Don’t forget this solution for businesses


We all know annuities are a great solution for retirement. But have you ever considered annuities as a retirement solution for businesses? If you’re working with business owners and executive-level clients, ask if their company has a defined benefit pension plan. 

Why? Traditional pension plans have become a thing of past as 401(k) and other contributory plans have overtaken the retirement landscape. As a result, many businesses have decided to do two things: 

  • Freeze and eventually terminate an existing defined benefit pension plan
  • Shift all or a portion of their plan benefit obligations to a third party 

Here’s how it works: Businesses with a defined benefit pension plan can remove plan liabilities from their books by transferring the risk to a group annuity issued by a top-rated insurance company. This transfer allows the company to eliminate premiums paid to the Pension Benefit Guaranty Corporation along with significant cost savings in the plan administration. These cost savings can be reinvested in their business. Most importantly, the transfer allows the company to make good on the benefit promises made to their employees.

Plan participants benefit from the transfer because it ensures payment of the plan benefits promised to them at retirement that may include guaranteed income, the ability to provide ongoing income for a joint annuitant, and options such as payment frequency or cost-of-living adjustments.

You don’t have to be an expert to help your business clients execute this unique solution – Ash Brokerage has a dedicated team who can do it for you. You should call us – (800) 589-3000 – to learn more or to start identifying opportunities today. 



retirement business

Annuities: A Top Pick


The nature of my job dictates that I spend a lot of time in my car. When I’m driving, I’m typically either talking on my phone or listening to sports radio on ESPN. Not too long ago, one of my favorite sports show hosts was talking about the NFL draft and how difficult it is for franchises to select the best possible college player for their top draft pick. In college football, there’s an abundance of talented athletes who look very promising; however, it’s almost impossible to know for sure if their talent will translate into success in the NFL.

The commenter said selecting a draft pick is exactly like selecting a financial advisor: Regardless of who your advisor is, you would’ve made money over the last two years …  You won’t know if you have a great advisor until you see what they do in a difficult environment.

Consider this: On Jan. 5, 2015, the S&P 500 closed at $2,020.58, and just two years ago on Jan. 4, 2013, the S&P 500 closed at $1,466.67 – the index is up 38 percent and near an all-time high. 

Despite all the market success, all of the studies we’re seeing point towards the fact that many near-retirees are ready to take some of their “winnings” off the table and “lock in” in their gains. A recent study stated that 86 percent of baby boomers surveyed wanted help protecting a portion of their retirement assets. This same study showed that more than 50 percent of those surveyed formed their opinions of annuities more than 10 years ago … so they may not realize an annuity could give them exactly what they are looking for.  

We need to spread the word: Indexed annuities are an attractive option today with more, and better, features than they’ve ever had before. As you’re sitting with your clients, reviewing their portfolios’ performance this past year, ask about their sentiments of the equity market moving forward, and broach the subject of locking in a portion of their gains.  

The Bottom Line: Show your clients that you can help them succeed in a difficult environment … show them you won’t disappoint them as their top draft pick. The annuity team at Ash Brokerage would be thrilled to be YOUR top pick to discuss your clients’ situations and help identify the best annuity solutions.



The Cost of Waiting


We’ve been in a declining interest rate environment for about the last 10 years, with historic low rates the last few years. These low rates are driven by the Federal Reserve in hopes of jumpstarting the economy by allowing consumers to borrow money cheaply. While lower rates may sound good, they also mean very low returns for products such as CDs and money market accounts.

Even in this low-interest-rate environment, it’s estimated that there’s still nearly $10 trillion on the sidelines in the form of CDs and money market accounts. Many of these investors are concerned that committing their money to an annuity at current rates won’t allow them to take advantage of higher rates in the future. What they may not be considering is that waiting could cause them to lose earnings that may require years to make up, even if they do get a higher rate of return in the future.

For example, if you put $100,000 into an annuity paying 2.25 percent for five years, you would be guaranteed $111,768. If you waited two years before buying that annuity and were earning 0.50 percent in a CD, you would have to earn 3.78 percent over three years in order to get to the same $111,768 you would have been guaranteed with the five-year annuity.  

