Volatility Control Index

Presented by Deb Strong

Clients have many different choices when picking an index strategy.  The Volatility Control Index is one that can help even out the highs and lows in the market.  I like to compare it to getting better gas mileage when you are driving your car.  When you are going up a hill, it takes more gas, when coasting down a hill it takes less gas.  This can help with the overall performance in the market and help your clients sleep better at night. Please call Deb Strong at 800-397-9999 for details.

Please click on the link below for more information.



4 Risk Rules

Presented by Deb Strong

Risk 1 – Inflation

What is the #1 increase in expenses for a retiree?  Most people will say it is Health Care, which isn’t actually accurate.  The #1 increase in expenses in retirement is daily living. Every day is a Saturday.  What is inflation directly tied to?  The increase in the costs of good and services over time…daily living.  Not to mention, do you expect inflation to go up or down?  Similar to taxes, everyone expects inflation to go up over time.

So having at least a portion of the client’s money allocated to a policy that can help them combat inflation is just smart planning for your client.

Risk 2 – Market Volatility

In the last 14 years the market has corrected by 50% twice!  Over that 14 year period investors would have averaged a 2% annualized yield in the market.  We are at the top of a 6 year bull market, when the average bull market only lasts 4.  If client’s are heavily allocated to the market they may not have time to recover from another major correction. Hence, the reason I like the rule of 100.  Take the client’s age from 100 and that is the percentage of their assets that should be at risk (example 100-70=30).  This means my 70 year old client should not have more than 30% of their retirement assets at risk.

Not to mention, from the Future of Retirement Income Study, 60% of annuity owners and 61% of annuity considerers would be willing to pay ADDITIONAL fees to keep from losing any money in a bad year, while gaining SOME of the market in good years.  People are willing to pay for what an index annuity does contractually!

Risk 3 – Interest Rate Risk

Many clients use bond funds in their retirement income plan.  However, most of them do not understand the inverse relationship of bond fund rates to interest rates.  In 2013, 88% of bond fund rates lost money.  The other interest rate risk is for the $11.3 Trillion dollars on the sidelines earning less than 1% interest, not even keeping up in a low inflation market.

Risk 4 – Longevity

Longevity is the multiplier of all Risks.  One out of 4 people 65 years old today will live past 90.  One out of 10 will live past 95.  People are in retirement as long as they are in their professional careers.  You have to make sure that they have an income they can’t outlive.

Unfortunately, many advisors are still using the outdated method of the 4% rule.  Which says that if you have a 50/50 stock bond portfolio you can pull out 4% annually and it would be guaranteed to last 30 years.  We have a White Paper and tools called Rethinking Retirement Income, which is a study done that shows if you use that, you have less than a 50% chance of success.  The real number is more like 2.8%.  What I find as more of the real problem versus the percentages is what happens when you outlive the 30 years?


Annuity Risks Clients Should Consider

Presented by David Corwin

I read an email recently and thought it would be great to share some of the talking points and also share some videos supporting the ideas mentioned. It spoke about the different risks that are out there that clients should consider when purchasing an annuity. The first one is Interest rate risk. Typically traditional bond funds may lose value in an increasing interest rate environment so protecting your income becomes paramount and could be accomplished with an indexed annuity contract. Dealing with Inflation risk means that if you have a lot of cash on the sidelines, you would most certainly be exposed to inflation risk. An indexed annuity would help keep pace with inflation and protect your purchasing power. Market volatility risk is hedged with an annuity contract by locking in your recent market gains. Withstanding another correction will only prolong your retirement date. Longevity risk in a recent survey was the biggest fear of seniors. Outliving your assets is becoming a real possibility and creating a guaranteed income stream for life can be accomplished with an indexed annuity with the income riders that have been created in recent years.

Here are some great consumer videos to check out.
a. Interest Rate Risk https://www.youtube.com/watch?v=evokCdOaLnQ
b. Inflation Risk: https://www.youtube.com/watch?v=irA0Uk4-aZs
c. Market Volatility Risk: https://www.youtube.com/watch?v=a_FHYUmshKk
d. Longevity Risk: https://www.youtube.com/watch?v=lE1jq-Li1zU

Share some or all of these videos through your website and/or social media and keep your clients and prospects informed!