As financial professionals, we work hard to limit our clients’ exposure to risk in retirement.
Increasingly, it’s not enough to simply focus on market risk or income risk – the traditional areas of financial planning.
In today’s volatile political climate, two new risks are more important than ever. And those two risks are closely aligned.
The first is Tax Risk.
Tax Risk is, simply put, the risk that your client’s taxes will not be significantly lower in retirement than they are today. How exposed is your client to Tax Risk? It depends how much of their retirement assets are in tax-deferred vehicles, like 401(k)s or IRAs. If like many Americans, the answer is “all” or “most,” then your client could be faced with a BIG tax bill in retirement if their taxes don’t go down. (How big a tax bill might they face? You can request a complimentary Stonewood report to find out.)
The second risk is Legislative Risk.
Legislative Risk is the risk that Washington changes the rules, and those changes negatively impact your client’s retirement income.
We saw a powerful example of Legislative Risk in September, as House Democrats unveiled a $3.5 Trillion spending bill that made significant changes to how IRAs, 401(k)s and even Roth accounts can be grown and taxed. You can check out the complete on-demand webinar Stonewood hosted on this legislation.
But I’ll give you the key takeaway here: IRAs, 401(k)s, and Roth accounts have a big bullseye on them, as our government looks to raise new tax revenue to fund runaway federal spending. As financial professionals, it’s up to us to help our clients understand this growing risk and prepare for it.
You can help your clients hedge against Tax and Legislative Risk by using IUL as part of their retirement approach. Whether you’re already talking taxes in your prospecting and client meetings, or you haven’t incorporated the tax story yet, Stonewood can help make mitigating tax and legislative risk a central part of your practice. Schedule a call to learn how.
How Stonewood Advisors Stay Ahead of the Next Planning Conversation.
Watch a recent Stonewood Study Group focused on the legacy planning conversation. You’ll see how Stonewood helps advisors break down timely planning topics, client conversation angles, and practical strategies you can put to use immediately.
Expert insights. Real strategies.
Study Group Replay
Timely planning topics
Real client conversation angles
Practical strategies you can use
Real Advisors. Real Results.
See how advisors are using Stonewood software to win larger cases and deliver better
outcomes for their clients.
An advisor was working with a prospect who was a real "do-it-yourselfer" when it came to Roth conversions.
The client was converting assets up their existing tax bracket – and hadn't considered any impact to
IRMAA.
With Roth Done Right, the advisor was able to show an alternate pattern that sped up the conversion to
6 years. The new structure offered $30,000 savings in conversion taxes – a 20% reduction on the
prospect's conversion tax bill. The report also showed hundreds of thousands of dollars in long-term
tax and IRMAA savings from the converted assets – an amount the prospect hadn't been able to quantify
on his own.
Outcome
A new client with $1M in new AUM, and a $1M FIA sale to fund the conversion process.
An advisor was working with a prospect who already had assets with Ken Fisher. Fisher's team presented a
5% systematic withdrawal projection, so the advisor needed a stronger way to frame the income
conversation.
Using the Annuity Alpha report, the advisor showed how an annuity could deliver over 8% in annual cash
flow with lifetime income, plus a long-term care doubler. The contrast was clear enough that the prospect
moved forward.
Outcome
$1.5M placed and a $100K in new business revenue.
An advisor was working with a 58-year-old couple with an established, well-funded retirement income plan,
leaving an additional $3M IRA to build out a legacy for the kids. The couple's existing advisor had no
real additional plan for this money, other than to keep it in their managed account and grow that money as
much as possible for the kids.
Using the Legacy Done Right report, the advisor showed the need for tax planning on this $3M IRA.
According to the advisor, the simple analysis "opened up the wallet" to the Roth conversion story. The
advisor then used the blended Roth/Life feature in the report to show a blend of Roth Conversion assets
with some Life Insurance to help maximize the client’s legacy.
Outcome
$3M in motion. The advisor picked up a $1.5M FIA sale that will be converted to Roth. And the advisor
also sold a 5-Pay Protection focused IUL policy at $225,000 of premium per year.
An advisor group incorporated the Total Tax Burden report into the strategy presentation for all new
prospects. They ran the tax snapshot for every new client as part of their first meeting conversation,
quantifying the growing tax burden of IRA money – and illustrating the kinds of tax savings possible
when working with their firm.
Starting in January of 2023, this simple analysis was presented to every single prospect who walked in
the door. The goal was to differentiate their practice and drive overall revenue growth through various
Roth conversion strategies.
Outcome
From 2022 to 2025, new annual AUM rose from $5M to $50M. Annual FIA sales rose from $3M to $35M.
And annual life premium rose from $50K to $1M.
