Thought for the day:

“ Life would be infinitely happier if we could only be born at the age of 80 and gradually approach 18. ”                                                                      — Mark Twain

If you will read no further:

Consider this.  It’s not a matter of if you die; it’s a matter of when.  Part of almost every older client’s financial strategy consists of leaving some money for kids, grandkids or charity. “Investing” in life insurance will yield a guaranteed IRR that will surpass anything you can do for them elsewhere; particularly considering the guarantees.

Thought for the week:

I spent half a day last week listening to a respected economist who counsels several hundred corporate executives and private investors on the current and future outlook for the economy, U.S. and worldwide.  His message was similar to what we are hearing from economist and analysts for the broker/dealers and investment firms that we are involved with.  “For the time being, everything is holding together.  But this not a healthy situation and will not last much longer”, he said.  He gave a very compelling argument for a modest recession beginning end of 2013-early 2014 with a pull back in the market of 25-40%.

Clearly the “goings-on” in Washington is not helping and the rest of the world sucks as well. ; China is starting to feel the pain as well; not anywhere near the problem that we have but they will.  And all of this portends the importance of protecting the portfolios, particularly of your older clients.

I’ll bet you are ready for me to say that MoneyGuard will solve their problems.  Good for you!  Actually, that is not what I was going to say.  But I like the way you’re thinking.

Buy only individual issues of Bonds; no mutual funds or ETFs please.  An annuity helps a great deal…not in place of, but in addition to your other favorites.  There is nothing wrong with 6, 7 or 8% income from some of their money with no risk or reduction when the next couple of recessions come around.  The tax benefits aren’t bad either.  Remember, 60% to 80% of most annuity income is tax-free.

And while the younger clients are sitting on cash in their portfolio waiting for the bad stuff to pass, encourage them to begin a couple of half-million dollar life insurance policies on both the husband and wife.  Life insurance from age 50 on is an investment, not just a need.  Consider this; its not a matter of if you die, it’s a matter of when.  Part of almost every older client’s financial strategy consists of leaving some money for kids, grandkids or charity.  Why not fund that legacy beginning at 50 or so with a life insurance policy that will pay LTCi benefits if needed.  Annual deposits for 10 years and done…or smaller ones for life if they wish.  Click here and see the internal rate of return on a life insurance investment beginning at age 50 or 60.  Then tell me how you will beat that in the next 20 years particularly when you consider the ironclad predictability of the results.

For California Advisors:

We told you 18 years ago that the LTCi  program offered by the  California Public Employee Retirement System (CalPERS) would not hold up.  Three rate increases since then and now the big Kahuna.  An 85% rate increase is on its way.  http://www.sacbee.com/2013/02/28/5223864/the-state-worker-did-calpers-lie.html

Some of your clients may still be young enough and healthy enough to look at alternatives, but most will be too old or too sick.  Call us and we can tell you which.

Encouraging your younger clients to purchase Linked-benefit life insurance from carriers like John Hancock will assure them that in years from now they will not have to face the circumstances that these folks are facing. Prepare them today with an insured sinking fund that will provide hundreds of thousand of dollars when LTCi  becomes a reality for them; and hundreds of thousands of tax-free dollars for their heirs if they are lucky and it doesn’t.  How good a deal is that???

Thought for the day:

Life expectancy would grow by leaps and bounds if green vegetables smelled as good as bacon.                                                                                Doug Larson

If you will read no further:

Some of you missed the article on the Longevity Bond a couple weeks ago click here to copy and read later.

Thought for the week:

I have been reading a lot lately about the coming “pop” of the bond bubble.  Billions of dollars will be lost when interest rates rise as the Fed continues to print more money and buy more bonds.  We common folk who use bonds to protect us from the volatility in the market and provide stable retirement income are going to be the losers.  By turning to dividend paying stocks we can mitigate the bond risk, but we are replacing it with additional stock risk.

The main use of bonds in a portfolio is to provide a stable retirement income; and in some cases we invest the income in stocks to dollar cost average for future additional needs. Consider the annuity (fixed version -VAs are just way too expensive) that can guarantee annual lifetime payments of 6% to 9% or more. Now with those clients who don’t need additional income at this point, you use it to dollar cost average into their managed account.

Your client is a 70 yr old widow in good health.  Cash in those bonds before they collapse and purchase a $150K immediate annuity that will pay 9,750 per year (6.5%) for the rest of her life.  As long as she doesn’t need to spend the income, dollar-cost average it into the managed account to accumulate another $140,000 (assuming you can net her 6%) by the time she is 80; at which time she could annuitized that for about 13,000 per year.  So now she has a tax-favored income of $22,750 (15.2%) off of her original $150,000 that will continue as long as she lives.

