"You're going to have clients that retire into every kind of market," says Jim Nagengast, so any portfolio you build to deliver retirement income, he argues, must provide income regardless of market conditions. Moreover, the client has to buy into the retirement plan, so that emotions don't get in the way of following the plan.
That's why, says Nagengast (left), who was named CEO of Securities America this summer, the independent broker-dealer has launched its NextPhase Retirement Income distribution program.
One day after the midterm elections, Nagengast sat down with AdvisorOne to discuss the 1,900-rep BD's retirement income strategy. He also to touched on the other initiatives that Securities America is focusing on in the highly competitive IBD space, including its program to help reps buy other advisory firms.
Tell me about the retirement income plan. What's special about it?
What we're doing with our retirement income distribution (RID) program is more complicated, more real life, using a time-segmented approach rather than a systematic withdrawal approach. It uses five or six pools of money, guaranteed on one end of the spectrum, and more aggressive on the other, It outperforms systematic withdrawal, and it reduces the emotional discomfort clients can have with a systematic withdrawal approach. You're going to have clients that retire into every kind of market, including down markets. Don't you want something that will perform in all markets?
It also presents the client with a visual picture of how they are making progress toward their retirement goals. We've also developed marketing around the program, helping advisors getting clients in the door, and built a proposal generator that includes cash needs planning for down the road.
So you build a plan, then manage and track it, automatically telling the advisor when to take action to harvest gains and reallocate [among the buckets].
(Securities America executive Zach Parker spoke about the RID plan during the 3rd annual Retirement Income Symposium in Chicago on Nov. 8)
How long have you been running the program, and why are you doing it?
We've been doing this for three years now. We want to be a fee-based leader among independent broker-dealers, and for that, you need to be a retirement income leader.
