RJ Malyk 0:03
Today on the BPN Insights Podcast with Chip Kispert, our guest is Sheryl O’Connor, CEO and Co-Founder of IncomeConductor, the retirement income planning platform, changing how advisors build, communicate and deliver income strategies for clients in retirement.
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Chip and Sheryl will cover the vision behind the platform, what it looks like in a client meeting and where retirement income planning is headed right now.
Here’s Chip.
Chip Kispert 0:29
Thanks, RJ.
Sheryl, welcome to the BPN Insights Podcast.
Sheryl O’Connor 0:35
Well, thanks for having me Chip.
Chip Kispert 0:37
So one of my questions I always love to start with is tell us how IncomeConductor came to life and what it is making possible for advisors today.
Sheryl O’Connor 0:51
So I’ve been in the industry for over 25 years and like many people in the industry, I was primarily focused on helping clients accumulate, invest and grow their money, right?
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But when the 2008, 2009 global market crash occurred, I saw first hand how that was affecting people moving into retirement and people in retirement.
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And I knew there had to be a more effective strategy than what the industry and the tools were providing, a strategy that could help retirees stay confident through crashes like that.
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And that’s when I discovered Time Segmentation and teamed up with Phil Lubinski, an advisor who first conceived of the bucketing approach to retirement income planning back in the 1980s.
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And along with Tom O’Connor, we developed IncomeConductor to support advisors.
Using this approach to give clients the confidence to write out those tough market periods.
Chip Kispert 2:08
Makes perfect sense.
And and we’re going to dig a little deeper into IncomeConductor.
2:14
But as we’re looking at kind of a problem that I see out there and in our round tables, we’ve we’ve covered this to some extent, but most advisors would say they do retirement income planning.
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What are they missing and why is that gap been so hard to close?
Sheryl O’Connor 2:32
And yeah, I think it’s pretty simple.
Advisors are doing retirement income planning the same way they did 30 years ago, using the same rules of thumb that have, you know, kind of perpetuated in the industry.
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For example, they run all plans assuming clients will live to 95 or 100 versus using reliable actuarial longevity projections.
They test a withdrawal rate like the 4% rule versus creating a cash flow that’s customized to each client spending goals using individualized expense inflationary increases.
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They don’t include critical healthcare expenses or use national averages versus using personalized healthcare and long term care expense data.
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You know, and while all this has been going on, the world has changed drastically.
Retirement is much more complex.
Products have evolved.
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We have access to really great personalized data in many areas and can easily integrate it into our technology.
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And most of all baby boomers are very different from their parents generation, you know and they have different expectations of what they want and need from financial advisors.
Chip Kispert 4:16
There’s one other problem in there and and that from the retire, you know if I look at a traditional financial planning platform disbursement, I don’t find it’s really taken into account for some of the other programs.
4:35
Can you comment on that?
Sheryl O’Connor 4:36
Well, you know, I have talked with the heads of the major financial planning tools when I was developing income conductor and they were very clear about the fact that they did not focus on that distribution.
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They really focused on accumulation planning for clients and advisors.
So I think it’s been a long neglected area.
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And I think the, you know, the massive wave of baby boomers into retirement has kind of woken people up to the fact that this has been neglected and it needs attention.
Chip Kispert 5:13
Yeah.
You know, it’s, you know, for us, it’s fascinating.
I remember we were in a roundtable.
It might have been three years ago, and this was a a hot subject and you know, it is an area where this disbursement strategy and it needs to be put in place.
5:31
You know, if you look at financial planning today, it’s fabulous at gathering assets.
I, I agree with you right there.
5:39
Let’s kind of change gears a little bit. You know, you just alluded to it.
5:44
Lots of lots of planning platforms out there, but what makes IncomeConductor really special?
Can you walk us through what it looks like when an advisor sits down with a client using IncomeConductor?
Sheryl O’Connor 5:59
Yeah and I even want to take a step back.
6:02
So even before that client meeting, I think that technology needs to help advisors position themselves as retirement income specialists.
This is a really complex, unique area of a client’s financial life cycle.
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So we provide training, a suite of sales and marketing tools, and a proven process on how to use those tools to really differentiate themselves from other advisors the client may be considering going with.
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You know, there’s a lot at stake with over 124 trillion in assets in motion over the next decade or two.
It’s the expert, not the generalist Who Will Win and retain those clients.
6:56
So that’s the first step.
Once you put the client into the meeting, you know client conversations are important, but it’s the experience the client remembers.
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If it’s a great experience, you’ve locked in a lifelong client.
You know most planning tools are back office tools.
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They’re complicated with multiple input screens and steps to go through, and the only thing the client sees are the generated reports, and that’s not a memorable experience, especially if they’re seeing the same reports from different advisors that they’re interviewing.
