Fear and Greed and Annuities


Way back in the dark ages (pre-Internet), nearly 30 years ago, I earned my bachelor’s degree in psychology. Throughout my sales career, it has been enlightening and affirming to observe just how much of what we feel, believe and perceive is governed by our emotions. The investor experience is wrought with visceral emotion, much to the chagrin of those who do not seek any professional guidance. Human nature compels us to buy high and sell low.

When I studied for my licenses, I took batteries of tests, studying many terms and investment scenarios. Nowhere was there any mention of controlling investor emotions and expectations. As an advisor, you have to control two powerful client emotions: fear and greed. The overall strong 2013 stock market is a recent example, as some clients are now expecting higher returns and overall portfolio performance. 

Now more than ever, it is important that you manage your clients’ expectations, along with their fear and greed. Fixed Index Annuities (also known as Equity Index Annuities) may be a great part of your clients’ portfolios, and they may address all three of these challenges. 

Fixed Index Annuities remove fear from the equation with their downside protection. Zero is your hero when an index is way down on the anniversary date. The annual re-set creates a new starting point and upside opportunity for your client for the following year. When an index is up, you have satisfied their greed as long as you have set the proper expectations regarding the upside potential. Don’t make it complicated or confuse your client; remember that a fixed index annuity is simply a fixed annuity with a different way to credit interest.

Today’s fixed index annuity solutions have evolved tremendously from just a few years ago. Whether your clients’ require income, seek accumulation or are looking for bond alternatives and safe money vehicles, Ash Brokerage is ready to help you navigate the right course.

Bankrupt Millionaires


Everyone dreams of living a lifestyle with millions of dollars of income, having people standing ready for your every move, and performing in front of thousands of people live – not to mention in front of millions via television. What’s important, however, is how those millions of dollars are leveraged and positioned for the future. The worst seems to happen to the people with most. 

Recently, many young men became instant millionaires due to their athletic abilities on the football field. Highly drafted NFL players can receive millions in bonuses and guaranteed salaries. Clearly, this seems like a lot for playing a game. Unfortunately, these young men do very little to protect themselves and their investments. A staggering 78 percent of NFL players file for bankruptcy within five years of retirement. The numbers are equally high for other professional athletes. The bankruptcy rate remains at 60 percent for NBA players. 

Professional athletes represent a microcosm of the American public. A lack of understanding about finances creates the opportunity for poor decisions while we are employed. A discussion on the future and the need to protect what you have continues to be absent in most financial planning conversations. And finally, we fail to protect our clients against their own irrational behavior. 

It’s time to rethink how we educate individuals, advisors, and the general public. We have to prevent even our wealthiest clients from failure with protection from the unthinkable, guaranteed income for the future, and advice for how to use the blessings of today.

The Swinging Pendulum


Understanding client behavior has always been an interesting – if not challenging – aspect of the financial planning process for me. Sometimes it seems that clients move in opposite directions from what logic would dictate. Client trends remain one of the most important pieces of knowledge we can possess when we meet with our clients and prospects. 

A Towers Watson research paper released in May 2014 showed that consumer behavior has moved opposite of where we would typically think. Today, 62 percent of Americans would be willing to give up some current pay or salary for a guaranteed income stream in the future. While most companies are looking to take pensions off the books because they don’t help the recruiting process, the majority of Americans are looking for pension-like income. It appears we are not aligned with our clients. 

The need for guaranteed income is a major shift from just five years ago. In the same survey in 2009, only 46 percent of Americans said they would give up some portion of their earnings to have guaranteed retirement income. Think about the time in which that survey was conducted – 2009. The financial crisis was fresh in everyone’s mind, defined contribution account balances had fallen as much as 40 percent, and prospects were bleak for economic growth. Yet, as most account balances have nearly rebounded, more Americans want guaranteed income. 

Clients can no longer expect guarantees from their employers. With the PPA and proposed changes to PBGC premiums, it is unlikely that most employers will reinstate pension contributions. As planners, we must provide guaranteed solutions to our clients. We need to set aside our egos relative to money management and realize that our clients want some level of base, guaranteed income. Call Ash Brokerage for details on how to secure this kind of tax-efficient income for your clients.

Insure to Be Sure


According to a recent MarketWatch survey, 52 percent of retirees said they are pulling money out of their retirement accounts simply as the need arises – with no real plan in place. Most retirees fail to create an income plan, yet poll after poll suggests that their biggest worry is outliving their money.

So what advice are these retirees given?

  1. Stick to a budget
  2. Cut expenses
  3. Make sure you have the right mix of stocks and bonds in your retirement accounts

The list of advice goes on and on ....

I say if you want to BE sure … INSURE. Consider an annuity with a lifetime income rider. This strategy GUARANTEES a lifetime income payment for as long as you live.

A client’s lifetime income payment is based on their annuity income base and their age when they decide to start lifetime income payments. Some annuities even offer an increasing lifetime payment opportunity. Most importantly, employing this strategy guarantees an income payment for life.

It is worth repeating: If you want to BE sure … INSURE!

Planning with May in mind


In my hometown of Indianapolis, Indiana, the month of May brings spring, warmer temperatures and the Indianapolis 500. The Indy 500 is celebrating its centennial era after the inaugural race of 1911. Much has changed, but many of its traditions remain intact. Because of the race, May contains a lot of tradition, pageantry and speed. And, if we are lucky, sometimes late May has some NBA Playoff action. The events of May are a great analogy for talking to your clients about their retirement plans and future income needs. Teams are looking for speed, endurance and strategy throughout the month. 

At the beginning of the month, the focus is on speed in order to qualify for the best starting position. Many of our clients retire with plans to travel, build new vacation homes, or start new businesses. These early retirement years require a lot of income, and sometimes, we need to look at the most tax efficient manner to fund these years. Positioning our clients for their best start requires planning and strategy for the 10-15 years prior to retirement. In the Indy 500, teams who don’t test regularly struggle with qualifying and end up starting at the back of the 33 cars. The turbulence at the back of the pack is incredible, so getting your clients near the front is critical. Provide them with options for retirement by having a different conversation about protection, guaranteed income levels, and diversifying the product portfolio. 

After qualifying for Indy, teams begin looking for endurance. Drivers and machines must last a grueling 500 miles at speeds averaging 210-plus mph. Each team is provided the same amount of fuel and tires, and they must meet the same technical specifications. How they utilize the allowable resources throughout the race determines how they finish. We have to make sure our clients use their available resources appropriately and have a plan that will last for their entire life with certainty. 

Finally, in the final 50 laps or so of the race, strategy plays a large role in determining who reaches the winner’s circle. Making sure our clients have multiple streams of income that they can’t outlive is only one part of winning their retirement race. One of the most overlooked needs in retirement planning is inflation protection. Today, interest rates are poised to increase at some point the next three to five years. Therefore, the ability to afford the same items and maintain a normal lifestyle in the future requires growing your income. It’s easier to grow income with the proper products than to grow your account balances above and beyond your withdrawal rate annually and consistently. 

In order to win the retirement race, it takes planning, education, communication with your clients, and strong product selection. Let Ash Brokerage help you have a meaningful conversation with your clients and demonstrate new and innovative ways to secure your clients’ lifestyles during their different phases of retirement.