Guiding clients down the retirement slope

Proactive Advisor Magazine: Brad, when you first meet with a prospective client, how do you describe your value proposition?

I tell prospects and clients that, conceptually, retirement planning can be pretty simple. However, there are a multitude of choices to make, and it is important to make well-informed decisions. That is where we come in—providing the knowledge base, the network of experts, and the disciplined planning process to help make that journey as smooth as possible.

Retirement is a process of building up your net worth over many years of working hard in your chosen field of employment and then taking distribution of that money over what can now be almost as long a period. It is very important that you not make a critical error in the distribution phase. I tell clients to think of it like mountain climbing.

A tremendous amount of energy and willpower go into the actual climbing phase, but it is usually the least dangerous part of the journey. The climbers who get into trouble typically do so when they are coming down the mountain. They let their guard down and have not planned the descent the way they thoroughly planned the ascent. So, following the analogy, we are there to help guide them in what can be a challenging journey.

How does that process work?

We have two distinct processes in our group that we think are somewhat unique. First, my close associate James Billingsley and I work as a team on almost all client relationships. I joke with people that they should think of us as riding a tandem bicycle together—we both put a lot of effort into the relationship and are closely connected on all issues.

James has many years of experience in the industry and tremendous strengths in retirement planning and investment planning. My real strengths are in the areas of prospecting, networking, and overall account management. We both could do a very good job on our own, but I think as a team the client gets the best of both of us and the relationship benefits from our team approach.

The second aspect of the process is having an excellent network of third-party experts in place who can help clients out with any specific needs. This is not a one-shot deal; they are ongoing strategic relationships we call upon very frequently. Our network can cover a variety of needs such as Social Security planning, college planning, estate and legacy planning, tax planning, and long-term-care planning. It also includes the expertise that resides at our firm overall and our relationships with third-party money managers and other product and service providers. We put a lot of effort in pulling all of this talent together for our clients. We are able to present comprehensive options for clients in managing the distribution phase, with an emphasis on generating income throughout one’s retirement lifetime and hopefully passing on a legacy to heirs.

What are the overriding concerns of your clients today?

On the surface, it is making sure they do not outlive their resources for retirement income. But it goes much deeper than that. Clients are faced with what can be an intimidating array of choices in their retirement planning. We have all heard how there are literally hundreds of Social Security claiming strategies alone. When you factor in college planning, tax-effective distribution strategies, legacy planning, and unique circumstances such as a special-needs child or elder care for parents, it is definitely an area where clients need expert guidance.

“It is important that you not make a critical error in the retirement distribution phase.”

The other major attitudinal factor relates to risk. Many people were burned in the dot-com crash of the early 2000s or in the credit crisis of 2007–9. And now, given where we are located in Oklahoma, the volatility in the energy industry is top-of-mind for many people. The clients we work with who are planning their retirements are understandably concerned with risk, as are we, and lean toward wanting conservative solutions for their investment planning and distribution strategies.

How do you work toward addressing that?

We do not focus on a promise of market-beating returns; what we do is champion the idea of trying to deliver a high degree of security for one’s assets. If an advisor tells you that his or her firm is going to deliver consistent returns that “beat the market,” we tell clients to look closely at what the risks associated with that will be. It is, to our way of thinking, an unrealistic and unacceptable approach. We promote the fact that we use reasonable rate-of-return assumptions and that we feel there is a high degree of probability that those returns are achievable.

Everything starts with an analysis of each individual’s or couple’s current financial situation. We believe the coordination of all elements of a plan is critical. For example, planning for disability- or life-insurance coverage cannot be conducted properly in a vacuum without understanding a client’s overall investment plan and potential distribution strategies. We also think that planning along various time horizons is critical. Circumstances change for people over time and some of those can be planned for directly and others need to be planned for on a contingency basis.

When it comes to specific investment strategies, we favor a managed-money portfolio approach with a high degree of risk management built in. These portfolios can contain a mix of investment solutions such as variable annuities, managed and traditional fixed income, and both passive and active equity strategies. Anywhere from about 10% to 50% of our clients’ assets are in some sort of managed investment strategy.

First and foremost, we want to build portfolio solutions that can weather periods of market stress. Since we are committed to providing a high degree of security for our clients, the risk-management capability of our outside money managers is a prime consideration during the selection process. We look closely at how they performed during the steep downturns of the early 2000s and 2007–9 and try to dig deep to understand both their philosophy and their systematic methods and models for handling all kinds of market conditions.

This approach has served us well and helped us build our practice over the years. We tell prospects that we welcome their reaching out to our current clients to understand what it is like to work with us. We believe our commitment to conservative growth strategies, risk management, and an integrated planning process makes a great deal of sense in today’s unpredictable economic and market environment.