March 16, 2015 – Demonstrating that good news often travels in threes, I’m pleased to unfurl the attached triad of recent links which point to “smooth sailing” for the life insurance industry in 2015:
When people enter into life insurance or annuity contracts, they are buying promises that future financial risks they face will be properly addressed.
As these three independent rating agencies look ahead, they offer assurance to policyholders that their promise is well placed.
Even when local, national or global events conspire to test that promise, as was the case during The Great Recession, the industry as a whole fared exceptionally well.
A United States Government Accountability Office (GAO) report on the “Insurance Markets – Impacts of and Regulatory Response to the 2007-2009 Financial Crisis” reveals:
“(t)he effects of the financial crisis on insurers were generally limited . . . .”
Life insurers, with the exception of the variable market (which our firm doesn’t offer), fared especially well.
The structured settlement and retirement annuity companies we are proud to represent have long histories of honoring their promises and making their payments on time.
So if you want to increase your chances that your money will be there in the future when you need it, know that if you choose a highly rated life insurance annuity, you’ll be choosing something that has weathered many storms and is still solidly afloat.
(Image courtesy of Stuart Miles of FreeDigitalPhotos.net)
March 2, 2015 -With Superbowl XLIX recently concluded, if you played for the New England Patriots, CONGRATULATIONS!
Earning a Superbowl ring puts you in very elite company.
With the 87th Academy Awards now behind us, if you were among the select few to take home an Oscar, CONGRATULATIONS!
You own a rare piece of hardware.
If you’ve made the decision to use a portion of your retirement savings to purchase annuities, CONGRATULATIONS!
A host of prominent economists, including several Nobel Prize winners, agree you have made a smart retirement choice.
You are definitely ahead of the curve! (Pun intended)
Smart Folks Here
While it’s a safe bet that fewer people read American Economic Review than watch the Superbowl or the Oscars, those who did read one particular article from about a decade ago derive something far more important than the fleeting entertainment value the first two diversions bring.
Using formulae and language only a calculus student could love, “Annuities and Individual Welfare” demonstrates that economists, who rarely agree on anything, all seem to agree that annuities make the most sense for most people.
And lest you think this is a bunch of life company propaganda, consider the collective brain power coming together to agree “annuitization of a substantial portion of retirement wealth is the way to go.”
Those holding this belief are economists from some of the world’s most prestigious centers of higher learning, including:
The Wharton School, Berkeley, Chicago,
Yale, Harvard, London Business School, Illinois,
Hebrew University, Carnegie Mellon, MIT
Reluctance to Jump In
Most of us intuitively understand the retirement wealth accumulation process: Save money. Invest it. Hope it grows.
But when it comes time for Decumulation, people just can’t seem to make the shift from a lifetime habit of acquiring to one of “dequiring.”
Those who can make this transition will benefit greatly.
In their article “Investing your Lump Sum at Retirement,” Wharton Financial Institutions Center Fellows Babbel and Merril reinforce the finding that:
” . . . full annuitization was optimal for people who had no desire to leave a bequest to their heirs or charitable organizations.
It also concluded that for those with bequest motives, substantial annuitization of retirement wealth was still the most prudent way to act.” (Emphasis ours)
Ironically, those with the greatest wealth are the ones who stand to benefit the most from annuitization.
Not because they have the most wealth to begin with but rather because their percentage of assets dedicated to guaranteed lifetime income cash flows (i.e. Social Security) is much smaller.
When the Chairman of the Federal Reserve discloses, as Ben Bernanke did in 2010, that the bulk of his retirement portfolio consists mostly of two annuities, it’s definitely noteworthy.
If the person overseeing the entire central banking system of the United States chooses such a no-frills retirement allocation, maybe it can serve as a clue to the rest of us that annuities are a pretty smart, safe bet.
So why not join the chorus?
“Say YES to annuities!”
Image courtesy of digitlart at FreeDigitalPhotos.net
February 16, 2015 – If you’re off work today here in the United States, it may surprise you to know that it’s not because Presidents Day is a federal holiday since no such holiday exists.
5 USC § 6103(a) does, however, make Washington’s Birthday, celebrated the third Monday of each year, a federal holiday.
As presidents go, George Washington usually ranks among the top five all time in terms of overall net worth. Not all presidents were so lucky with their fortunes.
In fact, about 20% of our nation’s chief executives experienced insolvency at one time or another in their lifetimes.
Who knew the position was fraught with such a high chance of financial insecurity?
