. Implementing the retirement income plan (Video: Implementing the retirement incomeplan: Littell, Tacchino, Kitces, Guyton)7.25
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Huebner School SeriesHS 353 STUDY O
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THEAMERICANCOLLEGE.EDUThrough The A
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c. But it is more comprehensive bec
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(3) Work part-time during retiremen
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SECTION 2: UNDERSTANDING RETIREMENT
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d. Solutions(1) The model considers
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. Other sources of retirement incom
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c. Another option for solving cash
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(b) Net worth statements that ident
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d. Be ready to reengage with the cl
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(b) In financial planning(c) In inv
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j. Planning Point: Planners can use
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e. We also need them to have a bett
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Assignment 2IDENTIFY RETIREMENT INC
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(2) Income4. Determining risk toler
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collaborative experience which focu
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6. Asset allocation and risk tolera
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c. How long will the income last?d.
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. Durationc. Reliabilityd. Other6.
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c. Supplemental Security Income (SS
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. An unused emergency fund can supp
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5. Inflation(2) The expense method
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Assignment 3CHOOSE APPROPRIATE STRA
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. Save as a percentage of income an
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(1) Note that 38% of second income
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(4) The AARP website has a national
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4. Contributions to IRAs and Roth I
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carve out the nondeductible contrib
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(2) Plus salary deferrals (for an i
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a. Example:(1) Save $10,000 in 25%
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(a) This requires knowing four fact
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. Solution(1) Li and Lin Lin are bo
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(1) The increase in dollar amounts
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9. In some circumstances, an indivi
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2. Reverse mortgage basicsa. Almost
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5. Planning considerations(b) Keep
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(2) Some funds that are promoted as
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(1) Berstresser, Chalmers, and Tufa
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RESOURCES FOR COMPETENCY 3: CHOOSE
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(2) From the previous employer(s) p
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8. IRA funded plans (IRAs, SEPs, SI
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. Does the distribution election fi
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6. Net unrealized appreciation rule
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a. Tax-exempt plans include Roth IR
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8. Calculating required distributio
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(2) Exception: If there are separat
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5. Impactc. Tax rates are low in ea
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(7) Based on ordering rules, identi
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7. A married couple who file jointl
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(1) Needed to provide the appropria
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13. Transfers at deatha. Wills(2) A
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(1) The Retirement Equity Act manda
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(2) Beneficiary designation of bene
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13. Overview14. Types(2) The donor
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(1) Charity needs only to payout in
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c. Access should be granted to an a
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nightmare of living probate might h
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(6) Powers to represent their princ
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c. If the policy is term coverage w
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e. Factoring personal and family he
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problem. On the other hand, we can
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d. Adding a cost of living adjustme
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g. Planning Point: Sometimes a high
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(2) Clients may not be able to “a
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c. Ensure that the client is receiv
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a. Example: Because of physical and
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options about where to get his/her
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(2) Facilities, monthly fees, and s
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8. Other strategies that help to co
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standard deviations of the returns
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a collapse in the real estate marke
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a. In a later competency we will di
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years of service with the employer)
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a. Planning Point: Planners should
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(2) If you have locked in food, ren
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(4) Loss-of-spouse risk—Deferred
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(1) Excess withdrawal risk—The us
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(5) Frailty risk—Managing assets
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7. Practice good career management:
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Page 168 and 169: c. Example: Chuck and Sarah divide
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Page 174 and 175: (1) The time horizon used in the ca
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Page 178 and 179: markets have declined by a specifie
Page 180 and 181: (2) Annuities and long-term care an
Page 182 and 183: anticipates ramping down her activi
Page 184 and 185: c. Each of the three portfolios wil
Page 186 and 187: SECTION 4: THE ESSENTIAL VERSUS DIS
Page 188 and 189: d. Clients give up investment contr
Page 190 and 191: geared toward long-term growth. Thi
Page 192 and 193: . Trade-offs involve:(1) Irrevocabl
Page 194 and 195: (1) Rate at which banks lend to the
Page 196 and 197: . Dollar-denominated liabilities of
Page 198 and 199: (a) Dividend taxed in year paid out
Page 200 and 201: 4. Taxationtheir return generating
Page 202 and 203: . Close ended(1) IPO style launch(2
Page 204 and 205: (3) Tax control17. Conversations in
Page 206 and 207: (3) Mutual funds provide lower cost
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Page 212 and 213: 6. Today’s annuitization rates ar
Page 214 and 215: h. Planning Point: Markets are very
Page 218 and 219: a. Problems with implementation are
Page 220 and 221: c. Product solutions work together
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Page 224 and 225: (b) A traditional fund company(c) A
Page 226 and 227: d. Evelyn is in great health and he
Page 228: RESOURCES FOR COMPETENCY 7: INTEGRA
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