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The Importance of Expertise

The InvestmentNews column posted on Jan. 22 by Matthew Grove and John Moninger leads with: “Financial advisers who view 2012 as an opportunity to develop an expertise in retirement income planning will reap benefits to their practices and will be well-positioned to lead the industry over the next 20 years as baby boomers move from the accumulation phase of retirement planning to the spending phase.” They state that their conclusion is based on a recent survey by LPL Financial, LLC and New York Life/MainStay Investments. That survey is reported to state, among other things, that “about three in four retirees who use a financial professional indicated that they have consolidated their savings and investments with their primary adviser.”

While this business opportunity seems real and significant, the most important part of the opening of this opinion piece is, in my opinion, the need to “develop an expertise in retirement income planning.” Unfortunately, it is much easier to see the opportunity than it is to develop an expertise in retirement income planning. And there are many compliance issues that arise when there is a focus on retirement income planning without the appropriate expertise.

In addition, for life insurance agents, the consolidation of savings and investments with the primary adviser presents issues that go beyond the expertise. For a life insurance agent, a client that wants to consolidate also presents source of funds issues. It takes tremendous discipline to tell a client that wants to move from a securities investment to a life insurance product that the life agent cannot generally recommend or actually move funds that are currently in securities to insurance products without raising source of funds problems. An agent that succumbs to that enticing prospect could face fines, loss of license and other disciplinary actions!