Thought for the day:
“Even if you are on the right track, you’ll get run over if you just sit there.”
If you will read no further:
If you have been paying attention to the market lately you can’t help but notice an increase in the “sensitivity” to the issues going on here and around the world. None of these “issues” are positive. Diversification is the watchword for your clients who will not take kindly to another experience like 2008-9. You should maybe pay closer attention to some “product diversification” particularly designed to address those needs that that require certain solutions; Guaranteed Lifetime Income, extra income when they eventually need convalescent care and perhaps even legacy planning. No one does “product diversification’ like Westland.
Thought for the week:
I regularly follow the writings of a number of economist and financial analysts. One of the things that constantly impresses me is the bias that is evident in their writings….especially those who write investment newsletters and those written by broker-dealer’s experts . When was the last time you heard any serious words of caution from these folks? Even when they hedge a little in their positive outlook, they always seem to have a “work-around” to prevent any serious losses. Yet when the down markets happen, many planners are caught unaware and their clients lose a significant losses in their portfolio. It seems like this happens every 5 or 6 years; which is probably why I am feeling a little cautious about now; especially when I look around the world and see very little to feel positive about….economy-wise.
We are seeing a little sunshine recently in the U.S. with housing, energy and a slight increase in interest rates (18% increase in 10yr Treasury Rate in just the last three days) . But the capital markets are clearly being supported by the Fed’s printing press and it’s just a matter of time before it must be curtailed. Every time Bernanke speaks the market holds its breath or runs for the exits. Then look around and see Brazil on fire, France back in recession, Italy, Greece and Cypress teetering on the edge of complete disaster, with only Germany there to help; and losing patience along the way. The UK is chronically unhealthy, Japan is struggling to keep afloat and now China is showing signs of faltering. Where is the love? Where are the returns? When will we see another serious pullback in the U.S. capital markets?
I’m just saying, everyone should think about the next stock market collapse and where they would like to have their clients’ money reside when it happens. Can they withstand another 20%-40% pullback? How about the ones who are taking income while this is happening? I want my advisor to be thinking about what my portfolio should look like if/when we get the next major down-market…not just the value, but what kind of income can it provide without risk of failure? What are those bonds looking like when interest rates rise significantly?
My portfolio will supply us with most of the money needed to take care of us if we need care, will provide a base amount of income without any concerns about the market; and I am certain there will be some left over for the kids…or a charity if they tick me off. It’s not that difficult and it’s done without reducing the bottom line net worth. How many clients (or prospects) do you have who would like to feel that comfortable with their future…even after a few sizable back-to-back losses?
A BOOMER SURVEY
On June 17th 2013 a Nationwide Insurance Financial Consumer Survey released the following statistics from respondents:
$111,507 – the average estimate of Annual long-term care cost by 2030
$265,000 – the Actual estimated cost by the industry
4% – the average annual increase in nursing home cost since 1974
75% – respondents who think that long-term care means nursing home or assisted living
50% – long-term care that takes place in the home
70% – Dept. of Health & Human Services estimate of Americans over age 65 who will need care
25% – respondents who said they have long-term care insurance
22% – respondents who plan on paying for their care from their 401(k) or IRA
21% – respondents who plan on paying out of savings
81% – respondents who have never been asked to discuss the issue by their financial planner
(OK I made that last one up. But it sure seems pretty close to correct.)