For Agent Use Only

SecurePlus VIP: A Fixed Indexed Annuity (FIA) Exclusively for 401(k) Plans Phase 3 Training Presented by: Shelby J. Smith, Ph.D. Training/Service/Support by: 401k Marketing

FOR AGENT USE ONLY

For Agent Use Only

Enrollment Meeting with Employees This training session will cover FIA only

Securities & other assets choices of the 401(k) plan will not be discussed; however, record keepers, third party providers and product providers generally provide materials/assistance for conducting enrollment meetings. If ExpertPlan is your record keeper and/or TPA please contact their internal wholesalers for assistance or your 401k Marketing marketing representative.

FOR AGENT USE ONLY

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Enrollment Meeting for FIA: Options •

Traditional Presentation (cameo appearance): • • •

•

On-Line Enrollment • •

• •

Employee do-it-yourself with little or no help No relationship, trust or credibility built with advisor Fosters lower participation rate Only help is via 800# Same shortcomings as traditional presentation

Outsourced – you’re not of loop & out of mind The 401k Marketing way

FOR AGENT USE ONLY

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Typical Enrollment Meeting • You must master information provided at:https://www.expertplan.com/secureplusvip.jsp Secureadvisor/Password1 Securesponsor/Password1 • Supplemental information at www.401kmarketing.com • On-line materials & presentations can be purchased • Ask record keeper/TPA/product provider for enrollment presentation • ExpertPlan: guide, PowerPoint & presentation featuring on-line enrollment • Objective: pique interest, boost participation & foster one-on-one meeting

FOR AGENT USE ONLY

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Planning Your Enrollment Meeting • • •

• • •

All employees at once or smaller groups? Communicating the meeting & agenda • e-mails, bulletin board,n, etc. • Highlight: new menu, enhanced plan & lifetime income option Order & distribute materials in advance of meeting • FIA: 401kMarketing for materials: 877-319-2078 • Other: Record Keeper, TPA and/or product providers • Summary of employer’s 401(k) plan or Summary Plan Document Schedule during business hours if possible Duration: 30 to 45 minutes (a business meeting) Script presentation, test equipment & prepare

FOR AGENT USE ONLY

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Opening the Meeting •

• •

Senior management (you provide script or outline): • The company’s commitment to their employees • The company’s success depends on good employees • Only happy employees are good employees • Retirement requires advance preparation & one answer is 401(k) • Overview of the company’s 401(k) – supplements handout – Matching contributions/profit sharing – Commitment to keep fees reasonable & competitive – Dedication to offer best 401(k) plan possible for employees’ retirement – The importance of getting sound professional help – A new plan option for the risk avoiders & those approaching retirement Your introduction (qualifications & background) Your appearance and demeanor

FOR AGENT USE ONLY

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Keeping it Simple • Assume most employees are not knowledgeable • Avoid jargon and technical terms • Why save for retirement using a 401(k) • • • • • • • •

Payroll deduction is painless plus employer makes contributions Tax deferral or tax free growth (if Roth is offered): Example Increasing life spans means a longer retirement: Example Inflation has averaged 4% annually for last 50 years: Example Life spans have increased dramatically since 1900: Example Most people approaching retirement not prepared: Example Pay yourself first by contributing to 401(k) Social Security will probably not be enough

• Not intended to frighten – factual presentation

FOR AGENT USE ONLY

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Examples Compound Interest: •Work for 30 days starting @ 1¢ a day & doubles daily: yes or no?Day 1 = $0.01, Day 2 = $0.02, Day 3 = $0.04…… Day 30 = $10,737,418.24 •Bob saves $100/month for 30 years starting @ age 25, Mary saves $200/month for 20 years starting @ 35, and Shelby saves $300/month for 10 years starting @ 45. If all earn 6% simple, who has the most money @ age 55? Bob: $100,562 Mary: $93,582 Shelby: $50,298 •Inflation at 4% annually and impact on retirement: Gas @ $2.50/gallon today will be $5.48 in 20 years, $50,000 car will cost $109,556 and $85 hair tint will cost $186.25. •Life expectancy & retirement years are increasing

FOR AGENT USE ONLY

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Example: Life Expectancies & Retirement Male and Females age 40: If retiring @ age 65 – Average years in retirement Year

Males

Females

1900-20

27.74

29.17

1929-31

29.22

31.52

1949-51

31.17

35.64

1979-81

34.04

40.16

2000

37.10

41.30

2004

38.00

42.10

2012 (est)

41.40

44.50

Increase in retirement years since 1950

FOR AGENT USE ONLY

Males

Females

6.17

10.64

16.40

19.50

166%

83%

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Example: Average Savings by Age • • • • •

Workers under age 35 have < $6,000 in savings. Ages of 35 and 44 have roughly $22,500. Ages 45-54 have saved just under $44,000. Baby boomers (55-64) approximately $65,000 Those 65 and over have savings of $56,000 Source: Employee Benefit Research Institute

