|
 March 15, 2006
Edition |
|
|
|
|
REGULATORS
CAUSING SOARING COSTS - Compliance costs for
broker-dealers have
skyrocketed, and their nemeses - securities regulators - are to blame,
according to an industry study. The cost of compliance has nearly
doubled in the past three years, according to a report
the Securities Industry Association of New York and Washington released
last month. The industry spent more than $25 billion in compliance
costs last year, up from $13 billion in 2002, according to the report.
INSURANCE
ON AGENDA
- The NASD will offer an advertising regulation review session at its
NASD Spring Securities Conference scheduled to start May 17.
The
session will discuss advertising rules governing annuities and 529
college savings plan. Another session, on "Insurance
Products:
Key Regulatory Considerations," will talk about application of
securities rules to insurance products.
FINGERPRINT
MODEL
- The NAIC has unveiled a simplified Fingerprint Model Act, which would
exempt company officers and directors from submitting to fingerprint
requirements and eliminate a central repository of fingerprints housed
with the NAIC. An NAIC committee has also approved the
expansion
of annuity suitability standards to all consumers, regardless of age.
HEALTH
CARE NEWS
- Here's an interesting commentary from the St. Louis Post-Dispatch
on the
state of health care benefits in the U.S., "Wal-Mart
tells it like it is." Then we have the 60 Minutes segment,
Hospitals:
Is the Price Right?, which aired March 6. The
segment dealt
with hospitals charging the uninsured significantly more than what an
insurance company pays for the same treatment.
LIFE
SETTLEMENTS
NEXT FOR SPITZER? - New York officials sent a subpoena to
National Financial Partners Corp. asking it about life settlement
transactions. We suppose that the New York Attorney General's office
has to keep its attorneys busy somehow.
RECORD
TORT COSTS
- A Tillinghast study reports that 2004 U.S. tort costs hit a record
$260 billion, or about $886 per person. The complete report
is
available at http://www.towersperrin.com/tillinghast/.
PHOENIX
RISING
– Or at least the stock is after an analyst raised it to a
"buy"
rating, saying it's more likely now that the Hartford-based company
will be acquired within 12 months. UBS analyst Andrew Kligerman said in
a report that Phoenix is a likely target because it has been slow to
improve returns during turnaround efforts and "appears to lack the
critical scale necessary to remain a competitive and independent
insurer over the longer term." Possible buyer? Hartford. As a
side note, about 5% of Phoenix is owned by State Farm Mutual.
BROKERS
WANT HELP
- ING survey reports that almost 90% of the participating brokers find
financial institutions are difficult to work with and, thereby, cost
them money. Some solutions mentioned: More responsive wholesalers and
simplification of product lines and paperwork.
PLANNERS
PINCHED
– Another or maybe the same, ING study reports financial
professionals are finding themselves pressed between two competing
forces: retail clients growing increasingly resistant to investment
guidance, and product providers inundating them with complicated
products and paperwork. An unofficial inquiry of our own found that
100% of the producers we surveyed said providing them with the Virtual
Library was extremely valuable company support. E-Mail Bill O'Quin,
CLU, ChFC, RFC at boquin@ix.netcom.com
for details.
|
|
|
|
MEDIAN
AMERICAN HOUSEHOLD - It has
about $3,800 in the bank. No one has a retirement account, and the
neighbors who do only have about $35,000 in theirs. Mutual funds,
stocks, bonds? Nope. The house is worth $160,000, but the family owes
$95,000 on it. The breadwinners make more than $43,000 a year, but
can't manage to pay off a $2,200 credit card balance. That is the
portrait of the median American household as painted by the Federal
Reserve Board's Survey of Consumer Finances. If you're
interested, click here
for a Christian Science
Monitor
article on this survey.
GM
FREEZES PENSION - General Motors
froze contributions to its defined benefit pension for its recent
salaried employees and plans to broaden its use of defined contribution
plans. Expect more companies to follow GM's lead.
PENSIONS
DOWN 80% IN 10 YEARS -
Watson Wyatt reports that returns on investments and annuity rates used
to convert pensions have both been reduced significantly. Once these
two cuts are combined, the resulting income is down by 78%, for savings
of identical amounts.
