Thought for the day:

A good battle plan you act on today can be better than the perfect one tomorrow.

Gen. George S. Patton

If you will read no further:

In these times of increased uncertainty and market volatility, one of the most dangerous comments I hear from Financial Advisors is “my client has plenty of money and doesn’t need long-term care insurance”.  At least one in three of your clients will have to payfor care someday.  At the very least, you should have a serious conversation with them so that there is an agreed upon strategy in place.  And while you’re at it, ask them to take two minutes for this:

Thought for the week:

How NOT to sell insurance products to your clients

1. Wait until the client asks you for a price quote…a sure sign that he has been informed of some serious health issues and is unlikely to qualify.
2. Show the client a proposal, but do NOT advise that it is the best choice to address his needs for income or to protect his portfolio from risk and volatility.
3. Present an insurance product but make sure the client has no sense that you consider this a serious recommendation.
4. Present insurance as the whole solution rather then a part of the overall investment plan.
5. Don’t read the proposal or fully understand the product before presenting it to the client so that you are unable to give a clear and compelling presentation.
6. Do tell the client everything you know about insurance instead of focusing in on what it will do to improve and help assure the results of his financial plan.
7. DON’T RECCOMEND IT!  Just throw it out there as “another approach” or better yet, send the client a proposal and/or a brochure in the mail.
8. Avoid moving money in the portfolio you are managing because it will reduce your annual fees.
9. Start the presentation with “I don’t like insurance companies and I rarely recommend insurance, but in this case…..”
10. Use some source other than Westland Financial Services as your source for Life Insurance, Annuities and Long-term care strategies.

Tax update:

You have probably already read much about the American Taxpayer Relief Act of 2012.  I’m not sure where the “Relief” part comes in, but at least there are several positive long-term commitments made on tax rates and other provisions in question.  Read it here from AVIVA for an excellent summary of the important features of the law.

Thought for the day:

“The measure of success is not whether you have a tough problem to deal with, but whether it is the same problem you had last year.”  John Foster Dulles

If you will read no further:

NEVER FILL OUT ANOTHER LONG-TERM CARE APPLICATION.

Westland Financial Long-term Care is now powered by the LTCi Partners national marketing group.  This means that we have MORE of the finest LTCi carriers and many increased commission rates.  We also provide the best training, the best back-office support and LTCi Partners proprietary Free Application Completion Service.  Your decision to choose Westland as your #1 source for conventional and linked benefit Long-term Care strategies has never been wiser.   Call Gene @ (800)238-8144 to discuss.

Thought for the week:

THE STORY OF ALLEN AND JUDY

Allen had been a very successful advertising executive in Philadelphia back in the 70’s and made a lot of money.  About 5 years ago at the age of 78 Allen was diagnosed with Parkinson’s.  If was manageable for a time, but after several small strokes as well, it got the best of him and today he is bedridden in his home with two health care professionals taking care of him every day from 6:00AM until 10:00PM.  This at a time when his investment portfolio is certainly not performing like it has in years past.  About 12 years ago I talked with Allen about putting MoneyGuard in his portfolio, but he assured me that would not be necessary.  Since I was not his advisor and he handled (very successfully) his investment portfolio himself, that was, basically, that.

As it has turned out, they probably have enough money to continue to pay the $110,000 per year that it has cost them for the past 2 years.  There is no way to tell how much longer he will need the care, but I can tell you that Judy is emotionally stressed.  Their portfolio is being significantly impacted by the need to pay his care bills.  And Judy still must pay the ongoing expenses of their home and cover her needs.  She is only age 70 and must look forward to a much-diminished financial situation for many years.

Had Allen taken my advice in 2000, he would have achieved the same investment income as he has now; but he would be receiving an additional $5000 per month, tax-free to help pay for his care, thus cutting the financial devastation to his portfolio in half.

Nobody wants to talk about insurance when they are healthy.  They can always self-insure.  But as soon as their health begins to fail, they become very interested.  Do your clients a favor.  Help them put a long-term care strategy in place before they know they will be using it.  Make 2013 the year that you take care of this with all of your clients.

They need more from you than just asset appreciation in the market.

Thought for the day:

If you will read no further:

RE-Read thought for the day! Then…. Play the 2- Minute Linked-Benefit video

Thought for the week:

Most of what I read is about the economy and politics. I read financial analysts who sell their opinions and columnists who give them away. What interests me lately is that I am not reading or hearing anything that is encouraging me to invest a lot of money.

I have a couple of money managers that take care of my important money (that’s the money my wife knows about) and then I have a little investment account that I use to entertain myself by trading and doing things that seem to be right at the moment. Sometimes I win and sometimes I loose; and all the time I am glad those money managers who are taking care of my wife’s money. They just tell me “don’t expect too much for a while”…until some of the economic and political issues are settled and there is a clearer path ahead.

