Talk about innovative strategies for creating and optimizing retirement income! Today, I have the distinct pleasure and good fortune to be interviewing Curtis Cloke, the inventor of the Thrive® Income Distribution System (“Thrive®”), one of the leading retirement income planning solutions available to financial advisors. I personally use the Thrive® system with my clients who have been receptive and enthusiastic. The following are eight questions I asked Curtis about the system together with Curtis’ answers.
What is the Thrive® Income Distribution System?
Thrive® is a retirement income solution that helps advisors utilize the least amount of a client’s portfolio to provide for their income gap needs with a known and precise amount of their retirement assets. This creates contractually-guaranteed and inflation-adjusted income that allows the client to invest the portion of their portfolio not needed to generate their income needs in traditional accumulation investments providing a significant horizon appropriate for longer-term strategies without being concerned about the sequence of returns. Thrive® is a turnkey web-based platform, including educational tools, marketing materials, client presentations and a calculation system that trains and helps advisors implement the strategy using a compliance-approved action plan and report for the client. The system is designed to help implement the purchase of income products that will create solid and authentic retirement income solutions for which advisors will never have to apologize.
Why did you develop the Thrive® system?
In 1999, I became concerned with the typical withdrawal strategy generally being recommended by the industry and manufacturers of investment products that supported modern portfolio theory as an end-all solution. I had seen an amazing run-up on the market and became very aware that at some point the house of cards would fall and sequence of returns or dollar cost averaging in reverse would become the great demise for many of those who had retired or would be retiring.I realized that the gross rates of return being highlighted were suspect to the real return being generated for the general public. There were fees and taxes on asset accumulation and then when income distribution became a necessity, the volatility of the market, in combination with all of the moving parts, became a significant danger zone for retirees.
My goal was to show that there are ways to contractually guarantee an inflation-adjusted income solution without high fees, focusing totally on real return without trading off the legacy of the client’s wealth in order to provide income free of market risk. My goal was to revolutionize the way retirement was done.
How is the Thrive® system different from other retirement planning software that financial advisors use?
Thrive® uses some relatively not-so-well-known income products that provide significant tax and pricing efficiencies that simply discount the amount of dollars required from the client’s portfolio to generate their income needs on a contractually-guaranteed basis with built-in inflation adjustment. Because this method of allocating dollars can be done at anytime pre- or post-retirement, Thrive® can also help eliminate the “Danger” or “Red Zone,” with which many of us have become familiar, that can annihilate a client’s portfolio when all assets are held in the market too close to retirement.
Who is the target audience for the system?
Not only does the system serve clients who are at or post-retirement, it also provides new opportunities for growth and accumulation with established guarantees for future income with clients who are five, ten or even fifteen years before they retire. The system is not a respecter of portfolio size. It works with both large and small portfolios. The higher the tax bracket and the larger the portfolio size, the more powerful the tax efficiencies are. Though there are no minimums or maximums, the most common portfolio range is $250,000 – $5,000,000.
How many years before retirement should the system be used?
The earlier one invests in the income products, the greater the returns generated during the accumulation and distribution phases, while also eliminating the “Danger” or “Red Zone” from market volatility prior to retirement. The rates of return for the accumulation period are also the same rates of return applied to the distribution phase, making this one reason why the portion of the portfolio needed to generate income is less than other more typical income distribution methods. The accumulation period is always tax-deferred no matter what asset class is used. There are significant tax efficiencies during the distribution phase as well. The sooner a client is able to understand and appreciate the value of this strategy, the more beneficial it may be. We have implemented it with clients up to 20 years prior to retirement.
Is it a one-time or ongoing solution? If ongoing, how often should it be used?
Though the strategy allows assets to be allocated all at once or over time, we recommend an annual review with each client since there will be changes in the retiree’s life that require flexibility and changes in the system along the way. Many of the products used allow flexibility to change the income start date, increase or reduce income, and monitor assets used to accumulate ongoing wealth for future needs and the legacy of heirs.
- Where can the public go to see a list of financial advisers who are using the system?
Thousands of advisors have access to the Thrive® Income Distribution System via a network of financial service organizations across the country. Interested members of the public can ask their financial advisor about the Thrive® solution, or can ask their advisor to contact Thrive® directly if he/she doesn’t currently have access to the Thrive® system.
How can I learn more about the Thrive® system?
Advisors can find educational material as well as contact information at our website, www.thriveincome.com.
Robert Klein, CPA, PFS, CFP®, RICP®, CLTC® is the founder and president of Retirement Income Center in Newport Beach, California. Bob is also the sole proprietor of Robert Klein, CPA. Bob applies his unique background, experience, expertise, and specialization in tax-sensitive retirement income planning strategies to optimize the longevity of his clients’ after-tax retirement income and assets. He does this as an independent financial advisor using customized holistic planning solutions based on each client’s needs and personality.