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Friday, December 15, 2017


I really wish this heading was a myth but as our devices and their connections get more sophisticated, so do the scammers.  Here are the top scams to be wary of, straight from the NASAA:

  1.  Promissory Notes-  As fixed income sources continue to languish, retirees will consider almost anything to increase their guaranteed income.  As pointed out in the press release, normally such notes are sold to large sophisticated or institutional investors who can confirm the notes' backers' capacity to repay the loans.  WARNING:  these are marketed to individuals as short term notes, less than 9 months, to avoid securities registration requirements. Unsure?  Check with your state's securities division.  Oregon's is  In addition, check to be sure the firm and representatives selling you the note are licensed and registered in your state.  Otherwise, turn them in!  I was pitched 12 mo. mortgage backed securities this year that turned out to be unregistered.  Oregon issues a cease and desist letter.
  2. Real estate & pyramid schemes were second most reported scams.
  3. Oil & Gas related schemes ranked 3rd.  But really?  You're going to support this industry that is killing our climate?
  4. Affinity fraud- to me this is the most outrageous of scams, where groups with high implied trust are targeted by scammers.  This can be your church, sports team, co-workers, ethnic or professional groups.  Because of the implied trust of these groups you should be more suspicious of any financial offerings within them.
  5. Variable Annuity sales practices-  These intricate, expensive and risky products can still have appropriate uses.  But they are inappropriate for most retirees since there are far safer, less costly annuity alternatives.  Always ask why this product is the #1 recommendation.
Scams clamoring for top billing in 2018 all involve the criminal misuse of technology:
  1. Initial coin offerings (ICOs).  That would be virtual coins, not collector coins.  Need I say more?  Not sure how much room there is in the market for BitCoin wannabes.
  2. Cryptocurrency contracts for difference (CFDs)- prohibited in the USA, for good reason, even if the platforms presented to you are legit, here is a great way to exponentially multiply your losses.  As Keith Woodwell (NASAA Enforcement Section chair) puts it, "There are red flags waving everywhere:.

Your Constructive Comments are Welcome!