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IncomeConductor is built to be used in collaboration with the client.
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All the planning is done on a single very visually appealing screen that updates in real time when data is added or modified.
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The client can clearly see their plan coming into, you know, taking shape and the impact their decisions have on their overall plan within seconds.
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So because clients are engaged, they have a much deeper understanding of the components of their plan and advisor save hours and planning time.
8:25
So that’s really a great experience for both the advisor and the client and and very different from what other tools offer.
Chip Kispert 8:34
So Sheryl, one of you talked about the experience.
8:37
I love the interactivity of it. I mean, because you’re really you’re able to, to pull the levers, so to speak, right.
8:45
But but when we look at kind of that experience today, is that an in person experience or a virtual experience?
8:54
It’s both.
So we have advisors, you know who because of the proclivity of Zoom and other webinar hosting tools, they have clients all over the country.
9:08
They have clients, you know, that take extended vacations.
So they work with their clients over Zoom meetings as well as in the office.
And IncomeConductor is perfect for that.
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They just pull up the application, you know, it, it just totally engages the client, whether it’s on their own computer screen or up on a big screen in a client conference room.
Chip Kispert 9:34
And that’s, I love that, that flexibility.
Can you share, you know, one of the things that I’m your statistics person, a numbers person, you know, advisors that adopt IncomeConductor, how do they see their business change?
Sheryl O’Connor 9:53
So a lot of our advisors use IncomeConductor as a complement to a full financial planning tool like eMoney, MoneyGuidePro, right capital.
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We are not a replacement for their tools, right?
But IncomeConductor really differentiates them in this space.
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And some of our advisors Chip have had such a success with gathering assets.
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You know, let’s face it, baby boomers hold 50 to 60% of the wealth in this country.
So they are really a very lucrative demographic to specialize in and we’ve seen advisors double their AUM in one to two years.
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One of our RIAs at LPL credits its 25 billion in assets to using income conductor as part of their, you know, overall strategy of working with high-net-worth business owners.
Chip Kispert 11:01
Yeah, and that’s, that’s fascinating and, and kudos to you, you all for really putting a, a terrific product together.
11:11
One of the things also I hear and is that, hey, great, great demo, tough implementation, right.
11:20
Walk us through the adoption journey, you know, where typically it goes well, where maybe it gets a little harder.
And you know, what does the advisors practice look like when Income, when IncomeConductor, you know, is 2 years in?
Sheryl O’Connor 11:38
Yeah, I think that transition from how they’re doing retirement income planning now with the traditional financial planning tools to using IncomeConductor can be, it can be an operational change for them.
11:54
It’s it’s not just a story that’s changed for the client, it’s also an operate a back office operation.
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And without a doubt, it does take more effort upfront for an advisor to implement a time segmented plan then like let’s say putting the client’s assets into a single portfolio and running an annual withdrawal test on it or selling a single product like an annuity.
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But once the assets are situated and invested appropriately in the products purchased, IncomeConductor makes it extremely easy to manage the plan.
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So we more than make up for that extra time upfront by making it very easy across the next 25 to 30 years of retirement.
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Advisors don’t think about that. They think about, you know, what am I doing today?
But retirement is a long game.
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And what we provide the advisor is a tracking and management platform that gives them daily plan performance.
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It gives them key analytics about the plan that inform client reviews and decisions.
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It sends alerts, alerts out to them that let them know that there are opportunities to take risk off the table and lock in the income the client needs, keep it from any additional market risk.
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And they don’t tend to think of all the work they do with these other strategies over that 25 to 30 years.
13:40
The IncomeConductor just takes off their plates.
Chip Kispert 13:44
You just covered a lot of ground there that that, you know, we we covered A and and one of the things I always love are kind of real life stories.
13:54
Can you share a real life story where, you know, one of your advisor customers really utilize the project or the product and you know, really that’s a bell ringer for you?
Sheryl O’Connor 14:07
Yeah.
14:08
Well, I think a lot of what advisors experience is, you know, first of all, they’re a little bit hesitant to make that switch.
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But the thing that clinches it is when they present the income conductor plan to the client when they pull up the application and they start working with it dynamically with the client.
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And one advisor shared with us and we hear variations of this story multiple times that they actually had a client breakdown in tears in their office because she was so relieved when she saw this plan because it gave her and her husband permission to retire and enjoy the last phase of their life.
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You know, and who wouldn’t want that kind of reaction from their clients?
This is what clients are looking for.
15:10
So if advisors are willing to make that leap and you know, adjust their strategy a little bit in the retirement income distribution area and use income conductor, you know, the, the rewards are, are multiple and, and mostly it’s going to be that, you know, they’re going to have very, very satisfied clients who are going to trust them.
