InsuranceNewsNet Magazine January 2011 : Page 9
seriously consider getting a securities license. “I talk quite frequently to agents who ask whether they should become regis-tered investment advisors,” said Wendy Waugaman, president and CEO of American Equity. “My advice to them is, this is where the industry is moving and where regulation in general is mov-ing, to a system where there are fidu-ciary duties of advisors and a more holis-tic approach.” Another challenge that most people at the NAFA summit identified is fro-zen money. One reason people are not moving their funds is interest rates, which have been low for much longer than many advisors expected, said Tony Compton, president of Gradient Insur-ance Brokerage. “We all can remember 12 to 18 months ago, talking about how low interest rates were and that they could only go one way,” Compton said. “Well, we were wrong. They could go two ways, and they con-tinued to go down. Now we have products that have extremely low crediting rates, whether it’s a traditional product, a guar-anteed-rate annuity or an indexed annu-ity. And when the final numbers come out for 2010, you’re going to see the index annuity business a little flatter than what you’ve seen in the past.” Another reason money is not moving is because people are just plain scared. Many advisors and IMOs pointed out that trillions of dollars are sitting on the sidelines. Compton said, indexed annui-ties should resonate with those consum-ers looking for security and some upside potential. “There’s still a great marketplace for it because you’re not going to lose money— that’s the safety net and peace of mind— and with the evolution of income rid-ers and death benefits, in my opinion, there’s not a better place for retirees to have their money.” Others agree that a lot of retirees will be looking for what annuities can do for them. Compton said it’s just a matter of inflation and time. “The boomer generation is coming through,” Compton said. “All of their money is in 401(k)s, qualified plans and the accumulation. They have to get out of the accumulation into distribution, but when they go to the distribution phase, they want to make sure they go into a product that can still credit them interest. So when interest rates come up, you’ll see a big jump.” Thomes of Allianz said that message is not just for retirees looking for the best distribution of funds, but for anyone who even hopes to retire in the future. “If you think about it, I think our aver-age issue age on an indexed annuity is in the low 60s, but that number has been coming down over the years,” Thomes said. “I always use an analogy: when my father and my grandfather planned for retirement, they planned for it in what I call thirds. One third of their retire-ment was going to come from Social Security; one third was going to come from their pension; and one third was going to come from their own personal savings. But I look at myself, and I go, ‘That formula just doesn’t work.’” Thomes sees a future without defined benefit plans or even Social Security. “If it’s there when I retire, that’s great,” Thomes said. “But I guarantee it’s not going to be 33 percent of what I’m plan-ning to retire on. So what does that mean? I don’t know if the numbers now are 10 percent/10 percent/80 percent or 20/20/60, but they’re not one-third/one-third/one-third. So, more of the onus of my retirement is now on me. … One of the things we’ve been talking about is changing the lexicon around the word annuities and thinking about it in the terms of ‘retirement insurance’ or ‘lon-gevity insurance’ or ‘inflation insurance.’ When you think about a new employee sitting down with a company, the ben-efits people go through, ‘Here are your health insurance benefits; here are your 401(k) benefits; here’s your dental bene-fit.’ A natural transition would be, ‘What are you doing for your retirement insur-ance?’” Steven A. Morelli, is senior editor for Insurance-NewsNet Magazine. He has more than 20 years of experience as a reporter and editor for news-papers, magazines and insurance periodicals. He was also vice president of communications for an insurance agents’ association. Steve can be reached at smorelli@insurancenewsnet.com Everyone knows that most “Baby Boomers” failed to arrange plans for their children’s education expenses. 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