Wednesday, November 22, 2017

The Estate Tax Hurts Families

I don't believe this blog title nor is it true.  $22 million is a wildly excessive head start for the largest of families' kids.  Besides, even that amount of money could do more harm than good for your kids.  Very timely this time of year is the article below by John McManus.
As with lottery winners and athletes who are in danger of spending significant portions of their new-found wealth in an instant, children who were raised with wealth must be properly prepared to handle affluence and their inheritance wisely
Older generations must be intentional to guard against the development of affluenza in children of all ages.
Here are 10 tips to help clients accomplish this elusive goal.
1. Reality Check: Preventing affluenza starts with discipline. This includes enforcing consequences when the child breaks rules and giving responsibilities such as chores in early childhood. Each shows that there are real consequences for one’s actions and that life requires hard work and accountability, regardless of status and wealth. Giving children duties creates opportunities for them to feel accomplished when those duties are fulfilled. It also establishes a pattern or habit of personal responsibility. Often it is with these struggles that real personal growth takes place.
2. Better to Give than Receive: Involve children in philanthropic activities and have them volunteer for a charitable organization of their choice. This provides children with a genuine sense of what life is truly like for the majority of the community which is less fortunate. As a result, it develops a profound appreciation for the opportunities they are receiving and, further, what their inheritance can bring in the future if managed properly. Prior to their earning years, children can often better understand the sacrifice of giving time, as they haven’t yet had the privilege to make money or manage their livelihood or lifestyle. Hours in a day, on the other hand, working selflessly for the benefit of others, feel very real to them.
3. The Most Important Things in Life Are Not Things: Informed families derive enjoyment from activities that do not require buying the latest items or spending a significant amount of resources, but stresses the value of relationships and celebrate personal achievement. The amassing a great deal of wealth should not be viewed as an end in itself or essential to achieving happiness. Therefore, involve children in activities that create enjoyment but aren’t driven by the payment of money, and instead require commitment of time and personal effort, such as sports. School activities and undertakings that build relationships in the community are very important.
4. Patience Is a Virtue:  Require children to save for things they wish to purchase. This teaches the value of money, self-control and delayed gratification. It also leads to a much deeper appreciation for the items earned. Postponing gratification builds character, discipline and fortitude in children, and it creates strength for managing relationships with others. Meaningful relationships require each of these personal traits.
5. Knowledge Is Power: Enroll children in basic, age-appropriate financial literacy classes. It is a good investment in a child’s future and will help them learn to manage the money they earn and their family inheritance. Spend the time to teach children to protect themselves first from themselves, before protecting themselves from others.
6. No Substitute for Hard Work: Beginning in high school, especially during the summertime, encourage children to secure employment or start their own businesses to earn resources. This imparts the meaning of hard work, the importance of being responsible and accountable and the pride of ownership in dollars earned. In affluent families, travel and other enrichment activities, including participation in sports events, can make it difficult to consistently integrate the weekly responsibilities of a summer job or other activities during the school year, which often are the most enriching lessons of all.
7. Word to the Wise: Identify advisors that can be trusted to guide children once their inheritances are received, but these individuals should be introduced while your children are adolescents. The value of having these advisors in their lives should be covered as well. Concepts can be integrated modestly regarding the management of family assets. It is an iterative process; a 14-year old may not fully appreciate the value of the family advisor in the same way that a 20-year old would. That said, at a very early age, make it clear that a child must come to trust their established and proven professional relationships.
8. Failing to Plan Is Planning to Fail: Develop a plan for significant assets to be passed in a shielded way. Create goals for the orderly process of wealth transfer, and outline what resources should be allocated and what vehicles should receive them. Move assets to be passed to children into protected entities first to safeguard them, and then communicate to the children at a later date that the assets exist—eventually let them know the size of those assets. As we move to guard assets from others, think of it as a gradual process instead of a “wholesale immersion” of the children into the family finances. That said, fearing children will find out too soon is a reason why too often people fail to protect the assets and themselves. As a child learns more about their interest, teach them to be more active in its management and protection rather than spending it.
  1. Include requirements to pay off any debt, calculate income and living expenses, and create a realistic budget.
  2. Encourage the child to invest and track assets received. Portfolios must compound to outperform inflation, key to avoiding dissipation of the protected assets. The assets must also be diversified to avoid concentration in just a few positions, which can lead to dramatic losses if the concentrated bet fails.
  3. Consider putting a temporary freeze on making significant decisions regarding the assets; this can allow time for the child to think through their situation and avoid making monumental mistakes due to impatience or panicky decisions with their inheritance.
9. Know When to Say No: Children should always be selective in their choices of friends. It is simply unavoidable that certain friends may be attracted to the lifestyle that a child enjoys rather than the quality of the child’s character. As children grow, part of their decisions regarding their friends might be: “Is this person or group spending time with me because of my family’s affluence? Do they support the values we promote as a family?” An example of a red flag could be if a child is asked or is presumed to pay for common items when they are out with others.
10. Preparation Is the Key to Success: Create or update estate planning documents. The best laid plans are irrevocably undermined if parents pass away before completing the mission of ensuring that their children are ready to accept the inheritance. Delivering a gift in a protective vehicle is as important as delivering the gift itself.
  1. Not only create trusts and protective partnerships, but be prepared to amend your Will to reflect any new situation that, if otherwise ignored, could affect your child’s growth and progress within the family. If there is a demonstrated weakness with social or financial matters, for example, this will require further maturation.
  2. Setting up a trust for a child offers him an opportunity to exercise the wisdom you have provided from a very early age with the protection against wrongful, unanticipated attacks. Have a co-trustee serve with the child well into adulthood. The trustee’s job is not to give the child a fish, but rather to teach him to fish.
As Warren Buffet once said, “A very rich person should leave his kids enough to do anything but not enough to do nothing.”
Your Constructive Comments are Welcome!