Each week, I write this BLOG (please comment if you like)  discussing our insurance-based products and strategies and I compare them to the other financial assets with which most folks are more familiar. And I see that “my stuff” is doing well, or at least as good as that other stuff; but with a lot less excitement. Don’t get me wrong, excitement is good when that is what you are looking for…like a roller coaster, or sky diving. But I’m not hearing too much joy at the year-end parties about how exciting people’s investments are these days.

I think there is a very good chance we will have another, uh, market adjustment in the near future. Two reasons I say that. One, we are almost due, since we haven’t had a serious one in four years. Two, no good news. Everything is bad in Europe, and in the U.S. we are either going “over the cliff” or we are going to increase taxes on the rich and borrow and spend more money. Sometimes I think we should just go over the cliff and get it over with.  I’m glad I’m not retiring soon; partly because I still need to help more planners to understand how important it is, to include insurance products in their clients’ investment portfolio; and to be aware of the uncertainties they face and how fragile their portfolios will be if the bad stuff happens financially at a time when other “bad stuff” is happening personally.

That’s what adding insurance to the portfolio is all about…reducing the risk and volatility while increasing the predictability of results. I hope you will make 2013 the year you become more accomplished in Insurance and Annuities. Add them to your own portfolio and suggest that your clients do the same. We are here to help.

SPECIAL ANNOUNCEMENT

Welcome to our new blog! The “Thought” this week may be controversial to some and we encourage your responses and additional comments….agree or disagree.

Thought for the day:

All investment strategies have the potential for profit or loss.  Changes in investment strategies, contributions, withdrawals and economic conditions may materially alter the performance, strategy and results of your portfolio.

One of seven disclaimers found on a random Financial Planner’s web site

THOUGHT FOR THE YEAR:

I fear that the way many planners approach their older clients’ financial issues involves a critical flaw.  For most clients, the objective of financial planning can no longer be focused on simply and growing their assets.  Things like retirement income, paying for health care and leaving a legacy are not just about ROI; because the issues are too complex to make portfolio decisions on that alone.  Consider the client who began her retirement in 2008 with a plan to take withdrawals from a managed portfolio that became severely diminished within a year; or at best, generated little or no return.  It will be extremely difficult for her to recover, unless she can cease taking income for several years while the portfolio rebuilds.  ROI is a function of the time period in which it is measured and the activities (adds and subtracts) that occur in the account along the way.

I submit that the best retirement plan is one that has a foundation of a pension account that provides a basic monthly income to cover fundamental expenses such as housing, transportation, insurances and the like.  If the client would require nothing less than $50k per year, her planner’s first responsibility is to provide the security that she will never receive less than $50k per year no matter what happens in the future, no matter how many 2008s there are.

Here is a good place to detour for a moment.  There will be several more 2008s (or similar) in our retiree’s future.  No one knows how mild or severe.  I assure you, however, as your client ages, his/her sensitivity to those financial incidents will increase…no matter how much money they have.  Not all, of course; but many clients will fall into this group.  More than ROI, they want predictability that their income will last as long as they do.  Predictability that there will be enough income to pay the increased cost of living due to long-term care needs.  A friend of mine is being cared for from 6:00 AM to 8:00PM in his home at a cost of $11,000 per month and his wife must continue paying the mortgage, the condo fees and her other living expenses.  That is a concern, especially since their ROI right now is nothing like it has been in the past.

The attached statement for another client just arrived while I am typing this.  This is a statement from his LTCi insurance policy that we helped his planner sell him over 10 years ago.  Imagine what this would do to the return in his managed portfolio if, for the past 6 years, he had to withdraw $7,300 per month while trying to re-grow it after 2009. 

Now that we have built your wealth, you can’t spend it!

It is interesting to me that we help our clients create wealth to provide income in retirement then, when retirement comes, we tell them that they cannot spend that money.  They can only spend the interest that it earns…even if that is not as much as they would like.  That makes absolutely no sense when it is so easy to contract with an insurance company to make that promise of lifetime income.  Annuities are the core to any retirement strategy.  They efficiently pay the client an income for life.

Are you able to guarantee your clients 6-8% income for as long as they live?  Will it also be substantially tax-free?  Does he really care what the ROI is if $500k of his portfolio is providing him with $3000 per month (80% tax-free) every month regardless of what the congress does or the economy does or what the terrorists do… for as long as he lives?  In light of that, how important is having some left over when he dies?  If the legacy is most important, he may not choose the pension (SPIA).  But if he needs more income, I’ll bet he will leave the rate of return calculation to the kids after he dies and take the money now.  I would.

You cannot guarantee success…only that you will do your best. 

Planners and investment advisors know how to manage a portfolio for growth, when ROI is an important measure of their value to the client.  But, when we are dealing with retirees, we are no longer talking about growing the portfolio as “job one”.  What about your fiduciary duty when you tell them your plan includes an 85% – 95% probability of success that their income will last as long as they do?  “So what happens if I end up in the 10% or 15%, Mr. Planner?”  “Oh, well, that will be on you, Mr. Client.”  Including annuity income in their portfolio increases the probability of success and is simply serving your client responsibly.

Not for everyone or for all the money.