•

Cost of retirement varies widely - Medical expenses for retired age 65 couple = $240,000: Source Fidelity Investments 2012 - U.S. Census: Average income of households headed by age 65+ was $49,000 in 2010 75% x $49,000 x 18 years = $661,500: P.V. @ 4% = $465,230 (before inflation)

FOR AGENT USE ONLY

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Presenting the FIA Option • •

FIA unfamiliar to most employees – keep it simple Features & benefits: • • • • • • •

• •

Two separate accounts: Accumulation & Income Accumulation: Contributions + earnings (explain) Income: Annual increase is roll up rate (GLIR is optional) Minimum rate guaranteed on accumulation account Income & accumulation compared & adjusted at 5 year intervals Surrender period/penalties – (explain additional premiums) Penalty free withdrawals/inside transfers after year 1

Clearly explain Guarantees Worth considering for some of your 401(k) money

FOR AGENT USE ONLY

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Guaranteed Lifetime Income Rider • The GLIR is optional (may appeal to near retirees & risk averse) • Cost is 0.7% annually & fixed for first 20 years • Cost increases to 0.8% in years 21 – 30 • GLI determined by age-factors starting at age 55 (specify percentages) • Roll-up rate guaranteed for first 10 years only – varies thereafter • GLI will be paid for life unless withdrawal option exercised • Joint life option for spouse is available – reduced pay out factor • Nursing home benefits in some state (omit if not state approved) • Provide details of requirements • Not available if joint life option chosen • Provide other details of GLI

FOR AGENT USE ONLY

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Video explaining FIA and GLIR •

Two versions: • LSW Animated • NAFA approved • Available from 401k Marketing or on-line @ • http://www.401kmarketing.com/mktg.html • Consumer e-brochure (p. 3 & 5) & consumer video • For your information 401k Marketing offers: • PayCheck for Life video • Retain Your Gains Video • Available on-line @ • http://www.theretirementpros.com

FOR AGENT USE ONLY

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Enrollment Aids from Record Keeper/TPA • ExpertPlan: • PowerPoint presentation for on-line enrollment • Enrollment Guide for employees & tutorials • Private label site for sponsor/participants (review) • https://www.expertplan.com/secureplusvip.jsp – (username/password) Securesponsor/Password1 (case sensitive)

• If not ExpertPlan • TPA or Record Keeper generally assist with enrollment • May have written materials and/or website • Master the materials/sites

FOR AGENT USE ONLY

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Your Objective in the Enrollment Meeting • Make favorable impression & stress your availability • Encourage one-on-one meeting for further details • FIA option will be new and meeting not sufficient for details • FIA target should be those approaching retirement or fearful of risk of loss • Volunteer to help participants understand the on-line enrollment process • Provide your contact information for future reference • Handout materials should provide access to FIA video(s) you showed • Lots of good videos at www.theretirementpros.com • Briefly explain diversification – ABC approach works well • Stress why participating, starting early & contribution targets are vital • Explain how combined Social Security & GLIR would work (example)

FOR AGENT USE ONLY

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Example: Social Security & GLIR • Annual SS benefits at retirement will be $24,000 • • • • • • • • •

http://www.socialsecurity.gov/planners/benefitcalculators.htm Desired annual retirement income estimate is $55,000 Shortfall is $55,000 - $24,000 = $31,000 Now 45 & retire @ 65: needs $31,000/year from 401(k) Age 65 GLIR factor 4.5%: $31,000/0.045 = $688,889 from 401(k) Current 401(k) is $100,000 & all annual contributions = $10,000 At 6% roll-up FIA income balance $710,641 at age 65 Need $689K, got $711K – goal reach & mission accomplished Don’t forget inflation & possibly higher taxes

FOR AGENT USE ONLY

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Five Facts to Boost Participation with FIA AT EVERY OPPORTUNITY STRESS…

•FIA has no fees that come out of employee’s money •401(k) offers tax-deferred or tax-free (Roth only) growth •Value of FIA is always up or sideways, never down •Guaranteed Lifetime Income (optional) is predictable •Start at any age 25 or better

FOR AGENT USE ONLY

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Assuring an individual meeting • Your fiduciary responsibilities are… • Your service includes: • • • •

Help in understanding the investment choices, including FIA Assistance with retirement & 401(k) contribution goal setting Guidance in assessing risk for individual circumstances On-going availability as circumstances change

• 401(k) reviews and progress assessments • Will schedule private, confidential meeting upon request • Will schedule routine meetings to review 401(k) matters • You’re their pro-bono personal 401(k) professional ready to help

• Always available for non-401(k) financial advice if needed • Helping employer make 401(k) even better

FOR AGENT USE ONLY

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Questions? Call Help Desk at 401k Marketing at 877.319.2078 for details. Talk to your marketer: Andy Alvis, Celeste duPreez or Rebecca Brundage To do list: 1. Start prospecting for 401(k) plans to add FIA 2. Training session #4: follow up & servicing

FOR AGENT USE ONLY

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