Lessons from the Boll Weevil

Lessons from the Boll Weevil

You may or may not be familiar with the story of the boll weevil, but I’ve been thinking about it the last few weeks during the recent market volatility. The story is a great reminder of why we need to consider alternative products outside of our normal assets-under-management mindset. Change is always feared, but many times, it results in greater success. 

The boll weevil is a beetle that migrated to the United States from Mexico in the late 19th century and devastated the cotton crops in the South. Farmers nearly went bankrupt due to the infestation, so many began to grow peanuts instead. Most cotton farmers resisted the change, however, saying peanuts wouldn’t grow and no one would buy them. As it turns out, peanuts were not only resistant to the boll weevil, but they were also extremely profitable. In fact, the peanut farmers made enough money in three months to equal an entire year’s work in cotton. 

Eventually, the boll weevil was nearly eradicated in the south and cotton farming resumed. However, those who seized the opportunity to grow peanuts became far more prosperous than those who never diversified. In fact, the citizens of Enterprise, Alabama, erected a boll weevil monument to show their appreciation for the insect and its profound influence on the area’s agriculture and economy. 

Take a hint from the peanut farmers. With the recent market volatility, we must look to alternatives to meet client needs. Our clients continue to fear running out of money during retirement, yet we continue to throw out the same solutions to old problems. Like many farmers in the south found, a forced change creates opportunity and profits. Annuities and life insurance provide an opportunity to leverage tools for safety, protection and tax-advantaged growth. Many advisors don’t like having a conversation about these products, but it’s time to change.

The Bottom Line: The boll weevil taught a southern town the value of change. Adversity forces us to look at alternatives that many times work in our favor.