One famous founding father whose age was likely the only thing preventing him from becoming president was Benjamin Franklin. Ranking No. 181 on the all-time richest people ever list, Franklin did pretty well for himself and his heirs moneywise.
Franklin was 83 at the time of Washington’s inauguration, 26 years older than our first president.
In addition to passing a significant amount of property and valuable personal possessions to his heirs, Franklin’s last will and testament laid out some pretty detailed annuity requirements.
The one for his sister, Jane Mecom, was a rather straightforward “fifty (later increased to sixty) pounds sterling . . . to be paid to her annually” annuity in addition to the house he bequeathed her.
The annuities left to the cities of Boston and Philadelphia for schooling, hospitals and apprenticeships were a little more creative and specific. And they were set up to run for 200 years. Now THAT’s forward thinking!
Unlike Washington, who married into his fortune, Franklin’s wealth was a result of his own initiative.
And you can bet a man who preached that “a penny saved is a penny earned” understood the value of the time value of money. No doubt this belief influenced his annuity decisions.
Perhaps helps explain why most people would rather have a Benjamin than a George.
Image courtesy of Gualberto107 at FreeDigitalPhotos.net
February 15, 2015
Are you among the 76 million people born between 1946 and 1964?
Worked most of your adult life?
Have some money sitting in a 401(k) or similar retirement account?
Want to make sure it lasts the rest of your life?
If you answered yes to any of these questions and are retired or within a decade or so of retiring, there’s a good chance you could benefit greatly by converting some of your nest egg into some type of annuity.
But there’s an even better chance you will never do so.
Even though annuities have been shown to be “the most cost-effective and least risky asset class for generating guaranteed retirement income for life,” people still resist buying them.
They’re safe. They’re secure. They’re practical.
And They WORK!
To gain insight into this paradox, Forbes has a brief slide show that does a pretty good job identifying the “8 Reasons Retirees Don’t Buy Annuities.”
No reason for you to be one of “those” people. When you’re ready to put the “I” in your retirement, give us a call to let us help you decide whether or not a retirement annuity makes sense for you.
BONUS INFO: By the way, contrary to rhetoric espoused by many in the financial planning community, annuities and traditional investing can co-exist very nicely.
In fact, when you address your non-discretionary retirement cash flow needs with annuities, you take a lot of pressure off your portfolio (and yourself) to constantly perform at an unsustainably high level.
Owning annuities allows you to better absorb the market ups and downs, reducing the chance you’ll make panicky moves which could leave you in a weakened long term financial position.
Image courtesy of hyena reality at FreeDigitalPhotos.net
February 13, 2015 – In less than the time it takes you to read this blog, you can give yourself a quick financial health check-up to learn where you stand financially.
While I can’t attest to the accuracy of the Financial Health Calculator I stumbled across on CNNMoney’s website today, I found it personally very helpful and wanted to pass it along in hopes it might help you.
After entering your age and income, the calculator walks you through a series of seven categories of spending, savings, investments and insurance to arrive at a grade with recommendations on how to improve your score.
It’s quick. It’s easy. It’s fun.
No simple calculator should ever substitute for actual financial advice but as a starting point for further dialog, this one feels worthwhile.
So click the link and start typing. Here’s hoping you earn a passing grade.
Image courtesy of foto76 at FreeDigitalPhotos.net
CAUTION: Blog post contains musical references which some readers may find bubble gummingly offensive
February 2, 2015 - If the stock market were a song and January were Britney Spears, right about now it would be singing a paraphrased version of the former teeny bopping icon’s hit, “Oops! . . . I Did It Again.”
What “it” did – decline more than 3% for the month – isn’t particularly remarkable in and of itself. Over the past sixty-five years, January has been a down month for the market about 40% of the time.
But the reason it’s Britney Spears song-reference worthy is because of what this drop could signal for the rest of the year.
Key Stat: Since 1929, market indexes for the year followed January’s lead 72% of the time.
Any discussion about markets must begin and end with the reality that nobody can accurately predict what the market is going to do or when.
But regardless of whether or not you’re in the chance taking business, this might be a good time to pause and ask yourself whether the promise of higher gains really outweighs the historical probability of loss.
Are the bears back in town?
With the stock market bulls having had such a phenomenal run these past few years, doesn’t the very ebb and flow nature of the market increase the probability that a bear run – maybe even a recession – is nigh?
Young people usually have time to recover from these market swings. But those heading into the bell lap of life cannot afford to loose money.
So if you’re in the latter category, let a Retirement Income Certified Professional® help you make an informed decision about your future. Our firm is committed to offering retirement cash flow solutions that are safe and secure and will help you get the most out of your hard-earned retirement dollars.
