By Donald Jay Korn
Financial-Planning.com
December, 30 2016, 1∶22pm EST
Not so long ago, Terry Prather was advising clients to submit restricted applications for Social
Security retirement benefits.
Similarly, Timothy Hayes was explaining the file-and-suspend plan to his clients. However, the federal budget legislation signed into law in November 2015 reined in those two
popular tactics.
Is that the end of savvy Social Security options for advisers to bring to clients? Apparently not.
“I still think Social Security planning is a viable area for advisers to add value for clients,” says
Prather, a CFP and wealth planner at Keystone Financial Consulting, a division of Payne
Wealth Partners in Evansville, Indiana.
Hayes, a CFP and the founder and president of Landmark Financial Advisory Services in
Pittsford, New York, concedes that the rules have changed significantly.
But he says that he is waiting for the developer of a planning application he uses to update
Social Security projection data so he can see whatever “sweet spots” remain.
SPIKE IN INTEREST
Meanwhile, the underlying premise behind offering sophisticated Social Security strategies
remains intact. Millions of baby boomers are approaching retirement, eager to get the best
deals from this complex federal program.
“We are much busier now, given the recent changes to Social Security,” says Ash Ahluwalia,
founder and president of National Social Security Partners, a planning firm in New Brunswick,
New Jersey. “People want to know how they are affected and what they should be doing.”
Ahluwalia describes meeting with a plumber and his wife one day and with a couple worth
$80 million the next.
“No matter how much people have, they all want to know how to maximize their Social
Security benefits,” he says.
Indeed, some advisers are delving deeper into this topic and reporting considerable interest
from clients and other professionals.
“Specializing in Social Security planning has helped me to differentiate myself from most
advisers, who do not have this knowledge,” says Joe Alfonso, a CFP and the founder of and principal planner at Aegis Financial Advisory in Lake Oswego, Oregon.
One approach to using such expertise is to offer stand-alone meetings about Social Security
claiming options, for a fee.
Among advisers doing so is Joe Elsasser, a CFP and managing partner of Sequent Planning,
an RIA firm in Omaha, Nebraska, who says that scant attention was paid to Social Security
strategies a few years ago.
“I learned how little people knew about them, including advisers,” he says. “But the demand
was there.”
Elsasser studied the topic and then ran a seminar in conjunction with the gerontology
department at the University of Nebraska at Omaha.
“We had over 180 people who tried to register for 120 seats,” he says.
From that Social Security seminar grew a retirement transition series, held in libraries
throughout Omaha and a neighboring county, also covering Medicare and long-term care and
estate planning.
For those wanting to learn more, Elsasser offers Social Security sessions.
“Often, those sessions lead to engagements covering the rest of retirement income planning,”
he says. “The focus on Social Security has become the primary way we generate new clients.”
Alfonso, who works mainly with clients who are already retired or are on the verge of doing so, also provides specific Social Security planning, which he promotes on his website.
In addition, he says, “I’ve consulted for other planners whose clients need claiming advice.”
KEY COMPONENT
Other advisers position themselves as being knowledgeable in this area, even though they
don’t offer stand-alone engagements.
“We do not provide Social Security planning as a separate service, because we need to
understand a client’s entire picture to provide the most relevant claiming strategies,” Prather
says.
As boomers approach the moment to make decisions about Social Security, they are drawn to
advisers who show special expertise in the subject.
Jim Blankenship, a CFP and the founder and principal of Blankenship Financial Planning in
New Berlin, Illinois, for example, has written “countless” accounts of the rules and options
available.
“These days, at least a third of my clients come to me having first read an article or one of my
books about Social Security strategies,” he says.
Mike Prendergast, a CFP and director at Altfest Personal Wealth Management in New York,
reports having “in-depth discussions” about Social Security with clients, potential clients and
even other professionals.
“Their clients are asking about Social Security, which is not a core knowledge area for them,”
he says.
Although Prendergast doesn’t expect Social Security by itself to be a large revenue source for
his firm, his expertise does have other benefits.
“It can make our existing client base happier and more engaged with our firm by providing
tangible value,” he says.
Enhanced service was also mentioned by Kelly Henning, a CFP and adviser at Modera Wealth
Management in Westwood, New Jersey.
“We’re using updated Social Security Analyzer software to more efficiently analyze maximum
claiming strategies for our clients,” she says. “Social Security and health care [including
Medicare] are paramount in our clients’ minds.”
Several of her clients called or emailed in reaction to headlines about the changes to claiming
strategies.
“We have been actively going into our files in the Social Security Analyzer to review those
clients who were advised to consider the file-and-suspend strategy in recent years,” Henning
says.
Under this strategy, Spouse A files for Social Security benefits, Spouse B files for spousal
benefits on A’s record, and A suspends benefits in order to receive larger checks in the future.
DUAL DEADLINES
Seniors who have existing file-and-suspend plans were grandfathered, but for others, the
window closed April 30.
Clients who were 66 or older on that date could file and suspend until then.
“There are also many individuals who can still file a restricted application for spousal benefits,”
Henning says.
Eligible are those who were 62 or older by Jan. 1. With this tactic, an individual claims spousal
benefits only, allowing his or her own benefits to keep growing as late as age 70.
“The recent rule changes are phasing in over two different time windows, and there are still folks who can take advantage of them if they act in time,” Alfonso says.
For example, he has a new client who turned 66 last year and has a much younger wife and two minor children. This client didn’t know about using file-and-suspend to trigger family benefits for his wife and kids, so he would have missed the window.
Alfonso says his advice about Social Security will bring about $150,000 in additional income to this family.
Elsasser thinks that Social Security remains a valuable specialty.
“I believe this is still a viable concentration area for advisers, particularly over the next four
years, when confusion among consumers will be high and misinformation will be all over the
place,” he says.
This story is part of a 30-30 series on Social Security. It was originally published on Feb. 1.