MAR 09, 2017 | BY TAYLOR BOYD
For many Americans, Wall Street is perceived as a confusing and mysterious world of fluctuating stock prices, complicated fiscal equations and, most importantly, incredibly high risk.
And why shouldn’t this be so?
After all, portfolio management is not something taught in mainstream scholastic curriculum, and the topic of money and financial matters are often shied away from in the home. After years of working towards a comfortable retirement, many pre-retirees would prefer to avoid investing altogether out of fear of losing their hard-earned retirement dollars. In fact, many Americans have a mutually exclusive view of risk: Either it’s invested and risky or in cash and safe. There are, however, many varying scenarios, and a properly diversified portfolio can focus on mitigating risk and increasing return.
When evaluating whether to invest or avoid the markets, most people — and the markets themselves — are subconsciously driven primarily by two emotions: fear and greed. When investors compete to buy a possibly scarce resource such as a specific market commodity, prices rise sharply with greed in control. On the other hand, when fear is the dominant force due to uncertainty over future outcomes, people cash out in haste or stop investing altogether, which causes markets to dive and crash. This all-or-nothing attitude almost makes Wall Street feel like a giant gambling casino, where one can win big or lose big, without any possibilities in between. But what about winning small? Or medium? With a much broader spectrum of winning and losing, every investor would do well to focus instead on developing a portfolio where the potential volatility is within an accepted comfort range. This minimizes the chance — through any market cycle — of becoming anxious and going to cash, which over the long-term reduces the probability of meeting retirement goals.
For a financial advisor, evaluating the client’s tolerance for risk is one of the first hurdles to clear when strategizing a financial plan for any portfolio. Higher risks yield higher returns but carry the weight of potential high losses, while low-risk investing offers less return but invariably more peace of mind. The volatility of a portfolio can be measured using standard deviation, or the measure of dispersion of a set of data points from its mean. For example, a volatile small cap stock may have a high standard deviation, while the deviation of a stable large company stock is generally lower.
Here are a few tips to consider:
The bottom line is that no one needs to go at it alone. Particularly for investors who don’t have the time, energy or desire, or don’t feel that they can keep their emotions out of the decision-making process, hiring a professional will help them navigate their financial future — and stay sane. It’s important to review an advisor’s background and credentials and request a list of references, all of which will help with the due-diligence process. It’s also essential to feel comfortable sharing thoughts and concerns and, above all, enjoy the process. Investing for retirement doesn’t have to feel as if it’s a game of chance, like the spin of the roulette wheel or the roll of a dice. It should be well thought out, organized and calculated, with the estimated cost of retirement at the core. By identifying long-term income needs based on an intended lifestyle, an experienced advisor can help anyone at any level develop a sound investment strategy that is realistic and on target to land on the right numbers.
*Past performance does not guarantee future results.
AUG 30, 2016 | BY GREGORY E. SCHWABE
Here's how to reach some of the prospects you may not have considered
If your prospecting is mainly with the age 55-80 group, you know it’s not what it was even a few years ago. “Almost tapped out” is the way some advisors are describing it.
If your practice is feeling that pain, there’s a way to reach a broader, motivated and largely untapped audience: Consumers age 36-55.
You can do it with Indexed Universal Life (IUL) insurance policies. What grabs the attention of this age group is the concept of a “tax-free retirement.”
Unlike IRAs and other qualified retirement accounts, there are few cap limits on IUL contributions. Essentially, this means your clients can invest as much as they want into IUL savings vehicles.
These accounts not only help them hedge any risks associated with their retirement savings; they also offer your clients the potential of having tax-free distributions in retirement. The higher contributions are not only wonderful news for your clients, but you can also benefit from a greater earning potential based on the regular and automatic deposits they make to these accounts.
IUL opens up more sales opportunitiesAs you know, IUL is experiencing double-digit growth in the insurance and financial services industry. Continue reading to find out why.
The growth that these types of policies are experiencing is so significant, you can be sure that if you’re not selling IUL, the competition is out there getting the business.
Here are some of the ways you could be pitching IUL to new prospects:
Even at a lower rate of return, the values are far better than nearly all GULs on the market. Would a client trade the handcuffs that most GULs come with for a few less years of guarantees and the future flexibility than an IUL offers? It has been said this product offers “optionality,” the flexibility of deciding how to use it in the future without having to make any decisions today.
Continue reading to learn by many advisors now prefer IUL over mutual funds.
Why do accountants and advisors often prefer IUL?Here's why:
It’s easy to understand why IUL is setting sales records, particularly with 36-55 year old prospects. They’re motivated consumers who take retirement seriously and want to do all they can to maximize their assets. While IUL may not fit every prospect, the opportunities are enormous.