If you are a fiduciary financial advisor, then you have to have your clients’ best interests in mind. However, there is only so much you can do for a client’s 401(k) plan since you don’t have access to their account. That can lead many to wonder how to go about helping clients retire. Luckily for a financial advisor or retirement planning advisor, you don’t need access to your clients’ 401(k) to assist them in preparing for retirement. You have other options. But first, let’s discuss what you can do to help a client with their 401(k).
What Does a Financial Advisor Do for a 401(k) Plan?
While you as a financial advisor do not have direct access to your clients’ 401(k) plans, you can still assist them with managing their plans. For one, you can recommend how to spread their contributions across investments to best meet their goals, if their plan allows them to choose.
You can also assist clients in maximizing their tax benefits using their 401(k) by advising them on how to adjust their contributions. For example, if they put more money in their retirement account, they can pay less in income taxes for the time being. Advising them on when to withdraw money from their account can also help them save the most money on their taxes.
Even though you cannot access clients’ 401(k) plans yourself, assisting them with it can still benefit you financially.
How Does a Financial Advisor Get Paid on 401(k)?
Clients pay you for your advice on their 401(k) plan. You might lump this assistance in with the rest of your financial planning services, or you may charge extra for 401(k) wealth management. However, for those of you who aren’t 401(k) financial advisors (the advisors who help employers pick the 401(k) plans to offer to their employees), you won’t make commission on your clients’ retirement plan. Keep in mind that you will not manage these specific investments for your clients. You can merely give advice and leave it to your clients to make the decisions. Consider adjusting fees for these services accordingly.
There are better ways out there to enable your clients to retire comfortably while also making a commission. One such way that many advisors don’t know much about is encouraging them to consider a life settlement, if your client has purchased a life insurance policy.
How Life Settlements Help With Retirement
A life settlement is the sale of all or a portion of a life insurance policy, even term insurance. Your client will receive more than they would from its cash surrender value. However, it will be less than the death benefit.
Some of the benefits your client will experience when selling their life insurance policy through a life settlement include:
- Avoiding market volatility. They are not affected much by the current state of the economy.
- Gaining a high return on investment. They’ll get a lump sum of cash that they can use for medical expenses, vacations, or whatever else they have in mind.
- Having more choices. The life settlement industry is growing, so finding an investor to pay for their life insurance policy will be easier. And more choices mean they can get the most out of the settlement.
- Getting rid of expensive premiums. No premiums means more money savings for your clients each month.
While your first thought should be about how the life settlement will benefit your client, you’ll also want to know how it can benefit you financially as well. So how much commission do financial advisors make off of a life settlement? Typically, they will receive 10-25% of the value of the life insurance policy. Plus, if you’re a fiduciary financial advisor, educating your clients on life settlements will prevent any legal repercussions for not having your clients’ best interests in mind. Being transparent with them will promote trust and could lead to even more business from both your client and from anyone they might send your way.
Get Life Settlement Assistance from Life Settlement Advisors
To help your clients get the most out of their life settlement, you’ll need a professional who knows all about selling life insurance policies, like Life Settlement Advisors. We have over 50 years of combined experience in educating both clients and financial advisors on the ins and outs of selling life insurance policies so that both have a better understanding of whether a life settlement is the right choice. If you both decide that it is, we will sell the life insurance policy for your client without any out-of-pocket costs.
Ready to learn more about how a life settlement policy can help your client with retirement and you with a commission? Contact us to learn more and to get started.