Chip Kispert 15:40
And trust is key. Trust is absolutely key.
So looking ahead, right, Obviously products keep evolving, right?
15:51
So you’re building a road map for where income planning goes next.
You know, are you building in AI longevity, wrists, the full weight of the the boomer decumulation arriving at once?
16:07
Tell us a little bit more.
Sheryl O’Connor 16:08
Yeah. I mean, we keep evolving in two ways, of course, you know, enhancing the actual functionality for the advisor and the ease of use.
16:19
So that’s where a lot of that AI comes in.
16:22
So we have plans this year to start incorporating AI to make the experience for the advisor better.
16:32
But also we’re looking at how the challenges of retirement are evolving.
16:40
So bringing in more personalized data like long term care data and not just the, you know, the costs themselves, but allowing the advisory and client to actually customize what their care situation is looking like in the future.
17:00
You know, I think that the successful firms in the future are going to have to evolve into a new paradigm of offering some additional satellite services.
17:18
Over the past, you know, maybe 10 years, we’ve seen the value proposition of the advisor move from asset manager to financial planner.
17:28
Now, I think we need to expand that planning function and you know, it will open up new opportunities like specialties like retirement income and new sources of revenue.
17:45
But especially in this later phase of life as clients age, they’re looking to their advisor to give them advice in areas that traditionally they weren’t involved in.
17:59
You know, they’re really looking for a Sherpa to guide them through these major life transitions in this last phase of life, things like housing decisions, care assistance, end of life planning.
18:15
And I’m not suggesting that, you know, advisors become death doulas.
18:22
They don’t need to be experts in these areas.
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But the successful firms will be the ones that curate and partner with service providers who are experts in these areas and will help their clients navigate these major transitions safely.
18:43
And I think the benefit to the advisor will be to develop a much deeper, more trusting relationship with both the clients and their families cover a lot of ground there.
Chip Kispert 18:57
So you know what we’ve, what we’ve heard from you is that, you know, the end cut, the end investor customer has more trust, really enjoys the experience from the standpoint of it.
19:13
It gives them comfort to some extent, right?
The advisors have a, a, a nicer interaction and they’re building trust without client, which is going to make it for a longer relationship.
19:28
So let’s change the gears a little bit, right?
19:32
What is one change you would ask every advisor to make in how they approach income planning?
Sheryl O’Connor 19:41
You know, I would say, and this is kind of my wish for the industry as a whole, is be willing to adapt, to adapt to new strategies, to new technologies, the strategies and the tools that helped firm succeed.
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10 or 20 years ago may not be the ones to help firms succeed in the future.
Be open to change because clients are currently changing.
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Our, you know, global environment is changing, technology is changing, and we need to be open to new solutions that address the challenges of those changing environments.
Chip Kispert 20:30
Interesting.
Good answer, good answer.
20:34
You know, I think everything we’re looking at and and we’ve seen over really the past 15-20 years has been pretty static.
20:45
I don’t know about you, but I’ll tell you this.
20:47
The last couple of years have have been so much change when it comes to technology.
20:54
We need to go back to the relationship though, and because if we’re looking forward, it’s going to change even more and it’s going to change equally as fast with probably the insert of AI into what folks are doing, which also demands good data, right?
21:13
All right, So I always love it asking this question.
21:16
It’s my industry hit list, right?
21:20
Who are two or three people or firms what right now that you really admire and why do you think they’re worth watching?
Sheryl O’Conor 21:33
So there are a couple that I feel have really have really thought through the larger strategy.
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So there’s one RIA that I’m working with right now and they are working on creating a seamless experience for individuals as they transition from their careers into retirement
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And that’s that means from planned participant to retirement wealth client.
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So for too long firms have been focused on, you know, either siloed into the ERISA business or the retail wealth business, right?
22:17
And the two shall never mix. It’s like oil and water.
22:21
These forward thinking advisory firms are developing the resources and expertise to serve advisors, to serve clients rather in both of these phases, first helping clients grow their wealth and then seamlessly bridging or transitioning into them enjoying their wealth post career and passing it on to the next generation.
22:47
So that’s one RIA that I think has, has a real vision for, you know, creating this unbroken arc of experience for the clients they work with, whether they’re planned participants or retail clients.
23:03
You know, the other one that I, I always bring up is Paul’s Saganey with integrated partners at LPL.
23:10
I mean, he has created a plan very similar.
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There’s an arc of experience.
He concentrates on high net worth business owners and he set up a a program in his company where he has experts helping these business owners position their businesses for sale, helps them sell their business, helps them with the planning for retirement.
