Editor's Blog 

That most famous face of the psychological profession, Dr. Phil, is known for his down-home philosophies.

One of the chief among them is: “If Momma ain’t happy, ain’t nobody happy.”

Well, all I can say is “Momma” must really be ticked off about health care, because it seems like nobody likes the road reform (or lack of reform) is taking.

A (very) short list of angry people:

• Doctors
• Nurses
• Patients
• Seniors
• President Obama
• Senator Boehner (R-Oh.)
• Glenn Beck
• Jay Leno
• Conan O’Brien
• The U.S. Hockey Team

Some people have been seething for a long time; for others it’s been a slow boil.

According to a photo essay in Time magazine, “at an overflowing town hall meeting in Lebanon, Pennsylvania, on Aug. 11, Craig Anthony Miller grew so agitated that he had to be restrained by another audience member. ‘You are trampling on our Constitution!’ he shouted at Sen. Arlen Specter (D-Pa.).”

In the photo, Miller looks like he’s about to give Specter a Three Stooges poke in the eye, which would only have contributed to the nation’s bloated medical expenses. Ah, but at least Specter, as a member of Congress, has great health coverage. Nyuk nyuk.

Everybody, it seems, is angry about health care. And if I have learned one thing in following this incendiary topic, it’s this: you can’t escape the outrage.

Believe me, I’ve tried. I was late to the party of anger and only swept up in the fervor by virtue of my being collateral damage—angry due to others’ anger.

This time of year I like to frequent college football message boards to keep up with the latest scoop on which players are developing during spring practice and who’s climbing up the depth chart.

Have I been able to find that out lately? No! Instead of discovering if the quarterbacks can make “all the throws,” or if the middle linebacker can run sideline to sideline, I’m reduced to reading wild rants about health care reform—on a college football message board!

I thought I would be the last angry man in America, but now I’m mad, too.

Maybe, hopefully, by the time you read this in April, everyone will have joined arms at the elbows and will be swaying and singing happy songs about health care. But something tells me whether a bill has pushed through by then, somebody, somewhere, is going to be angry—very, very angry.

A recent study by an Allianz Group research team reveals how the recent economic turmoil and plunge in household wealth is affecting consumer habits.

The research showed that the spike in savings rates, which recently hit 6 percent, could prove to be a permanent shift in Americans’ behavior.

Such a sea change in consumer habits could correlate to an increase in the need for guaranteed and safe-savings solutions, as Americans become more leery of risky investments.

Allianz estimates that $700 billion in U.S. savings could be amassed in the next 10 years. This would come as a reaction to the unprecedented drop in net worth from mid-2007 to early 2009. At its worst, the collapsing real estate and stock markets erased almost $17.5 trillion in household wealth.

“We have witnessed a surge in the saving rate since early 2008, up to an average of 4.6% in 2009,” said Michael Heise, an economist at Allianz. “We anticipate that products such as mutual funds, annuities and equities will benefit from this change.”

After a slow start to 2009, purchases of financial assets are set to climb to an estimated $700-800 billion annually. This compares to the average of nearly $900 billion for the boom years of 2003 to 2007.

“One [lesson] from the financial crisis is that it’s not just about asset allocation, but asset location. There is a definite need for financial products that offer guaranteed lifetime income and which we view as the emerging fifth asset class,” said Allianz Life Insurance president Gary Bhojwani. “It goes beyond saving for retirement; it’s about planning how we want to live once we do retire.”

It seems every month another state is rocked with a Medicare scam. With these predatory forces out there, it’s a great time to contact clients and educate them that these bad apples are out there and what they can do to avoid getting caught by their false promises.

The latest state to issue a warning is North Dakota. Contributing writer Chelsey Emmelhainz, brought the information to my attention recently.

According to Chelsey’s researching of the subject, seniors have been receiving phone calls from people claiming they’re from Medicare. The scammers tell the beneficiaries that they owe a penalty for not having Part D prescription drug coverage and that they need to pay the fine immediately. An article in the Jamestown Sun, stated that the scam is preying on “the penalty that is imposed on people who are eligible for Part D coverage but don’t elect it and have no other creditable drug coverage.”  Creditable coverage might include Veteran’s Administration or most employer group health plans.

Insurance Commissioner Adam Hamm added to the announcement saying, "Medicare beneficiaries should never give financial or personal information to anyone who calls and says they are with Medicare.” Hamm went on to remind seniors, “It is against Medicare’s rules to call beneficiaries and ask for that information.”

As part of the statement released by the Hamm’s office, Medicare beneficiaries should remember:

• Medicare cannot call and ask for financial or personal information over the phone.
• Medicare numbers should be kept in a safe, secure place.
• Medicare will not notify beneficiaries of payments by phone. The beneficiary must be notified of the past due premiums via mail.

Again, this appears to be a great opportunity for you to educate your clients on this  topic.