Not all clients fit into my scenario as described above.  But we all must be sensitive to the perspective that we bring to the table; and understand that this perspective changes as we age.  Does the 50-year-old planner really know what a 75-year-old client feels?  That is the issue that we must deal with.  My 90-year-old mother is pretty sharp about money.  She has significant financial assets and pension income coming from Social Security and a private annuity.  Her expenses are $17,000 per year more than her pension income.  Even with zero ROI, I know that the annual shortfall can come out of her assets for the next 23 years when she will be 113.  Only when I explain that to her (every few months), does she relax.  Trust me.  She does not care about ROI unless it means “Reliability of Income”; and, I suppose, neither do I.

Thought for the day: 

Always get your facts right first.  Then you can distort them as you please.  -Mark Twain

 If you will read no further:

That’s OK.  This is interesting, but will only change your life if you are not already doing business with us.

Thought for the week:

Christmas is coming very soon and work activity is slowing.  It didn’t use to be that way.  Time was when we ran as fast as we could to finish the year’s work.  I’m not sure what changed that; but I actually like it better.  It allows me to spend time organizing and thinking about the year ahead and what (or how) I am going to do differently in the year ahead.

We are completing Westland Financial Services’ 38^th year in the business of providing insurance advice to anyone who will listen.

Looking back there are some milestones worth pondering….like

• Showing clients and advisors the proper way to purchase insurance; ways to be properly insured while getting the best value for the money allocated.
• We introduced Universal Life to the Financial Planning industry.  They actually got on board before the insurance agents did.
• We created the first single premium life insurance strategy and showed advisors how to benefit their clients by diversifying from investments and including insurance products in the portfolio.
  • There are still many who haven’t got that message yet but we keep trying.  I guess when everyone gets it, my work will be finished.
• We created the first (and most successful to date) asset-based long-term care product.  It was initially called Assured Care and is now called MoneyGuard.
  • No one knows these products like we do and anyone who really wants to do a proper job for their clients should work with us to set up the best strategy for the client’s portfolio.

Today we are the only ones to offer insurance products in the context of the clients’ investment portfolio vs. making it a separate need that must be filled. You don’t have to “back up the hearse” to make your point that insurance is an integral part of a balanced portfolio. And you don’t have to become an expert in insurance to employ the concepts to help your clients enjoy the predictability that it brings to their lives, and the satisfaction that they have with your services.  Call and let us help you help your clients gain peace of mind through predictable solutions to their retirement issues.

Thought for the day:

“It’s easy to sit up and take notice.  What is difficult is getting up and taking action.”

-Al Batt, Writer & Speaker

If you will read no further:

If you haven’t learned this already, you will; perhaps the hard way.  Investment diversification is only effective if you include product diversification.  The only products that can yield impressive results without risk are all offered by insurance companies.  We represent a whole bunch of them.  But you have to know when, where and how to use these products.  We can help.

Thought for the week:

Do you think you can earn your clients 8.5% on average over the next 15 years?  Would you encouraged them to expect (or even look forward to) those returns from you?  If you can achieve that level, what will it cost to do so; two percent?  How about taxes?  Can you keep their tax cost below 25%…federal and state combined?  Oh, and let’s not forget that 3.8% surtax on dividends and capital gains that ObamaCare imposes beginning in January 2013.  VAs and qualified plans will defer the taxes under current law so that will help.  When all costs and taxes and volatility are taken into consideration, however, smart advisors are projecting more modest results.

A survey conducted by CMG, an SEC registered investment advisor outside of Philadelphia, reveals that 83% of advisors are currently using tactical and alternative investment; and 84% are likely to recommend them to their clients in 2013.  The survey, conducted at the annual Financial Planning Association (FPA) Experience 2012 Conference in San Antonio, also revealed that less than a quarter (23%) of advisors surveyed still use the traditional 60-40 stock/bond allocation.

Now here is where I tell you about using life insurance as one of those “alternative” investments; but not just to pitch you on selling what we have for sale.  This is what I have done personally for over 30 years.  In all of the time, I have averaged just over 10% of my own investment portfolio in the cash value of a Universal life policy.  It has earned interest as high as 11% and today it is down to a meager 4.5%.  I have never paid a tax and it always has been a source of comfort during the many recessions and down markets we have been through.

Today’s products allow you to deposit your clients’ money in an account that will credit the annual gains in the S&P up to 12%-13% (not including dividends)  If the S&P goes down the account will suffer no losses. It only goes up.  Because it is cash value of life insurance annual gains are not taxed and unlike annuities, the value at death also passes tax-free to the heirs.  The cost to do this is about 1-2% but that actually buys some life insurance benefit…not a lot, but enough to more-than-replace that 2% charge if the money ends up going to the heirs.  Unlike annuities and qualified plans, there are even legal ways of taking income without taxes.

I’m not suggesting you change what you do and become insurance salesmen.  But I am saying that it is wise to present a portfolio option that includes life insurance in it.  You might be surprised at how many clients will jump on this these days; and with our help, how easy it is to implement.