Hardship Witdrawals
- Thread starter xrac
- Start date
- 8,707
In my 403(b) days back before the new regulations people would use their 403(b) as their emergency fund either through loans or withdrawals regardless of the consequences because they do not have an emergency fund...No one gets paid to set up the emergency fund we pay little attention to it other than to suggest setting one up.
Since the new 403(b) regs have gone into effect, now that the districts are responsible for dealing with Loans and Hardships I've found the majority deal with it by writing loans and hardships right out of the plan document.
- 1,459
That's true, but it does create a stickier client. Especially if they have their emergency fund with you. I set-up all sorts of brokerage accounts with check writing added. Mr. Client sees one monthly payment come out for their "financial program" and the rest of the pieces are set-up on ETF on that account. Say the client has $600 per month to work toward their goals, but not enough in emergency savings. $300 may go toward products I sold them (life, DI, maybe a Roth IRA) and the other $300 just builds in their account until we get to the targeted liquidity level. When they get to the targeted level, we reallocate the other $300/month.
Advantage for Client: it automates their program, it's simple to see one payment come out of their checking account each month. Plus, you are doing right by the client since no one else will help them build an emergency fund besides paying lip service by saying "you should really increase your emergency savings" then moving on since it doesn't pay to set it up.
Advantage for Producer: better persistency on products sold, stickier client since to switch away from you, they would need to re-do all the ETF settings. They also don't see $50/month coming out for their disability program and call to drop it since they haven't used it yet.
I wish I could get all my clients on a similar program, the one's who are on it are actually "clients", not "customers". Big difference.