If we suffer from extreme inflation and interest rates rise, her deposits into the stocks will expand her total value and her income whenever needed….all this with a fraction of the volatility and risk that exists when all of her money is in stocks and bonds.

No.  I’m not saying do this for every client or with all their money.  For single retired clients, a portion of their money in this strategy, reduces portfolio volatility, improves the rate of return on invested money and increases predictability of results.   The less money your client has to support their retirement the more valuable the annuity element becomes.

Add a MoneyGuard or other long-term care product to the mix and she can protect a greater portion of her legacy to her children and grandchildren as well.

Thought for the day:

Insurance is always too expensive if you never make a claim.  If, however, it turns out that you collect benefits on your insurance, no one really cares how much you paid for it.

Gene Pastula

If you will read no further:

Most folks who ignore insurance in their practice do so at the risk of limiting their clients results.  Almost every day we get a call from an advisor looking for life or long-term care insurance for a client who is way too sick to qualify.  If we had asked that advisor three years earlier to recommend insurance he/she would have told us, “My client doesn’t need it”.  Most clients don’t need insurance.  But they sure want it when a claim is in sight.  If you use insurance in the portfolio like you use other instruments, stocks, ETFs, VAs, etc. it is amazing how much you can improve on the results your client will enjoy.

Thought for the week:

We have been hearing that the leading LTC insurers have all filed or will soon be filing for sex distinct rates.  Those that have not will likely face some anti-selection (assuming their rates are lower) that will certainly cause concern; prompting them to follow suit.
We’ve been told some will just raise rates for single women … while others will raise rates for all women.  In either case women will soon pay between 20 and 40 percent more than men for long-term care insurance as leading insurers move to sex-distinct pricing.  The issue has been reported widely in the media with no backlash, so I would anticipate that products will start being rolled out sooner rather than later.

You should be alerting your clients who have been “thinking about LTCi” and suggest they quit thinking and commence shopping to get in before rates are increase.  Women are often the drivers behind the purchase.  These rate increases will not only affect women living alone.  This applies to married couples as well.

I you would like to have a good news article to point folks to (for validation), here is the link to the AALTCI-placed news story in MarketWatch / The Wall Street Journal.
http://www.marketwatch.com/story/avoid-coming-long-term-care-insurance-rate-increases-for-women-2013-01-23

Insurers paid over $6.6 billion in claims last year according to the Association, and women account for 65 percent of all new claims opened.  Dementia, cancer, fractures, stroke, osteoarthritis and hip fractures or replacements are the most frequent reasons women require long term care insurance benefits.

Call us for quotes and design assistance.  This is a good time to experience the full service of Westland’s new LTCi division powered by LTCi Partners.  Get quotes, comparisons and case presentation material; and when the client agrees to go forward, let us know and we call them and take the app for you.  The next thing you need to be concerned with is delivering the policy that will arrive in a couple of weeks and deciding what to do with the commission. 

Thought for the day:

The trouble with learning from experience is that you never graduate.

Doug Larson

If you will read no further:

One of the finest products of the past 25 years is threatened with extinction.  The Single Premium Life insurance policy is under pressure to be taken off the market until interest rates return to their long–term averages, especially the ones that will pay huge income when long-term care is needed.  That said, they are still available now and we suggest that you make a list of all clients who should have them in their portfolio.  Then get with the program to inform them of this window of opportunity.

Thought for the week:

Introducing the Financial Longevity Bond Concept

Would your clients gobble these bonds up?  These bonds are AAA rated from several major issuers.  Guaranteed for life and designed to mature to pay estate costs and/or pay a monthly tax-free income for health care costs prior to death, they can actually take the place of long-term care insurance.

Called a Financial Longevity Bond, it guarantees your lifespan by compensating your heirs in the event your death occurs earlier than expected.  Like a zero coupon bond, its interest is deferred until your death or disability.  However, it can be redeemed at any time, if desired, for its original cost.

Because of the longevity guarantee, the value at maturity varies based on your age when you purchase the bond for your portfolio as well as the time of your death.  The amount of monthly dividend payable for healthcare is a function of the maturity value.  For example: a healthy woman in her mid 60s could purchase this bond and be guaranteed a lifespan well into her 90s.  If she purchases a $100,000 bond and dies earlier than expected, say age 70 the bond will instantly mature for $195,000, tax-free under the IRS Code sec. 101.  If she lives past the longevity guarantee period of 20 years, the bond will mature for $150,000 at her death.  At anytime, if she were to need convalescent care, the bond would begin paying her a monthly tax-free income to reimburse her expenses up to $6000/month for as long as six years, a potential total of $450,000.

