A 1000 point decline in one day? Memories of 1987, 2000, and 2008… fear is now overtaking greed with the Boomers and Gen Xers. And why not? We’ve had our fun- we went straight up Space Mountain, and it has been a glorious ride. But, for most current, or near retirees, it is time for a little less excitement. And, we are here to help.

When it comes to security, and reasonable rate of return, what can match a good Fixed Indexed Annuity? Let me help you out: NOTHING does. So, it’s now time to help the Boomer and Xer generations differentiate between what they need… and what they want. Heck, I want the Cubs to win the World Series. I want to win the lottery… all good wants, and things like this can happen (I just know that this is the year for the Cubs). But, what Americans need in retirement is a guaranteed flow of income. Maybe a flow that can increase with inflation. They may also need funds available for a chronic illness, or long-term care need. And, they both want and need a reasonable rate of return.

Let’s quickly review what has happened. Current owners of FIAs should kiss you. Yes, the market tanked… all principal protected, and past gains locked in. Plus, if they are near their anniversary date, their floor has now re-set. They have a new low starting point to calculate gains. What about new buyers? Well, there is not time to wait. If we all agree that that market will come back (it always does- it’s just a matter of how much and when) is there a better time to buy? The answer is no… there are great opportunities and growth.

Here are my tips:

• I want a good fair crediting rate on the accumulation side. Don’t be blinded by shiny first-year bonuses, and a low crediting rate. Big bonuses usually equal low caps, along with bad spreads and participation rates.
  
• I want an income payout strategy that gives me the opportunity to see increased payouts later in life, if the market hits a homerun.
  
• I want “history” in my strategies. Call me crazy, but I think a little history, and a lot of experience… is what the public wants today. No time for new trends or fads.
  
• Credibility in the carrier. Do you feel that the management team is on for the long term, and has the best interest of your client at heart?
  
• Is the insurance company very profitable? Or, will your new clients pay for their profits with low renewal rates. 
  

So, there you have it. I have sold these products, designed these products, and priced these products. I also have a pretty good sense of smell, and can usually sniff out some trouble. So, that’s why you should give us a call. This week, I use my closing phrase with gusto…until next time, good selling!

The past six negative days in the stock market is creating worldwide concern. The Dow Jones Industrial Average was down over 10% at the Friday closing.  The S&P was down just under 8% from its high in May.  Things didn’t start out any better this morning, as the Dow opened down over 1000 points.  The market, as I am writing this, has improved. But, all three major indices are down approx 3% in early trading. Other areas to note are the yield on the 10 year, which is now under 2%, and the price of oil well under $40.

So, what does the short term and long term financial future hold in store for us and our clients?  Bottom line…this is the United States of America. We are not a “third world country” and we will get this back. We always have …and we will. But, there is always a question of timing. So, if you will allow me, I would like to speak to you as a consumer, agent, agency owner, IMO and former Insurance company president that has developed markets all across the world. So, please take this in the spirit intended. I am not giving investment advice. And, if I had all the answers, people would be paying me to write this. Here we go.

The first thing you should do now is… call all of your clients and good prospects  now…leave massages and speak to them, as opposed to writing a blanket email to all. As a consumer, I am sick to my stomach about the money I have lost the past 6 trading days. But, I am thankful that I don’t have any immediate or near term plans on retirement. Therefore,  I will continue to buy low and ride the market back.  But, what about the “Safe Money”? That is a different story. You need to spread the “good news” for all of your annuity and life clients. They did not lose a penny, and all past gains were protected from loss.  Is this a great service that we are providing to Americans?  The answer is the resounding yes.

What about you clients that want to wait this thing out, ride the market back up and then start the annuity?  Nonsense… if they are in, or near retirement they need a “Safe Money” place. And, it is very important that we, as advisors and agents, present the best products to fit their needs. We have to give them complete information. Knowledge=  power. The more the client knows…the better the decision making process.

Let’s put things in perspective. The market was due for a correction. The last correction ended in October 2011. Way overdue.  Also, the market was down on Black Thursday 1987 by over 500 points. Big difference… that was a 20% decline. 500 points today is approximately 3%.Will the market recover?  When? How much?  Your guess is as good as mine. Are there products that we can present to keep our clients safe that are near or in retirement?  The answer is yes. Which products?  That is a good question.

As I said, I have been in about every chair in this business. I always want to do business with a company that is highly capitalized, is credible and has a history of treating clients fairly.  Remember, the first year rates in an annuity have very little to do with the overall returns. Rates can change in the future. I take great pride in being able to read the statutory reports filed by the insurance companies.  I also have the ability to look at a product and determine if the client has a great chance for long term success. I also have the experience to sniff out the products that are going to have to tank rates to make the desired profits. That is what we are here for.  We have some products that we think are ones that need your consideration when speaking to prospects and clients. Give us a call if you would like us to point you toward what we consider, as the best products for this type of market.

Finally, keep on fighting the good fight. This financial time illuminates the reasoning that the Department of Labor has no clue as to the very important role we play in assisting the vast majority of Americans in the quest for a tranquil retirement.  Good selling.

I was at a luncheon where our main speaker was the CEO of a major U.S. life insurer headquartered in Indianapolis. There were about 50 of us in attendance. This individual was known to all of us as he started as an agent as did most of the luncheon crowd. He spoke about his perceptions regarding the opportunities and challenges facing our industry. He was concerned about various legislative issues that could affect our business. These were items such as “stranger owned life insurance,” Federal versus State oversight, the attack on tax deferred cash value and the intrusion of other regulatory bodies into our business. He was not gloom and doom. Coming from the field, he still noticed glowing opportunities regarding the before mentioned issues. He was concerned about a couple of other issues that are very glaring.

First, the lack of new people entering our business and the underinsured, underserviced and ignored population as a result of the demise in new agent recruiting. He was also concerned about the lack of proper ‘problem-solving’ versus ‘product pushing’ that goes on among certain parts of the agent/advisor population. Don’t get me wrong. This is a home office executive that is proud and grateful for the efforts provided by today’s professionals. He is just worried that a few bad apples could spoil the bunch. His remarks were followed by an active question and answer period. Something he said during this portion really stuck with me.

He was reminiscing about his start as a commission based insurance agent. He was a very successful Million Dollar Round Table (MDRT) Member. He went on to say that much of his success was due to a wonderful mentor he had at the inception of his career. This mentor/trainer gave him this shortcut that was the advice to insure a successful and happy career. It was as follows: “There is no right way to do the wrong thing.” This statement sat me back in my chair. It’s not that this was something earth shattering, but it was the simplicity of the statement that really made me think.

I caution myself whenever I write this commentary – I am sometimes fearful that my readers will find me to be “too preachy.” Believe me, I am not a saint nor do I pretend to be one. I am just convinced that doing the right thing brings ultimate success in every endeavor. This success is both personal and professional. You see, we hold such great power in our profession. We are true “Lifetime Risk Managers.” We protect people from the tragedies of catastrophic health situations so that our clients aren’t ruined financially. We also protect their families if they die too soon. We also insure a lifetime income should they live too long.

In short, our aim is to keep our clients, their families and business associates in the world to which they have become accustomed to regardless of what may come upon their doorstep. So, people depend on us for the best advice, solid solutions and sturdy products. They expect us to continue to service them and to honor our promises. They assume that we will always do the right thing. Anything else would not be right. In conclusion, as the speaker said, “There is no right way to do the wrong thing.” 

Until Next Time ... Good Selling!
Raymond J. Ohlson, CLU, CRC
President & CEO
The Ohlson Group & SMP International LLC