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RETIREMENT PLAN INVESTOR

Use your plan ID (available on your account statement) to determine which employer-sponsored retirement plan website to use:

IF YOUR PLAN ID BEGINS WITH IRK, BRK, 1, 2 OR 754

Visit americanfunds.com/retire

IF YOUR PLAN ID BEGINS WITH 34 OR 135

Visit myretirement.americanfunds.com

Retirement Planning
Building success with retirement buckets, with Joe Schoenhardt and Jim Hinchsliff

32 MIN PODCAST

Do one thing, and do it well. For advisors Joe Schoenhardt and James Hinchsliff, that one thing is retirement distribution. The two partnered more than 30 years ago with the goal of becoming retirement specialists without a lot of prospecting. They focused their outreach on a few corporations, offering to educate employees about time-release retirement funding. This model has led to strong bonds with organizations, even stronger client relationships and steady practice growth without marketing. Today, their Chicago-area firm, Infinity Financial Concepts, manages more than $330 million and gets up to four referrals a week.


In this episode, hear Joe and Jim describe their unique business model, the “aha!” moment that investors have in their seminars and why Joe gets to play Santa Claus a lot. They also share tips for advisors just starting out.


Retirement distribution specialists


The firm distinguishes itself with its approach to time-release funding, or segmenting client portfolios based on different time frames for spending the assets in retirement. The first segment (or “bucket”) is cash, used for immediate and short-term needs. This bucket is replenished over time with the four others, which are invested in conservative funds; growth and income funds; growth funds; and global growth and small-cap funds, respectively.


“The whole concept is the money releases to the cash bucket to be spent when it's time,” Joe says. “And that helps us to segment the investment buckets and put in different funds.” Software helps them determine what goes into each.


It's different from what most advisors are doing,” says Jim. “Somebody retires, and let's say they want $2,500 a month. What most advisors are trying to do is find assets that will deliver, in dividends, $2,500 a month to their clients. And we just think that's a fool's game. We just think, have it in cash, some $30,000 to start with. Just start giving them $2,500 and let the investments do their job.”


Joe offers an example of someone who retires at 65 with a life expectancy of 90, meaning 25 years of retirement. “Five buckets are split up into five different time frames,” he says. The final bucket, number five, is marked to spend between the age of 84 and 90. “Then we know there's two decades before that money is going to be released. So that money can be the most growth-[oriented] of any asset that they have, because it's the last money that's going to be spent,” says Joe.


Bozo buckets and “aha!” moments


Explaining the buckets concept to investors has been a marketing driver from the start. In fact, leading corporate seminars is the only marketing the firm participates in. “Jim and I had the same philosophy of what we saw our practice to look like. Neither one of us liked the grind of reaching out for clients,” Joe says. So they decided to specialize in retirement and to do it through corporate workshops.  Early on, the two participated in an AARP certification program to teach investors about retirement planning, which led to one of the corporate relationships they still have today. “They asked for a referral from AARP. And AARP said, ‘Oh, we got these guys that are just graduated from our class. Give them a call.’"


The partners describe a sort of “aha!” moment that investors have when they take part in their corporate workshops. It starts with challenging certain perceptions: “We tell clients that it’s not up and to retirement but up and through retirement,” says Joe. “And it really has nothing to do with how old they are. It has to do with when they're going to spend that segment of money. “ This sets up the bucket approach and helps investors see retirement income in a way that suddenly makes sense, Joe says.


To help investors further understand the concept, the two sometimes use Bozo the Clown, a popular childhood favorite among baby boomers, and his “Bozo buckets” as a means of illustration. As part of a brief foray into marketing years ago, the two even hosted a radio show on a local oldies station, using the character’s “Bozo buckets” as a fun way to get listeners excited about retirement distribution.


Fewer client conversations


Having easily repeatable mantras provides an added benefit: It reduces the amount of client conversations that advisors typically have during times of market volatility. “That's where this system really excels,” says Joe, “because it allows us to explain to them exactly what we’re doing. The client understands when these assets are going to be spent. So when the markets are moving around, we may have to…remind them that they've got the cash and they've got the conservative stuff that's not moving around as much. And the stuff that might be fluctuating the most is money they're going to not touch for a decade or longer. “


The early days of the pandemic helped to illustrate this, he says. “If you were retired in January of last year, and the pandemic hit in March, your buckets three, four and five were significantly down,” Joe says.  He would remind clients, "You've got cash, and you've got the second bucket. We’ll work through this." Nine months later, buckets three, four and five had not only regained their value but significantly increased in value. Jim and I use that as a teachable moment when we talk to clients. This is why you didn't panic.”


“We have colleagues saying, ‘Oh your phone has got to be ringing off the hook.’ It really doesn't,” Joe says, “because we've done a really good job of educating them on how this system works and to let time take care of it and not worry about their age.”


The Santa Claus of benefits


Because of their close connection to a few corporations, Joe and Jim have many decades of institutional knowledge about their clients’ corporate benefits. They understand the retiree plans inside and out, which helps them spot flaws in clients’ assumptions about retirement in a way that’s not only surprising but sometimes feels like  a gift. Joe tells a story of a woman who walked into the office at age 62, convinced she would be unable to retire until at least age 70 or 75, if ever. After going through the firm’s retirement blueprint and reviewing the benefits she had, she was able to retire three weeks later.


“She didn't realize that she had half the benefits that she had, because they just haven't done a very good job of communicating them over the years,” he says.


This kind of thing happens so often, Joe thinks of himself as getting to play Santa Claus all year round. For example, clients commonly confuse two separate accounts and think of them as a single asset. They are bowled over when they realize they have more saved than they’d realized. “A lot of the people don't believe they have this second pension until the check is actually cashed and put into their account,” Joe says. “That’s the Santa Claus story.”


Advice for new advisors


When asked what they would suggest to those just starting out in the profession, the two had a few ideas to share:


Consider coaching – Having participated in Strategic Coach years ago, Joe and Jim found it extremely helpful in figuring out the strengths and weaknesses of each team member. Joe does much of the client-facing communications and new client onboarding; Jim handles the back-end details. This has helped maintain practice efficiency over time.


Develop repeatable systems – Many firms understand the importance of standard operating procedures. By focusing on clients whose benefits they know well and sticking to the simple message of time-release funding, Joe and Jim have repeatable systems down to a science.  They are also able to keep the operation lean, relying on only one other team member to handle administrative tasks.


Improve customer service – The two work hard to provide a feel-good experience for clients. But this manifests in ways that are different from what most advisors are doing. For example, Joe regularly calls clients to tell them exactly when a pension check is about to hit their mailbox, just in case they might miss it. Joe says that little things like this feel big to clients, so no effort is too small. “Go above and beyond what's expected,” he says.  “Contact, contact, contact,” adds Jim.


Hire great people – Jim points out that this piece of advice has been crucial to their success. Their third team member has been with the firm for more than 20 years and is integral to understanding the paperwork and benefits that the firm’s repeatable systems are built on. When hiring in any capacity, finding the right person counts. 




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