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Larry Klein has presented a powerful insight into why and how to market financial services to seniors.  A must-read for persons working with seniors and those entering the senior market.
-- Ed Pittock, CSA President, Society of Certified Senior Advisors

TAX TALK – With President Bush conceding that he will have to compromise on his tax cut plan, it's now up to House and Senate negotiators to hammer out differences between the budgets each chamber passed.  With a budget resolution in place, the Senate can then begin work on its version of tax legislation.

DI, THE FORGOTTEN NEED – According to a survey by the Consumer Federation of America (CFA) and the American Council of Life Insurers (ACLI), 82% of U.S. workers either have no long-term disability income coverage or believe their coverage is inadequate.  CFA and ACLI have prepared a free brochure, Long-Term Disability Income Insurance -Financial Protection for You & Your Family, to help people understand this most misunderstood product. The brochure is available on CFA's Web site, http://www.consumerfed.org, and on ACLI's Web site, http://www.acli.com.

SELLING "ABOVE THE LINE" – Perhaps one reason DI is the forgotten need has been financial advisors' perceived difficulty in selling the product.  Jim McCarty, one of the most successful DI salespersons in the country, was a speaker at the recent NAIFA Financial Forum.  His concepts are simple and effective and he actually did "write the book" on selling DI.  If you want to help your clients and make some money, we recommend you buy his book.  See http://fsc.fsonline.com/fsj/mccarty.html for details.

GROUP DI UP – According to LIMRA, and perhaps indicating more awareness for this "forgotten need," premiums for group disability sales climbed 6% in 2000.  Fully-insured LTD sales increased 14%, while ASO sales declined 35%. See http://www.limra.com for details.

SILVER LINING – According to a study by John Hancock, "despite the explosion of tools and information, most 401(k)-type plan participants remain fundamentally unprepared to manage their retirement portfolios."  Hopefully these individuals will seek professional advice from financial advisors.  It is also likely that the surging stock market over the past decade may have hidden the problem.  An Investment News editorial warns, however, that the "bear market may be too short to teach a lesson" about risk tolerance...to advisors and their clients.  Now is a good time to try to help your clients manage their expectations of securities and practice sound asset allocation.
 

MARGIN CALL CALCULATOR – In an effort to help investors avoid getting stung by the dreaded margin call, the SEC has launched a Web-based margin calculator.  Check it out at http://www.tradeworx.com/sec/cgi-bin/tutorialmargin.cgi. 

STILL THE SWISS ARMY KNIFE – After hearing Ben Baldwin, one of the founders of modern financial planning, talk at the NAIFA Financial Forum, we are further convinced that if you had but one financial product to offer, it should be variable universal life.  Properly used, it is a splendid financial tool.  One of Ben's points for the product is the fact that in many cases the annual pure cost of insurance can be less than the tax cost of owning a mutual fund.

HANCOCK'S eSWISS ARMY KNIFE – John Hancock has launched its first Internet-based variable universal life insurance product, called eVariable Life.  It is available through the "Buy Direct" section of Hancock's website (http://www.jhancock.com).  According to Hancock, the site makes variable universal life easy to understand on the Web and "that is what's kept our competition from introducing this product so far."

CAREGIVERS – According to a MetLife study, employees who care for elderly or sick relatives with long-term care insurance are twice as likely to stay in the workforce as those caring for relatives without it.  Done in conjunction with the National Alliance for Caregiving and LifePlans, the survey also found that the presence of insurance allows for less stress and less job "flight."  Also from MetLife, there is a very useful 28-page booklet (PDF only) called Resources For Caregivers at http://www.metlife.com/Business/Images/resource36.pdf.  An additional "tidbit"...the 1999 MetLife "Juggling Act" Study found that caregiving costs individuals about $650,000 over their lifetimes, in the form of wages, as well as social security and pension contributions, that are lost because they take time off, leave their jobs entirely or experience compromised opportunities for training and promotions.

DON'T BOTHER TO CALL – A recent four-day Treasury Department study found that taxpayers have about a 60% chance of getting through to an IRS official when they call.  Perhaps those that don't get through are the lucky ones.  The study also found that IRS officials gave the wrong answer 47% of the time, even though the questions asked were drawn directly from an IRS list of frequently-asked questions.

SPEAKING OF WHICH – According to the Kiplinger Tax Letter, momentum is starting to build for income tax simplification, with killing the alternative minimum tax being the first priority.  If the AMT isn't repealed or reformed this year, any income tax cuts will swell the ranks of middle-income taxpayers subject to the AMT.  Other targets for later simplification include the capital gains tax calculation and all of the phaseouts on a variety of tax benefits.  If IRS officials give the correct tax answer only about half of the time, it sounds to us like tax simplification may be long overdue.