A Washington Post article recently compared the U.S. Medicaid system unfavorably to the long term care systems for the elderly and those with disabilities employed in France and the United Kingdom. Going back 20 years, most of the developed world relied on a system similar to the one the United States uses: Poor enough and sick enough and you received some assistance; middle class and you were on your own (until your resources became so depleted that you no longer qualified as middle class.)

Most developed countries determined that this approach was unnecessarily cruel and fiscally unwise, and revamped their systems to address the need for long term care, often in arrangements that combine government assistance with private long term care insurance. The U.S. response was to encourage its citizens to purchase private long-term care insurance. Despite tax subsidies, a government marketing campaign and efforts to coordinate private insurance with public benefits, the approach has been less than successful, as today only about seven million Americans own private insurance.

The systems in place in other countries have not been without problems, such as increasing costs and uneven availability of benefits. Germany has been forced to raise taxes to pay for the benefits it provides. France, Japan and the Netherlands have had to reduce benefits. In England, the long term care model is disparaged as the “postcode lottery,” as benefits vary by local jurisdiction.

Although insurance-based systems are difficult to administer, they are superior to those that force people to impoverish themselves before they qualify for help. In revamping the U.S. health care system, perhaps legislators will examine the long term care systems of other countries and attempt to learn from their mistakes.

Like Monday morning quarterbacks who second guess plays made the previous Sunday, Americans are reviewing the strategies they might have followed to best handle the recent financial crisis.

A new survey by Allianz Life reports that employed Americans between 35 and 64 are 20 percent more likely to alter their financial strategies than retirees and those over 65. The latter group is 70 percent more likely to “stick to the same game plan.”

Allianz marketing chief Nancy Jones said, “This financial upheaval should be a wake-up call that small things can add up and that it’s never too late to begin saving for retirement. A product that offers guaranteed lifetime income, such as an annuity, can be a great defensive play in planning for retirement.”

According to a Synovate Research survey, only two out of five respondents said they expect to have enough money to retire. While 18 percent expect retirement will be “an easy touchdown--I should make it comfortably,” 17 percent said they anticipate being “sacked--I think I’m going to come up short,” and 19 percent believe they will need a “Hail Mary – it’s going to take a miracle.” The remaining 22 percent characterized their retirement prospects as “a coin flip--probably 50-50.”

When asked how they would have done things differently, 86 percent said they would have tried to save more. Specifically, 28 percent said they would have dined out less, while 19 percent would have brought their lunch to work.

Respondents over 65 in households with higher income and in households without children feel more positively about retirement and their savings. Those in middle-age with lower income and children reported the most negative outlook regarding retirement.

As Leon Labrecque, managing partner of LJPR, LLC, which manages more than $300 million in assets, notes, “Roth IRAs are more than just an excellent planning tool for retirement – they’re something to help you live your life richer and happier now. There is information that the masses need to know about in order to make the best decisions for their estate planning needs.”

This information is vital in making the best choice for IRA holders. “Most Roth IRA holders have been taught to the old rules, and are currently accessing their Roth based on that incorrect information,” said LaBrecque.

“With turmoil in markets and the tax code in transition, the Roth IRA has some very attractive features. A Roth IRA is one of three kinds of IRAs and has a very special feature: all growth and income from a Roth are free from federal and--usually--state income taxes, if you follow the rules.”

“One of the major beneficial changes in IRA rules in 2010, is that you can convert an IRA into a Roth regardless of your income level. What’s even better is that if you convert an IRA to a Roth in 2010, you have the option of reporting half of the converted amount as income in 2011 and the other half in 2012,” said LaBrecque.

If you have any good Roth ideas or case studies, please send them my way for publication.

Okay, so we’re two weeks out from Valentine’s Day, but Barack Obama has a new sweetheart. It appears the president has fallen head over heels with … annuities?

At least that is the rumor going around. His affinity for the safe product was mentioned in a report from the White House last week.

A New York Times financial column writes at great link on this subject, but I’ll give you the skinny right here.

According to the Middle Class Task Force report:

“The Administration is … Promoting the availability of annuities and other forms of guaranteed lifetime income, which transform savings into guaranteed future income, reducing the risks that retirees will outlive their savings or that their retirees’ living standards will be eroded by investment losses or inflation.”

So, does that make you feel warm and fuzzy about the Obama Administration and your products? Hey, every little bit helps, right? Right?

As always, your thoughts are welcome and encouraged…

At Senior Market Advisor, we’re carving a niche as somewhere advisors can learn great tips and techniques on how to grow their business, develop new leads, and close on referrals. 

For this blog, I wanted to offer the same type of tools for market conduct and suitability issues so you can bulletproof your practice. I called on the help of Harry J. Lew, communications and content director, National Ethics Bureau, who penned the following tips to help your practice hit its stride, ethically.

***

Want to fly high in financial services? Then jettison old thinking. First, success isn’t about the money. It’s about the value you deliver to clients. Second, it’s not about enjoying the trappings of success. It’s about making a real difference in the lives of people. Third, and most important, your business is not about YOU. It’s about THEM (your clients).