401(K)
PARTICIPATION RATES CONTINUE TO
DECLINE - The Spectrem Group reports more employees are
either
investing sparingly or failing to enroll at all in 401(k) plans. Asset
growth in 401(k) plans tumbled from a growth rate of 15% between 1990
and 2000 to just 10% since then, according to the Chicago-based
consulting firm. Much of this difference can be explained away by
market conditions during these two different time periods, according to
the study's critics. But less easily dispelled are the growing numbers
of employees who are taking a pass on the plans altogether. The
participation rate fell to 70% in 2005 from 80% in 1999, according to
Spectrem, which surveyed 500 employers who sponsor plans.
NEW
TREND? - Facing budget
shortfalls, some states are reported to be taking a look at the cost of
tax breaks provided to senior citizens, particularly as the baby
boomers move closer to retirement. "Being elderly isn't the
same
thing as being poor." The problem facing at least some states
is
that rolling back senior tax preferences could make it more difficult
to attract boomer retirees. Click here
for an article on this topic.
FOR
SALE - The American College is
in active discussions to sell its 35-acre campus in Bryn Mawr,
Pa. The sale would include the six buildings located on the
campus, one or two of which the College would lease back for its
operations. The capital generated from the sale would be used
to
revise the course curriculum, hire new staff and promote the College's
professional designations.
LOMA
ACCUSED OF DISCRIMINATION - Investment News
reports that the
Life Office Management Association (LOMA) "has been accused of racial
discrimination and of maintaining a "glass ceiling" that has prevented
blacks from being hired or promoted into high-level
positions."
The complete article is available by clicking here.
AON
TO CUT 1,800 – Aon, the
world's No. 2 insurance broker behind Marsh & McLennan, will
cut
1,800 jobs (about 4% of its 46,600 employees) in hopes of saving $180
million a year by 2008. Aon shares have risen 66% in the last year
versus a 1% decline for rival Marsh Mac.
MANULIFE
LOOKING - Canadian insurer
Manulife has completed its acquisition of John Hancock and is now
looking for new U.S. targets. Likely targets would be "sizeable" and in
the life, variable annuity, long-term care, mutual fund or 401(k)
industries. Of note, Manulife is protected by the Canadian government
and can't be bought.
PRU
BUYS ALLSTATE'S VA BUSINESS -
Prudential will buy Allstate's $16 billion variable annuity business
for $580.5 million and a reinsurance arrangement. Allstate will still
sell VAs under Allstate's name, but underwritten by Pru.
|
 |
|
Need a
Free Speaker?
Use
Technology and Bill O'Quin, CLU,
ChFC,
RFC!
Bill is the
co-creator of the Virtual Sales Assistant and offers a
variety of free seminars for company, agency and association groups.
All speaking engagements are free and conducted via the Internet, so
no travel
costs are necessary. You provide an Internet connection, a speaker
phone and projection system. Bill will do the rest.
Currently
Bill's most popular
presentation
is:
The
Priority Planning Review.... A
Simpler Way to Approach Prospects.
A simple,
non-threating approach is
the key to effective and
unobtrusive prospecting. Bill will not only tell you how to do this,
but
will also give you the tools necessary to actually conduct a
stress-free approach.
For availability, contact
Bill at boquin@ix.netcom.com.
(Last minute requests for a stand-in speaker can usually be
accommodated.) |
|
|
|
 |
DISABILITY
DISREGARD – We all
tend to underestimate the possibility of becoming disabled and running
the risk of incurring serious debt. According to ProtectYourIncome.com,
about 375,000 Americans become disabled every year, a 35-year-old's
chance of missing 90 days or more of work before age 65 is 50% and 1 in
7 of those age 35 will be disabled for five years. The U.S. Bureau of
Labor Statistics' national compensation survey shows that just 30% have
access to an LTD product, but 70% have access to medical care, 52% life
insurance and 46% dental care. Ask yourself, when was the last time you
sold or, for that matter bought, a disability income policy?
HEALTH
CARE AFTER
RETIREMENT - Fidelity Investments recently estimated that
a
65-year-old couple who retire without employer-sponsored health
insurance will require an average of about $200,000 to cover
out-of-pocket health care costs during retirement. The Employee Benefit
Research Institute, however, estimates that 65-year-old couples who
retire without employer-sponsored health insurance will require
$216,000 if they live to age 80, $444,000 if they live to age 90 and
$778,000 if they live to age 100. Regardless what the exact number is,
it is a real threat to a secure retirement.