By the way, even though “da Bears” weren’t playing in yesterday’s Super Bowl, another bearish statistic that’s making the rounds today has to do with New England’s win. It goes like this:
When an original NFL team wins the Super Bowl, the market will go up.
If an expansion team wins, the market will go down.
Funky Stat: This “Super Bowl Theory” has been accurate 80% of the time.
Sooner or later, the bear will arrive if he’s not already lurking about. Locking in some gains and securing your future now might help you prevent the next “Oops!” which is sure to come knocking some day.
January 9, 2015 - “Apples, peaches, pumpkin pie….”
If you once lived in a house without satellite, cable or, heck, even color television, you likely recognize this familiar jingle as part of something you shouted, before opening your eyes, when you were “it” during a neighborhood game of hide-and-go-seek you played as a kid.
You might even recall the Jay & the Techniques song of the same title still occasionally played on oldies stations.
For my part, it’s the second stanza of the popular kid game phrase which came to mind as I finished taking The American College Retirement Income Literacy Quiz earlier today.
“…Who’s not ready holler I.”
As recently reported on CNBC and in several newspapers – USA Today, Washington Post, and Chicago Tribune among them – many of us from the Leave It to Beaver generation are simply NOT ready for retirement.
[CLICK HERE] to Quiz Yourself on Your Own Retirement Literacy
The New York Life Center for Retirement Income at The American College commissioned an online survey to “assess retirement literacy among individuals who are nearing or already in retirement.”
One of the most comprehensive surveys on retirement income literacy ever conducted, the RICP® Retirement Income Literacy Survey covered a host of retirement basics topics such as:
Social Security claiming options,
Medicare and health insurance planning,
Company retirement, IRAs and Investments,
Life insurance, Long-term care, Etc.
The “I’s” have it
Only 20% of those surveyed received a passing score of 60% or better.
With an average score of only 42%, the majority of survey respondents – and by extrapolation, Americans – are not knowledgeable enough about some very basic choices they’ll need to make leading up to and during retirement.
Fortunately, having spent the better part of 2014 earning my Retirement Income Certified Professional® designation through The American College, I had enough retirement knowledge fresh in my brain to be able to pass the quiz with flying colors.
I got a 91%.
But honestly, even though I’ve been in the insurance industry for nearly all of my adult life, until about a year ago I seriously doubt I would have scored nearly as well. I may not have even passed myself.
I strongly encourage you to take a few minutes to take the quiz for yourself to see how you fare.
Then, when you have questions about anything relating to your own retirement situation, don’t hesitate to call us to let us know how we can help you get ready for this important transition.
Because remember the song’s refrain:
“Ready or not, you shall be caught!”
(Image courtesy of stockimages at FreeDigitalPhotos.net)
December 24, 2014 – A year ago, we prognosticated that 2014 would be “the year of the annuity” based on financial articles we were reading at the time.
Boy, was it ever!
Thanks to the faith and confidence our loyal clientele continue to place in us, 2014 was Finn Financial Group’s BEST YEAR EVER in terms of number of people we were able to help and number of structured settlement and other specialty annuities we placed on their behalf. This past year:
We helped claims associates close files while cost-effectively satisfying their obligations under the Medicare Secondary Payer Act;
We created dozens of structured settlements for minors which will help parents put their children through college;
We designed income tax-free settlement cash flows, many coordinated to work hand-in-hand with Special Needs Trusts to maximize their value, that will help catastrophically injured plaintiffs live their lives free of financial worry;
We designed and conducted training seminars and webinars for casualty companies, the CPCU Society, attorney groups and private law firms;
We helped plaintiff attorneys save money on taxes and secure their own futures by helping them structure their attorney fees;
We analyzed and evaluated options for baby boomers seeking to lock in their own future guaranteed cash flows with retirement funds and savings they didn’t want to risk losing and wrote a lot about the choices they face in The Finn Blog’s retirement section;
I personally re-dedicated myself to educational excellence with the goal of better serving my clients by earning my Retirement Income Certified Professional® designation through The American College and enrolling in the inaugural Master Structured Settlement Consultant course through the National Structured Settlements Trade Association.
All this in addition to the numerous mediations attended, consultations conducted, and questions answered combined to make this one very successful year.
We are extremely honored and grateful for the opportunities you give us to be of service.
So if 2014 was the year of the annuity, what does 2015 hold in store annuity-wise?