Regardless of interest rates, annuities are really designed for investors’ long-term goals. Annuities offer tax deferral, principal protection, liquidity, lifetime income options and death benefits that are paid directly to the beneficiaries.  

The Bottom Line: With $10 trillion on the sidelines, now’s a great time to reach out to investors about the benefits of tax-deferred annuities.


History and a Math Lesson


Why do we study history? Because it’s all we have, and history tends to repeat itself. Well, what have we learned from the Japanese economic collapse of the early ’90s? Apparently, not much. 

Since their real estate bubble burst, Japan has been in a low-interest-rate environment for the last 20 years, yet we keep waiting for interest rates to go up. Right now, billions of dollars are sitting in low-yield fixed accounts earning less than 1 percent, waiting for a rate increase. 

We’ve now been waiting approximately five years for this “rising rate” phenomenon – when will we stop waiting and move on? 

So there’s your history lesson. Now, let me explain the math lesson. Do you know how significant it can be to find just one percent more yield on your clients’ conservative assets today versus five years ago?  

Five years ago, a five-year CD was yielding approximately 5 percent interest. If I could have found something to get that client 1 percent more yield, I would have increased their yield by 25 percent. As we stand today, a five-year national CD yield is averaging about 1percent.* If I could find something to get that client 1 percent more yield, I could increase their yield by 100 percent!  

You could certainly do that, simply by repositioning your clients’ assets in a fixed indexed annuity. With cap rates in the 3-4 percent range, it’s likely you will find your clients 1 percent more yield without risk to their principal. 

Don’t talk yourself out of presenting this option to your clients because YOU don’t believe they will be interested. Clients are seeking yields without risk to principal, and they are finally fed up with sub-1 percent yields.

So the next time your children ask you, “Why do we study history and math?” you now have your answer.


*As of Dec. 19, 2014


Retirement Through Air Travel


I fly nearly 60,000 miles per year. As I sit in a terminal, I’m still amazed at the size of the aircraft that manage to take off and stay aloft. But pilots will tell you there are four basic principles that make air travel safe: thrust, lift, weight and drag. I think most Americans can benefit from the same four principles in retirement.

Thrust: Now is the best time to buy a fixed annuity (as I already wrote in a previous post). Given the likelihood of low interest rates for the foreseeable future, an additional 100-150 basis points in rate make a surprising difference in accumulating money. Change your conversation to focus on the time it will take to double your client’s money. With today’s rates, it can make a 36-year difference – that’s thrust in a financial plan. 

Lift: One of the basic benefits of an annuity is tax deferral. Over time, tax deferral can make a significant difference in the accumulation value of nonqualified dollars. If nominal interest rates are similar, tax deferral provides lift in retirement planning. Tax considerations need to be evaluated during the distribution phase as well. Life insurance and exclusion ratios can be a tool to ladder income payouts at retirement. Positioning income with respect to taxation also allows clients to maximize their government entitlement programs. 

Weight: Weight slows an aircraft down and makes it inefficient, just as investment portfolios become inefficient when their asset classes have not been weighed properly. A diversified strategy to take advantage of all investment options makes returns more stable over long periods of time. Additionally, taking gains off the table allows an investor to reduce the weight of their portfolio. Rebalancing the portfolio regularly keeps the asset allocation in line, and allowing the client to take gains off the table with more conservative vehicles provides more consistent returns.  

Drag: When flying, resistance comes from many items on an aircraft. Reducing drag allows the plane to fly faster and more efficiently. Aside from taxes, fees are one of the biggest drags on an investment portfolio. Whether they’re advisory or product fees, they make the portfolio work harder to attain desired results. Client-friendly annuities and life insurance (during both the accumulation and income phases) allow clients to reach their goals faster.  

When talking to clients about their retirement goals, try to think about how to keep their retirement portfolio soaring. Provide thrust in form of better nominal rates; create lift through tax deferral; reduce the weight of equity-heavy portfolios; and minimize the drag in fees.

The Bottom Line: Flying may seem complex, but it can be broken down into four simple principles – use them to make your clients’ retirement portfolios soar like an airplane.