Small BusinessProfessional Markets

1
Small Business/Professional Markets

• Insurance products are issued by John Hancock
  Life Insurance Company (U.S.A.) (not licensed in
  New York), John Hancock Variable Life Insurance
  Company (not licensed in New York), John Hancock
  Life Insurance Company, Boston, MA 02116 and John
  Hancock Life Insurance Company of New York,
  Valhalla, NY 10595.
• QRP-1143 01/2007

Insurance policies and/or associated riders and
features may not be available in all states.
MLINY0124077447
2
Demographics

• 22.9 Million
• 98 of all U.S. businesses
• More than ½ all employees
• Fastest growing segment of economy
• Most do not have a Qualified Retirement Plan

3
Why No QRP?

• Financial Planning Magazine Survey
• 1186 small business owners
• 10 years or more
• Top quartile in profits
• Have financial resources for QRP
• 16.7 had QRP

4
Why No QRP?

• All had need, interest and finances
• Never shown plan that met needs
• Virtually all shown 401(k)
• Only 62 were not

5
Characteristics of Ideal Plan?

• Favor business owner
• and family 94.5
• Easy to manage 78.2
• Tax advantages 68.6
• Low cost 54.3

6
Survey Conclusions

• Enormous opportunities for registered reps
• Market very large
• Owners have clear sense of preferences
• Limited expertise is reason why advisors not
  taking advantage of QRP opportunities

7
Cross-Sell Opportunities

• 198 business owners bought QRP
• 82 did more business with advisor
• 70 bought additional investment products
• 40 purchased key-person insurance
• 28 established buy-sell agreement funded by life
  insurance

8
BusinessMarket
QRP Pre-Approach
Approach
Business InsuranceRetirement Plan
QRP
Both
Cross Sell Opportunities
LifeInsurance
MutualFunds
Long Term Care
Annuities
KeyPerson
EstatePlan
Buy/Sell
Personal
9
Plan Design for Small Business/Professionals
Data Gathering Form
Qualified Retirement Plan Group

• Defined Contribution
• Profit Sharing
• Integrated
• Age-Weighted
• New Comparability

• Defined Benefit
• Traditional
• 412(i)

Plan Illustration
10
Plan Design Example
Plan Contributions
Owner Employee 1 Employee 2
253,747 33,020 13,233 300,000
84.6 11 4.4 100
Total Contribution
Percentage
After Tax Analysis
Tax Rate 40 Total Plan Cost 300,000 Tax
Savings 120,000 After Tax Cost 180,000
11
Qualified Retirement Plans Group
Step 1
Consult
Step 2
Design
Step 3
Illustrate
Step 4
Install
Step 5
Administer
12
Why a Qualified Retirement Plan?

• 76 Million Baby Boomers

• 1/1/06

• Age 60

• Main priority saving for retirement
• Savings timeframe abbreviated
• Solution? Qualified Retirement Plan

13
Governmental Concerns

• Department of Labor
• IRS
• Congress
• Favorable QRP Legislation

14
QRP Legislation

• SBA 96
• SIMPLE Plan
• Eliminated family aggregation rules
• TRA 97
• Repealed 15 excess accumulation and distribution
  taxes
• Roth IRA

15
Economic Growth Tax Relief Reconciliation Act
of 2001

• Extensive favorable changes
• Enormous marketing opportunities
• Effective January 1, 2002
• Technical Release

16
EGTRRA

• Defined Contribution Limits
• 100 of compensation
• 40,000
• (45,000 in 2007)
• Compensation limit increased to 200,000
• (225,000 in 2007)

17
EGTRRA

• Profit sharing increased to 25
• Employee wage deferrals excluded

18
EGTRRA

• Defined Benefit Limits
• 160,000
• (180,000 in 2007)
• Compensation limit increased to 200,000
• (225,000 in 2007)

19
EGTRRA

• Small Business Incentives
• 100 employees or less
• Tax credit of 50 (500 maximum)
• Start-up and administration expenses
• First three years of plan

20
EGTRRA

• Marketing Opportunities
• Tax credits for plan establishment
• Higher life insurance amounts
• Rollover opportunities

21
Pension Protection Act of 2006

• Most significant pension changes since ERISA in
  1974
• EGTRRA now permanent
• Was to expire 12/31/2010
• IRC 412(i) moves intact to 412(e)(3)
• Non-spouse beneficiary can roll QRP assets
  directly to IRA
• Cash Balance Defined Benefit issues resolved
• Age discrimination relief
• Interest credit relief

22
412(i)/Defined BenefitSupport Materials

• www.JHSalesnet.com
• Qualified Retirement Plans
• Overview
• 412(i)
• Traditional Defined Benefit Plans
• Defined Contribution Plans

23
Qualified Retirement Plans Group412(i)/QRP Sales
Process

• Market Development
• Pre-Approach
• Approach
• Data Gathering
• Plan Design Analysis
• Presentation
• Installation
• Administration