Retirement Advisor Kyle Blackburn Asks The Questions Others Don’t About What To Do When You Can’t Take It With You
As one of the most knowledgeable product and universal life specialists in the country, one might assume Kyle Blackburn, of Blackburn Financial Group in Oklahoma City, would spend all his time discussing interest rates and percentages, or educating his clients on the particulars of various annuities. And in fact, he does weave together a combination of immediate annuities, rated annuities, and life insurance products in order to wrest impressive percentages from an unforgiving economy. But his methods of ensuring retirees have both enough money to live on, and to pass on, begins with even more complicated analysis – of family politics.
The relationship between investor and financial advisor, especially a retirement advisor, requires as much, if not more, intimacy than the family doctor. Retirees are required to reveal intensely private matters, which not only include their fiscal triumphs, investment missteps, and their hopes for the future, but also their concerns about the loved ones they’ll leave behind.
Retirement planning and estate planning are closely connected, which means that family dynamics play a large – though often overlooked – part in those decisions. “What we’re interested is in who’s going to get the money later. No one bothers to ask those questions,” says Blackburn
Even among those financial advisors who specialize in life insurance, annuities, long-term care insurance, individual financial plans, estate and retirement planning, Blackburn puts an unusual amount of time in to getting to know his clients. It’s time he feels is necessary. “Most agents when they meet somebody, they want to sell as much business as fast as they can. And then you never see them again. When we meet someone, we don’t know what they need. Our initial interview with them lasts an hour to two hours,” says Blackburn. Part of the reason for taking that time is to break through the barrier of “company manners” to ask the vitally important, and personal, questions.
“Tell me about your kids. Are they doing really well? Are they handicapped? Are they poor? Are they rich?” Blackburn might ask, joking “What you don’t want is for the dumb kids to get a half-million dollars in a lump sum.” He says these questions often surprise his clients at first, because they’re not questions they’ve ever been asked by any other advisor. However, part of the reason for these initial sessions lasting for two hours is that when clients start opening up about their families, they often have a lot to say. “Second marriages, all kinds of scenarios. We find out about their families, their kids, their grandkids, because this helps us figure out what they need to do,” says Blackburn.
In Oklahoma, where Blackburn Financial Group is based, a frequent scenario involves what to do with the family farm. “Say the farmer has a property that’s worth five million dollars, and two of the kids don’t want the farm, and the other kid loves the farm and wants to continue. What do you do when mom and dad die? They have land, tractors, cattle, cash flow, but they usually don’t have cash. But when mom and dad die, the son has a five million dollar farm, and the siblings step in wanting their share. There’s no cash unless you sell the farm, but the son doesn’t want to sell the farm. You can make the siblings partners on the farm, but the son is doing all the work – so what do you do?” It’s a complicated family situation, one which could tear a family apart, but with clever financial planning, says Blackburn, “you can avoid a lot of family strife.” He says, “We’re really more problem solvers than anything. We want to sell products and annuities, of course, but sell it to the right people for the right reasons.”
While family dynamics have a large part to play in deciding who gets what, when, and how, the rest of retirement planning and estate maximization comes down to personal goals and numbers. Blackburn’s first priority is to make sure retirees have enough money to sustain them – more money, in fact, than his clients usually think they’ll need. His second priority is organizing his clients’ assets in order to minimize taxes. “Somebody is going to get that money, so we want to minimize the taxes on that, and maximize how much their heirs will get,” says Blackburn.
His clients appreciate his straightforward approach. While one likes to think about what will happen after they’re gone – we’d all like to be around forever – that resistance to planning for eventualities only hurts families in the long run. “In some situations, we can guarantee your money and leverage it to be even more than when it started,” says Blackburn. He gives this example: “Someone will come in with $500,000 they want to give to their kids. By different strategies, products, and legal work, we can often triple that by the time their kids receive it. We’re very popular with the heirs.” He advises to look into gifting inheritance while you’re around to see your heirs enjoy it. The added benefit is that you can lower your tax bracket at the same time. “If you’ve got a taxable estate, every time you give someone a dollar, you pay less in estate taxes because you’ve just decreased the size of your estate,” says Blackburn.
While family matters provide the base for building a financial plan, and tax strategies play a vital role in protecting principal, Blackburn’s holistic approach to retirement income and estate planning also relies heavily on informing his clients about life insurance. “You’ll find that most people are not life insurance people. Most people in this industry are annuity salesmen, or securities salesmen – not problem solvers,” he says.
Blackburn has been in the insurance business for nearly 28 years, long enough to know the upsides and the downsides by heart. He says most salesmen don’t have the patience for insurance, “Life insurance takes a long time to complete – you have to go out, talk to people, do legal paperwork, get medical records; it could take 2 to 3 months to complete. Most salesmen want to get paid tomorrow. They want the fast money.”
Blackburn admits with a chuckle that “Life insurance is kind of a pain,” but also recommends it as “the best deal in the world for people who buy it and keep it.” The key to the insurance company’s success is that few people do keep their insurance policies. “There’s no way life insurance companies could afford to sell life insurance if everyone bought it and kept it,” says Blackburn.
Ninety-eight percent of life insurance policies are allowed to lapse by their policy holders. Blackburn says the usual pattern looks like this: “Let’s say you buy a 20 year term policy when you’re 50 years old. When you’re 70, your premium becomes exorbitant and you can’t pay it. Then you go to a permanent plan, but you can’t pay that either. You’ve paid money all this time, and you lose your policy, it’s like throwing all that money out the window.” Only 2 percent of the policies he sells lapse, which he credits to his clients understanding “why they bought and how much they bought.”
