Thought for the day: 

“Government, like fire, is a dangerous servant and a fearful master” 

                                                                                    George Washington

 

Just a Thought:

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If you will read no further:

Many financial advisors who read this BLOG do not consider Insurance and Annuities their strongest area of expertise. But their clients rely on them to make sure they have the insurance products they need and that they are suitable. If your clients have to die for their loved ones to collect they will not be happy when they find out you did not tell them about the kind of product that would have paid them while still alive had they become permanently disabled, critically ill, or terminal-but-not-yet-dead.

It’s time for all of your clients to get an insurance check-up because most of them have the wrong kind of life insurance. To make sure they don’t continue to pay for insurance that is yesterday’s news and grossly inadequate, collect their policies or pull their information from your client files and let us take a look. We will provide a current evaluation, tell you if improvements can be made and offer alternatives that are more like the I-phone then that clunker from 20 years ago. Call Nancy Woo or Randy Masciarelli to help, 800.238.8144

 

 

Thought for the week:

The economy that we have been experiencing since 2008 involving historically low interest rates and five years to recover what has been lost has some implications of which we should all be aware, or the impact on many of our clients and perhaps even on our practices will be tragic.

Think about it;

• We have an ageing Bull Market that is pushing the historical limits and looking at the next Bear.
• Our clients are retiring and are expecting us to help them support a comfortable lifestyle.
• Our clients no longer have the singular goal of building their wealth for future use.
• Our clients expect us to position their assets to provide income they won’t outlive, additional income when needed to help pay the increased cost-of-living when they become infirm; and pass a legacy to heirs who are facing an even more uncertain future and can use all the financial help they can get.

As investment advisors, we have historically faced one most significant risk….Market Risk. With diversification, asset allocation and intelligent strategies we help our clients overcome Market Risk and successfully build their wealth.

But now there are many more risks that must be addressed once the client retires and must live on the wealth you have helped him create; Inflation Risk, Deflation Risk, Withdrawal Rate Risk, Sequence of Returns Risk, Long-term Care Risk, Regulatory Risk, Taxation Risk and the granddaddy of them all, Longevity Risk.

Longevity Risk… the risk of outliving our income. But that’s not all. The longer we live, the more opportunities for market losses, the greater the possibilities of running out of money, the more significant the Sequence of Return issue and the greater the likelihood of needing long-term care.

The most important strategy therefore is to remove the Longevity Risk from a retiree’s portfolio so that you can eliminate, or significantly reduce most or all the rest; and concentrate on continuing to earn them a respectable return on their investments.

Stock markets and other investment instruments are never expected to specifically address these issues. And many successful individuals will die poor when their investments are unable to meet all of their requirements in an environment of volatility and uncertainty. Only insurance companies are able to eliminate Longevity Risk. They can do this successfully because they also deal with Mortality Risk. They win when people with life insurance live a long time and they win when annuitants die too soon. Everything in the middle is just a calculated profit. No other investment or institution can do that.

Some clients have so much money they cannot possibly out live it if you simply stuff it in the mattress. But most need you to help them position their assets, take the Longevity Risk off the table and cover the extra cost needed when they require long-term care.

I’m not suggesting that investment portfolios should be replaced with insurance policies. But there is no doubt that your retired clients will be much better off when their portfolios include a guaranteed Pension Income floor that eliminates Longevity Risk and insurance strategies that increase income when needed to protect their portfolio from decimation due to excessive health care costs and even provide a more efficient and predictable solution for leaving a financial legacy.

Most planners admit to modest knowledge of the insurance industry, its unique products and the many sophisticated strategies that can be employed to address these retirement-based concerns. So they continue to rely on the investment concepts they have employed for years to grow assets; when what is really needed are concepts for their retired clients to spend assets sufficient to provide the best possible life style without running out of money before they die.

Let us help you take clients’ Longevity Risk off the table, increase the security and predictability of their retirement income, and reduce their stress. Call Josh or email him at  Joshvh@westlandinc.com.