Once you shift your attitudes, you’re ready to revisit your business practices. Here’s your preflight checklist.

1. Always protect and promote your client’s best interests, even if it can mean making less money in the short term (but more in the long). I believe that 2010 will be the year of the fiduciary. The sooner you begin putting your clients’ welfare first, the sooner you’ll fly high with the best.
2. Honestly explain your education and business background, including licenses and designations. Flogging sham designations and claiming to write a book you had no hand in producing are like wing icing. . . dangerous to your longevity! If you really want to lift your business, earn a credible designation and write your own book instead.
3. Always disclose the important features of your products or services, including potential risks that may affect future performance or value. Full disclosure is the new normal for 2010 and beyond. You’ll never go wrong overeducating clients about your methods and products.
4. Be totally up front about the realistic returns or future values a client can expect. Hyping results is not only an unethical business practice, it’s illegal. Don’t fly there!
5. Thoroughly probe a client’s current and future needs in order to make suitable recommendations. Only low flying advisors recommend products they want to sell, not products their clients need to buy.
6. Respect client confidentiality even under third-party pressure to disclose information. Strong advisor/client relationships are based on trust. Breaking confidentiality is a heat-seeking missile that will blow up your relationships.
7. Only use advertising and presentation materials that are completely accurate and legally compliant. Flying with false insignias will put you on regulatory radar screens.
8. Always refer clients to an outside advisor for expertise that is beyond your training and current license. Flying on a wing and a prayer is a doomed fight. Better to bring on a more qualified co-pilot than crash your practice into a cliff.
9. Stay up to date on all industry practices, including emerging trends, new government regulations, and the latest product innovations. In today’s turbulent world, taking wing without a current flight manual is like flying blind. There’s a reason pilots are required to have great vision.
10. Finally, adopt the long view. Don’t just try to fly high; fly long. If you make the right decisions that really help your clients, your flight time will be long, enjoyable, and profitable. And you’ll quickly become known as a top-flight ethical advisor.

A new LIMRA study, entitled “It’s All About Me,” indicates that most life insurance producers surveyed (64 percent) are “very likely” to stay with their current company. However, nearly one-fifth said they would consider moving to another firm if its culture, style and support more closely matched their needs.

“Just like any other relationship, the relationship between a company and a producer must be tended to and both parties must feel like it’s the right fit for them,” said LIMRA senior researcher Polly Painter Eggers. “We wanted to know whether there was a predominant issue that drove producers to switch companies or to remain loyal; what we found was there were a number of subtle indicators—weak signals—that influence producers.”

While most producers regard personal drive and initiative as the keys to their success, many also acknowledge the importance that products, business models and support services play in a successful career. The extent of the support they receive can help determine whether or not a producer is happy in his current work situation.

In addition to the support services provided to a producer, working style may also help determine whether a producer decides to stay with his current company. Managers who can tailor the work environment, making it more flexible or structured depending on the individual producer, may see a better producer retention rate. Furthermore, keeping lines of communication open can prevent a producer from feeling “detached” or “underappreciated,” two reasons producers gave for leaving their company. 

“It’s clear that high-performing producers will always be in demand,” said Painter Eggers. “A successful retention program works to provide not just strong service support but also offers training and flexibility to meet the individual needs of their producers.”

New statistics for 2009 show most Americans believe they will not be able to afford retirement anytime soon. The annual Retirement Confidence Survey, conducted by Matthew Greenwald & Associates, found that only 13 percent of respondents feel very confident that they will enjoy a comfortable retirement, the smallest percentage since the survey began in 1993.

Respondents expect to work longer due to the economic downturn, with 28 percent of workers reporting that in 2009 they pushed back their expected retirement date. Furthermore, 89 percent of those who are delaying retirement indicated they would do so for financial reasons.

According to Robert J. Krakower, CFP and author of Redefining Retirement for a New Generation, the old model of retirement no longer applies. Krakower believes that would-be retirees must adopt new views of retirement planning if they hope to retire on time. “Forces such as increased life expectancy, the sheer size of the baby boom generation and the massive replacement of pensions with 401(k) plans, shift the risk away from the corporations, where it used to be, and onto the shoulders of individuals,” he said.

The current generation facing retirement, the baby boomers, face risks that previous generations did not, namely outliving one’s money. Today, retirees can hope to live 30 years or more in retirement. Retirees receiving Social Security constitute a much heavier burden for the work force to bear, placing that income source at risk. This situation is aggravated by the size of the generation entering retirement, which will result in the most new retirees in American history. As a result, financial planners face increased risks in crafting retirement scenarios for their clients.

The traditional source of retirement income has also shifted, creating new challenges. Krakower notes, “The demise of the old pension plan and the rise of the 401(k) represent a new retirement risk. Now, individuals must cope with the risk that bad investment decisions can have catastrophic consequences for their lifestyle in retirement. Redefining retirement means taking a fresh look at all the assets to which individuals have access, and thinking in new ways about how to put those assets to work to generate lasting retirement income.”