Term life insurance, he says, is for the young who can’t afford permanent life insurance and want to make sure their loved ones aren’t left bearing the brunt of funeral expenses in the event of premature death. Yet cash-value insurance policies aren’t always the answer either, tempting though they sound.
Cash-value life insurance – including whole life, variable life, and universal life – not only pays out on the policyholder’s death, it can also act as a tax-sheltered investment, accumulating value during the policyholder’s lifetime. In theory, you can use it as a fund from which to “borrow” money, or pass on its value as inheritance. But these policies have higher premiums, and there are higher yielding investments. “It’s a bad idea, in my opinion, to put more money into insurance than you have to. Some people will say it’s a great plan to put a ton of money into your insurance policy and withdraw money out of it for the rest of your life. It’s treating it like it’s an investment. But I’ve looked at hundreds of thousands of insurance ledgers, policies and statements, and I’ve never seen one that met the original projection,” Blackburn says.
Those original projections, made by salesmen intent on gaining commissions, often sound extremely tempting. Blackburn says clients come in having been told that their 300,000 dollar investment will turn into a million dollars by the time they turn 65 – and wonder why it hasn’t. He says “the interest rate is a huge variable.” In the 1980’s Bull market, the interest rates on universal life policies were around 12 to 14 percent, according to Blackburn. Now, they’re at 3 percent. “If you projected a bunch of money in 1985 at 12 percent interest, then it went to 3 percent, you won’t get that money because keeping that insurance policy costs money. The older you get, the more it costs,” he says, adding “My experience is, when insurance companies can lower things, they do; when they can raise things, they don’t on existing policy holders.”
At the end of the ten years that has been called “the lost decade,” rising interest rates don’t appear to be on the horizon. Despite that, Blackburn says the most common promise he hears is 8 percent interest: “Just Google the S&P for the last 20 years and see if the market made 8 percent consistently. It didn’t. It’s never going to make a level return. It’s going to go up and down. I’m interested in marketing something that’s honest and true. If you know a lot about how those policies work and how they’ve worked in the past, it’s not a good deal.”
Another promise frequently made by insurance salesmen is that of tax-free income. Blackburn calls it “very questionable” to sell a permanent life insurance policy by telling clients they can take out tax-free money to live on. “I realize that’s very popular with some people, but I don’t want to sell that. I don’t think it’s a good deal,” he says. Blackburn recommends taking that same money and putting it into an annuity for a much better return.
However, this isn’t to say retirees shouldn’t buy permanent policies – Blackburn only warns against treating them as investments. “If you buy the policy for the death benefit, and keep it, you will end up with a claim. Let’s say you’ve got a 70 year old with 100,000 dollars. He’s not going to spend it; he’s leaving it to his heirs. If he buys a CD and lives 10 more years, he’ll be lucky to have 101,000 in this interest environment. But if you take that sum and put it in a life insurance policy that pays 200,000 dollars on death, he’s doubled the inheritance.” Blackburn also says single premium policies are worth looking into, even as investments, “you give a lump sum, and your money is available to you at any time – it’s 100 percent liquid. It’s a good deal.” “But if you think you’ll put a high premium in these and take it out later, it’s not going to work like you hope,” he warns.
It’s these kinds of unbiased, independent, and no-nonsense recommendations, given with a healthy sense of humor, that have earned Blackburn the trust and loyalty of his clients. In fact, most of his business comes from referrals and repeat customers. His motto is “It’s good business to do the right thing – just from the amount of repeat business we get from happy people.” He says “It’s a lot easier to go that route than to find new people all the time.”
Kyle Blackburn – President
Kyle and his father, David, started Blackburn Insurance in 1985. Kyle was in charge of computer illustrations and product support. Over the years and after looking at tens of thousands of printouts and statements, he has become perhaps the most knowledgeable product and universal life specialist in the country. Kyle is very clever at case design, using various combinations of annuities, immediate annuities, rated immediate annuities, and various life insurance products to generate tremendous income for people or maximize the benefit for their heirs. Kyle feels extremely lucky to be able to lead such an extraordinary team of people in this competitive market.
Contact Kyle at: Kyle@Blackburnfinancial.com or 800-782-3580 x 225
Courtney Blackburn – Marketing and Recruiting Director
Courtney earned her Bachelor’s of Science in Advertising from the University of Oklahoma. She has worked for Blackburn Financial Group since December of 2001 and signed on as full-time Marketing and Recruiting Director in 2006. Courtney is the wife of Kyle and is excited to be working with the family business. She wholeheartedly believes in the company and the products they support. She enjoys working with the exceptional staff and knows that each and every employee has the agent’s and client’s best interest at heart. Courtney handles all of the company’s marketing and advertising. She is also in charge of recruiting agents and preparing seminars.
Contact Courtney at: Courtney@Blackburnfinancial.com or 800-782-3580 x 236
Tricia McCarty – New Business and Underwriting Administrator
Tricia attended Louisiana College and earned her Bachelor’s of Science in Business Education. She has been in the insurance business for almost 15 years and has been working with Blackburn Financial Group for 12 years. Tricia really enjoys working for Blackburn Financial Group because the staff is exceptional, the work atmosphere is excellent, and everyone works together to create and build a prosperous business. Tricia handles all new business for numerous insurance companies, and she does follow-ups on all pending cases. She talks with agents and works out any problems they may experience with an application or insurance company.
Contact Tricia at: Tricia@Blackburnfinancial.com or 800-782-3580 x 222
Ann Curtis- Staff Accountant
Ann attended Southeastern Oklahoma State University. She has been the accountant for Blackburn Financial Group since August 2000. Ann loves working for a company that is dedicated to providing exceptional financial planning strategies and services. Ann is responsible for all of the accounting functions of the organization.
Contact Ann at: firstname.lastname@example.org or 800-238-5495