The older you are when you purchase the bond; your longevity risk is less valuable.  Therefore, it is best to purchase this bond as soon as you can identify money in the portfolio that will not be invested in the markets.  Certainly this is an attractive alternative to a bank CD as the yield to maturity (if never needed for income) is between 3% at 7%…and in some cases even more.  And one more thing, special tax incentives also apply.

If you are interested in how you can acquire this for yourself or your clients, send me an email at genep@westlandinc.com .  Please don’t call as I love to respond to everyone as soon as I can when I can – even in the middle of the night.  Phone calls and voice mail messages just make it more difficult.

Thought for the day:

Don’t buy a putter until you’ve had a chance to throw it.

Does it really matter who said this first?

If you will read no further:

There is important news at the bottom about LTCi.  And now all you have to do is call us with your client’s info, we will design the best product strategy for the situation then help you with the presentation if you like, and then we will take the application, underwrite the case and send you a policy ready to deliver.  See attached and call us.

Thought for the week:

My radio woke me this Sunday morning to another financial show.  I don’t need to get up that early, but I never want to miss the investment advisors promoting their service.  This weekend I was on a local show promoting MoneyGuard and a series of seminars on long-term care, so I understand the process.*  As I lay there listening to these guys discussing index annuities (FIAs), it occurred to me that I should mention it to you because it is such a good story and they are almost outselling variable annuities.

You see, people are OK with giving up some of the “upside” in exchange for “no losses”.  Certainly, the past 10-15 years proves that avoiding losses trumps occasional big gains.

Currently though, it’s all about the Guaranteed Income Riders in VAs and FIAs.  That’s what folks want….to know what their future income will look like…at least some of it.

This is not an either/or discussion.  I know it’s difficult for some advisors to see the value in FIAs that limit the upside.  So they use VAs that require a conservative investment mix in order to  provide the costly GIR that most attracts the client in the first place.

Here is a thought.  Present a combination of the two to your clients.  The FIA will give the client the certainty of a growing retirement income base (at half the cost of the VA) while guaranteeing their principal. The rest invested in the VA without all the riders allows for the potential gains from a well-managed investment portfolio.

I just can’t help but believe the upside potential of the FIA (with the downside protection) is a lot better for the client then any bond at this point.  Cheaper too!

*If you would like me to do a radio show, or a client seminar for you, just let me know.  When folks hear the story, they all want the product.  Remember, “Everyone will buy long-term care insurance if they don’t have to pay for it.”

News you can use:

The leading LTC insurers have all filed (or will soon be filing) for sex distinct rates.  Those that have not will likely face some anti-selection (assuming their rates are lower) that will certainly cause concern; prompting them to follow suit. Since women account for 65 percent of all new claims, the anticipated increase in female rates is from 20% to 40% for widows and singles.  It stands to reason that you should bring this up to your clients who have not yet addressed this issue or have been “thinking about it”.  There is still some time to acquire insurance at the current non-sex distinct rates.

Thought for the day:

Don’t complain about growing old… not everyone gets the privilege.

Unknown

If you will read no further:

Several thousand financial professionals do their insurance business through Westland Financial…not always because their broker/dealer says to; but because they choose us for outstanding service, top tier products competitive comp and after sale client service.  Go ahead and take a couple more minutes a read about two new reasons for calling Westland.

Thought for the week:

Those of you who have received emails from me in recent months have perhaps seen the little picture in my signature block that encourages you to “click here” for an important message.  This is the latest in presentation tools to help you get the message out about linked-benefit LTCi and how simply it can become part of the clients’ portfolio.

Many people resist the idea of “buying insurance” for long-term care (and unfortunately, many advisors resist the idea of recommending it); but investing for long-term care if needed…..that’s another matter.  I will address that concept in later issues of Pearls, but suffice it for now that many people can “invest” money on an annual basis that will effectively yield results in excess of 7% /year and provide 5-10 times that amount if they do, in fact, ever need income for long-term care expenses.  Did you “click here” yet?

This 2-minute video can be customized with your contact information to be used in the signature block of your emails and/or on your website.  It has already been directly credited with several MoneyGuard sales and has been approved by many broker/dealers.  If you would like to have this video for your own use, contact Tim Morton at timm@westlandinc.com.  He will assist you.  Also, if you need assistance getting it approved by your BD, he can help.  He loves that stuff.

