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.