I’m so glad you asked! Look for:
Longevity Annuities – We wrote about this our July 1, 2014 Finn Blog right after the U.S. Treasury announced longevity annuities were going to be an official part of the retirement landscape. Fortune also has an article this month entitled “Why 2015 is the year for longevity annuities.”
Fixed Indexed Annuities – The Insured Retirement Institute (IRI) believes this market-linked hybrid is poised to be a “bright spot” in annuity selection during the coming year.
Widely available for those doing regular retirement planning, earlier this year we told you about an indexed-linked structured settlement and structured attorney fee option, offered by Pacific Life, available to our clients who are settling personal, physical injury claims.
Oh, there will be more. And we pledge to stay on top of it. Whatever the year, whatever your need, rest assured we’re committed to being here to help you.
“Helping people with their guaranteed cash flow needs. That’s what we’re all about.”
So as the 2014 Structured Settlement and Annuity season draws to a close, we leave you with all best wishes for a most joyous holiday season and a healthy, happy and very successful year ahead.
Happy Holidays from Finn Financial Group!
Reprinted from our October 22, 2014 Newsletter
Structured Settlements Changing Lives
Several months ago, I shared Robin’s Story with you.
Today, I’m pleased to pass along the second in a series of first person testimonials on the benefits of structured settlements, produced by Prudential Structured Settlements.
This is Kim’s Story:
Click [HERE] for link to video
When Prudential formed the Structured Solutions Leadership Council several years back, it did so with a commitment to developing tools that would help practitioners and their clients better visualize and appreciate the important role structured settlements can play in the lives of those who benefit from them.
They continue delivering on that pledge with this video.
As a charter member of the council, I am honored to have been selected to join together with a number of industry leaders to aid Prudential with the development of these initiatives that will help so many of our clients.
Many thanks to Prudential Structured Settlements for its vision and support of the ENTIRE structured settlements, claims and legal communities. Along with the many other excellent life markets we are proud to represent, Prudential’s exceptional leadership on this particular initiative deserves special recognition.
Thank you for the opportunity to be of service and best wishes for continued success.
Enjoy the video!
October 21, 2014 – Last week, I had the great honor of participating in the inaugural class of the structured settlement industry’s newest designation and will soon be able to call myself a . . .
Master Structured Settlement Consultant (MSSC)
Offered through the National Structured Settlements Trade Association (NSSTA) working in tandem with the faculty at The University of Notre Dame’s Mendoza College of Business, this advanced Master Class curriculum was conceived as an enhancement to the existing Certified Structured Settlement Consultant (CSSC) designation created more than two decades ago.
While some required post-classroom work still needs to be completed before the designation can be formally conferred, I thought I’d take a moment to share with you some of the topics covered:
A Family Affair & Settlement Needs – We heard a first person account from a plaintiff who made an amazing recovery from an accident which rendered him clinically dead and the ensuing efforts by his financial team to design and implement a complex trust which helped facilitate his recovery and protect his settlement;
The Economic Environment – A Notre Dame associate economics professor shared perspectives about the current economic conditions;
Tax Policy and Tax Policy Challenges & Tax Reform Issues in the U.S. Congress – We got a double dose of insights on tax policy from a Deloitte Director of Tax Policy which tied in nicely with the comments from Chief Tax Counsel for the Senate Finance Committee;
Taxation – Structured Settlements – We learned firsthand how the Internal Revenue Service applies Sections 104(a)(2) and 5891 tax law to situations where taxpayers seek guidance on settlements which may fall into grey areas of the law from the IRS branch chief whose office handles such requests;
Business Ethics – A thoughtful session on business ethics was led by Notre Dame Associate Professor of Management Fr. William Oliver;
Negotiation – Listening and negotiations skill techniques were shared from a Notre Dame faculty professor with advanced degrees on the topic;
The Psychology of Grief – One of the better sessions, this interactive lecture was led by a psychologist who consults with those involved in national tragedies like 9/11, Hurricane Sandy and Sandy Hook Elementary;
Life Care Planning - A Certified Life Care Planner shared insights on how life care plans are developed, modified and implemented;
Affordable Care Act – Impact of the ACA on settlements was discussed;
Sudden Wealth Syndrome – Insights from a financial planning author about some of the pitfalls that await those receiving large sums of money and how guaranteed cash flow can help avoid them.
The sessions were intense but our thirteen hour days were well spent and the curriculum content provided me with added personal insight about issues that impact the lives of the clients I serve.
Congratulations and a big “THANK YOU!” to the collective brain trust responsible for developing and implementing this very professional industry-specific educational program.
PS Go Irish!