SPECIAL
NEEDS
PLANNING - There are approximately 77 million Americans
with
some kind of disability. Some 20% of U.S. families have special-needs
children. If some of your clients have such a situation, why not e-mail
them the Virtual Sales Assistant report, "Planning for Special Needs
Children"? Click here
for a
free pdf copy.
THRIVENT
THRIVES
- Thrivent Financial for Lutherans plans to add 675 new financial
representatives to its sales force of 2,500 by the end of the year.
PENN
STATE STUDY OF
LTC NEEDS - According to a new study led by Penn State,
individuals currently turning age 65 face an average of three years of
need for LTC some time before they die, with one in five expected to
need five years of care or more. The analysis also revealed that 65% of
all people age 65 will spend some time at home needing LTC; 30% will
receive care at home for more than two years; and 11% will get it for
more than five years. See more findings at http://www.inquiryjournal.org.
HOW
MUCH WILL I NEED?
- As company after company across the country freezes or terminates
traditional pensions, workers must ask themselves, "How much do I need
to save to make up for pension benefits I was expecting and now won't
get?" The answer is a lot...some studies find that a middle aged worker
might need to put away 20% plus. The Employee Benefit
Research
Institute offers some insights in its report, Pension
Freezes: Who's Affected and by How Much?. Best
suggestion: Do
the numbers.
DO THE
NUMBERS HERE
- Use the financial calculators page here
to do some quick retirement number crunching (NOTE: You must click
"Investment" in the upper right-hand corner to arrive at the Retirement
Investment Calculator page. The page automatically opens to the Credit
Card Calculator page; you must change it).
NEAT
FPA WEB SITE
- The Financial Planning Association and the National Endowment for
Financial Education have launched a collaborative Web site, Life Events
& Financial Decisions. The new online program was created by
NEFE
and explores financial considerations at various life stages, including
becoming established, marriage, buying a home, military service and
emergencies. The Web site address is www.fpanet.org/public/tools/lifeevents...you
might consider sending your clients for insight into their "life
events."
ROTH
IRA VERSUS
401(k) – While many people focus mainly on their
401(k)
plan for retirement, they should be giving more consideration to the
Roth IRA. The major advantage of the Roth IRA is that your tax break
comes when you withdraw your money...it is tax-free and many argue that
tax rates in the future will be much higher than they are now.
Additionally, Roth IRAs offer more investment options, don't include
mandatory withdrawals and Roth IRAs won't hurt your Social Security
situation. Money you take out of a 401(k) increases your income and can
increase the tax you pay on Social Security benefits. The 401(k) does
have the advantage of higher contributions, you can often borrow money
from your 401(k) plan, which Roth IRAs don't allow, and your employer
may match part of your contribution. Maybe having both is best!
VA
SALES UP
SLIGHTLY, FLOW DOWN SIGNIFICANTLY – According to
the
National Association for Variable Annuities, variable annuity sales for
2005 totaled $133.4 billion, a 1.2% increase from 2004. However, net
flows for 2005 were $20.5 billion, down 49%.
PREMIUM
FINANCING
AFTER THE FACT – Traditionally, premium
financing was
reserved for new purchases, but Coventry Capital has a product that
policy owners can use to finance their premiums using the market value
of the policy itself as collateral. Sounds a lot like an automatic
premium loan feature to us.
SOCIAL
SECURITY
ESSENTIAL - According to Wachovia Corp.'s Retirement
Fitness
Survey, more than 80% of consumers said that Social Security would be
important to their retirement well being, and 51% said they were
changing their retirement preparation strategies. More
information is available here.
EMERGING
MARKET
BUBBLE – Emerging markets have indeed been
booming.
Russia's RTS index soared 130% between early May 2005 and the middle of
last month. On average, markets in the six Gulf countries were up 92%
last year. The Saudi Index ended 2005 up 104% and more than 600% up
from 2002. The Dubai index rose 130% last year. However, some analysts
are saying that investors may have underestimated country risks and are
highly vulnerable to a sell off in global financial markets.
WILL
UNDERTAKERS
BURY PLANNERS? - Funeral directors in New Jersey are
beginning
to offer financial planning as an additional service. Most funeral
homes have "pre-need" plans...in fact the publicly traded funeral
parlor chain, Service Corp. International, had $343.2 million in
"pre-need" sales out of $1.1 billion in funeral-related revenue. We
suppose that "post-need" planning is a logical next step...sounds like
"advice to die for."
|
|
|