23:41
That’s where IncomeConductor comes in and then helps them with their state planning to make sure that their wealth is passed on in the most tax efficient way to the next generation.
23:54
So it’s these firms that have more strategic initiatives that are looking at the client experience that I really admire and and are achieving great success because of it.
Chip Kispert 24:09
It’s a very personal experience, very personal.
All right.
24:16
So we’re, we’re moving towards the close of our discussion here.
We always like to close with the Beacon Insights Flash.
24:26
So Sheryl, you have 60 to 90 seconds, no script, no guardrails.
What is the one thing you want the wealth management world to hear right now?
Sheryl O’Connor 24:36
Yeah. I would go back to my advice before.
24:39
I mean, be willing to adapt, be open.
Don’t be mired in this, you know, Well, we’ve done it this way for 20 years, so it’s worked for us.
24:52
So we’re just going to keep doing the same old thing.
24:56
The forward successful firms are going to be always looking for new ways to improve the client experience.
Look at where the money is and what those clients are looking for.
25:11
Not inwardly to say, oh, this is what we’re offering you client accept it.
But saying what is what does the client want?
25:22
You know, one of the things I heard from a leader in the industry recently was ask your, ask your clients if you could design the perfect advisory firm, what would it look like?
That’s a pretty novel question, right?
25:41
How many go to their clients and say, tell us what you want client, what would be the optimal experience for you?
And I I think that’s a real key to success.
25:57
So you know, my advice is be open, listen to your clients, ask questions and and implement to give your clients what they’re looking for.
Chip Kispert 26:11
Great answer, very thoughtful, very thoughtful.
26:16
Sheryl, thank you for joining us.
26:18
For anyone who wants to learn more about Income Conductor or connect with you, where should they go?
Sheryl O’Connor 26:24
So go to ourpublicsiteincomeconductor.com or you can contact me personally, SOConnor@incomeconductor.com.
26:34
I would love to talk to you learn more about your firm and how we might be able to help you grow your retirement income planning specialty practice.
Chip Kispert 26:44
Sheryl, you’ve been a terrific guest today. Thank you so much.
Sheryl O’Connor 26:47
Thank you, Chip. I appreciate it.
Chip Kispert 26:50
RJ, what a terrific discussion with Sheryl.
I took away a ton from that.
RJ Malyk 26:56
Same here.
There was just a lot of information and I was, I was furiously writing down notes and I just, I just found some of the things she said.
27:08
They were common sense, but they struck me in a way, For example, when she said how, you know, financial planners really haven’t changed the way they’ve done business for, for several decades.
27:19
And I’m, I’ve got me thinking, there’s a lot of industries that are getting caught in that trap of, of just doing the same things over and over again.
27:28
And then the other thing that stood out to me was long term care planning, because that’s something that I’m dealing with at this point of time with both my wife and, and myself and, and our moms and how we weren’t really, we weren’t really prepared for it.
27:44
And it stands out.
Chip Kispert 27:46
It, it does, you know, there are a couple takeaways that I had.
27:52
And, and it’s interesting because coming as much work as we do with technology, really it, it really my number one point is income planning is really a conversation tool, not just a math problem, a math tool, an extract of a report.
28:12
It’s, it’s between the advisor and the investor customer.
28:18
And the second thing I found that was interesting is from her comments, decumulation is really the, the new accumulation race.
I thought it was fascinating, especially when she touched on the amount of assets being transferred.
And that was an incredibly big number.
28:36
And you know, it was interesting how she really kind of packaged it or, or phrased it as the descent from the summit.
28:45
And I think in the past, everybody’s done a great job of, of, of capturing assets.
Now you got to weave in the decumulation of assets.
28:56
And then finally, you know, tools only work if the advisors believe in the framework.
And obviously, you know, some of their customers have had immense success with their framework because it it really fosters a, a conversational, a personal interaction that builds trust.
29:21
And so I thought that was pretty big.
29:24
All right, we’re closing here, RJ.
You know, we had a great conversation with Sheryl today.
Income planning is where good advisors become great ones.
29:34
And in conduct, IncomeConductor is making that work more accessible.
29:40
I thought it was terrific.
29:42
As usual, before I leave to quote Ted Lasso, be curious, not judgmental.
This is Chip Kispert, wishing you well.
Until our next edition of BPN Insights.
RJ Malyk 29:54
Thanks, Chip, and thank you for checking out the BPN Insights podcast, which is brought to you by Beacon Strategies, LLC.
30:01
For more information, visit beaconstrategiesllc.com.
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And until our next BPN Insights podcast for Chip Kispert and everyone at Beacon Strategies, I’m RJ Malyk.