Announcing the Westland Hands Free App Process

Many new advances in products and services are coming from Westland this year that will help you do a better job for your clients and (in many cases) make more money in the process.  Number one on the hit parade is the new Westland LTC Insurance Services.  Very soon you will be receiving specific information including, carrier lists, contacting process, commissions, and the specifics of our exclusive Hands Free App Process.

Just imagine.  You identify your client who should consider long-term care.  Call Westland and speak with one of our experienced (average 15 years) counselors who will design the appropriate plan and send it to you with appropriate support materials and product comparisons if you like.  Once you have presented it to the client, (yes, we are available to help there as well) let us know that he/she is ready to move forward.  You are almost done.  We will call the client and take the application over the phone, answer any follow-up questions your client may have and re-assure them of the advisability of this action.  Within a week or so, you will receive a policy ready for delivery.  No more forms to learn or personal health questions to ask.  Clean and professional.

All this will be ready to go in two weeks.  But don’t let that slow you down.  Call Chris Ridd today at 800-238-8144 to request illustrations, get answers to commission and contracting questions and anything else that is on your mind.  We want your LTCi business, conventional products as well as linked-benefit and now there is no reason to go anywhere else for your long-term care get your solutions.

Thought for the day:

“The retiree’s worst nightmare….too much life and not enough health.”

Gene Pastula, CFP

If you will read no further:

Look for our announcement of the expanded LTCi department from Westland.  All of your clients should be provided with information about how to prepare for an eventual long-term care episode.  No one will be able to provide more viable strategies, better products or a higher level of service than Westland.  And… we will take the application for you and pay top commissions.  Try us out and see how we do it.

Thought for the week:

The article starts out quoting officials of Russell Investment at a press briefing for a new retirement planning program for advisors.  “I desperately need you to secure an adequate retirement for me” says the retiree, “I’m afraid my assets will run out before I do.  But stay away from me advisor, because I don’t trust you.”  Then it goes on to talk about a computer program intended to help advisors design customized retirement plans that can be modified throughout the clients’ life.  It allows the planner to change course if things don’t work out the way we expect.

Here is a question.  If we have another meltdown in the next 12 -18 months like the one in 2008-9, how many clients will you lose?  What if they are in poor health at the time and spending money on nursing care?  What if there is no meltdown, but the markets just don’t perform well?  Will your clients accept that and stay with you, continuing to pay 1% or more for your services?

I think these are some questions that should be answered about every client portfolio you manage. Because if you can point to the positive steps you have taken to accomplish that, you have no doubt created protections from the things that retirees fear most….too much life and/or not enough health.  Where have I heard that before???

I was at a party the other night and talking with a friend who just recently retired from his practice as a CPA.  He’s a pretty bright guy who always had worthwhile perspective on things financial.  He told me that all of his money is in the bank.  Not a single stock, piece of real estate (except his house) or any other financial product does he own.  “I know that sounds rather stupid to some”, he said, “but no one has ever convinced me that they had a plan that was assured of working and I have seen too many that didn’t.”  As we talked I realized that he was probably right. The Planners and stockbrokers always talked about how their market recommendations would average this-or-that rate of return with this-or-that level of probability.  The insurance guys said, “Just give the insurance company your money and they will take care of you”. Do I really need to tell you what the real estate guys said?

So Jim says, “I’ll keep my money in cash, even though it is probably counterproductive.  I have plenty to last as long as I’ll probably need it; and if I start to run out, I can just cut down on my spending.  At least I know I won’t be spending it on advice that doesn’t end up working”.

An awful lot of people think like Jim; even though they don’t express it so well.  “Show me a reason I can relax knowing my income is safe as long as I live.  Prove to me that if one of us gets sick, there will plenty to pay for our care.  Explain why we don’t have to worry about income after one of us dies and part of our pension and social security goes away.”  Do that and I will continue to be your client?

This is not difficult to do if you combine the stocks, bonds and real estate with insurance and annuities. Doing so properly, allows you to show them how much income will always be there no matter what bad happens in the markets.  Also how their income will increase automatically if they get sick enough to need professional care. And you will also be able to show them how the value of their portfolio is protected, even when the market goes down as it does every few years.

There is no doubt that financial planners and investment advisors are beginning to understand the strategic value of these products in the portfolio and the incredible benefits they will provide.  If you have not pursued this with our clients you need to get with the program.  This is not about needing insurance….or not.  This is about placing some of their money safely where it will perform best when needed….by the client, by his heirs, or in the event of long-term care when its value expands five fold. 

Do I need to remind you that we are here to help?  (800) 238-8144

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.