Thursday, October 19, 2017

The Nation's Retirement System Needs a Comprehensive Re-evaluation says the GAO

Yes, I'm calling this a myth.  For the following reasons:

  • An excellent retirement system called Social Security was designed by Francis Perkins and her committee back in the 1930's right after the preventable debacle of the Great Depression began.
  • That excellent system has been under attack ever since it was conceived, primarily by people who just can't stand for other people to have happiness; it's not enough that they've "won" the wealth game, everyone else must also lose.
  • The majority of workers are willing to pay the taxes necessary to fully and indefinitely fund benefits.  It is a myth that there are only two workers to pay the necessary benefits for each retiree; 25% of beneficiaries keep working and paying taxes.  Reagan lied about this clear back in 1981 as he severely slashed benefits, saying there were only 3.2 workers for every beneficiary.
  • Every other industrialized nation in the world has a livable pension for its seniors
  • If we could first solve the pernicious problem of mertiless accumulation of vast wealth and power we could design an efficient and effective healthcare delivery system, leaving trillions of dollars on the table for Social Security enhancement.  And enhancement is what it needs:  reduce full retirement age back to 65, eliminate taxes on benefits for all who earn less than median income, and eliminate the cap on Social Security taxable income.
Read the report yourself here at

Your Constructive Comments are Welcome!

Tuesday, October 3, 2017

My Adviser Will Live Forever

This is a myth, of course.  But rarely do we discuss the consequences of, or solutions for, the mortality of our advisers.
I'm writing this post because this year I seem to be getting way more questions from potential and existing clients like, "Well what happens to our plan if you're no longer around?"  I don't know if this is because I look terrible lately or because I went on Medicare this year.  Or maybe both.  But it's a smart and legitimate question.  Here's how I answer:
First of all, a large portion of my plans can usually be called "set it and forget it" requiring little future tweaking, other than for untimely life events like unemployment, divorce, disability, or death.  But even those risks are largely taken into account.
Secondly, I have a succession plan should I become incapacitated or deceased.  Without giving too many details- to protect the security of your data -I can tell you this:  Upon my incapacity or death, my Personal Representative can present proof of that to my CRM vendor and gain complete access.  Then they notify all the vendors, partners & clients in my database.  I have designated professional partners who will either step into my shoes or find appropriately experienced and credentialed individuals to do so.  And they will be in touch with you to discuss any necessary changes.
Finally, in my experience, most successful advisers never retire anyway.  We are in this profession because it is extremely gratifying to make such a difference in the lives of our clients.  Having heard the hopes and dreams of thousands of retirees, we understand the importance of finding happiness now instead of deferring it to a couple decades of post-professional idling.  Besides, the Life Expectancy Calculator says I'm going to live to be 98 so I may outlive most of you!

Your Constructive Comments are Welcome!

Friday, September 15, 2017

MYTH: I don't need to check my beneficiary designations

A friend recently chastised me for having too much political content on this blog.  "Start another blog!", he ordered.  I disagree because every topic I choose for this blog pertains to your financial health, even if only indirectly.  But it's true; I do mostly take a macro, or big-picture view.
So this is a micro issue that can mightily impact you and your family:  Beneficiary designations on your insurance policies, annuity contracts, IRAs, etc.  Always one for source attribution, these were originally published by Dayana Yochim of Motley Fool, April 23, 2008.  But they are still apropo.  And of course I will exercise vast editorial license.

Top Five Beneficiary Form Boo-Boos
  1. Assuming your will takes care of all the details.  Beneficiary designations always trump your will.  It's important to be sure these documents agree with one another.  Dayana suggests that if you have a living trust then it should be the beneficiary.  I disagree, unless you want the proceeds paid out in a specific and weird manner.  Naturally, ask your attorney's advice.
  2. Subjecting your heirs to an avoidable tax bill.  Failing to name beneficiaries on your IRA robs your heirs of being able to do a Stretch IRA.  With no beneficiaries specified, your IRA will be probated and the non-spouse heirs must  liquidate it within 5 years.  Most heirs don't even wait that long, taking the lump sum and nudging themselves up into the top tax bracket.  And then all subsequent earnings and capital gains will be taxable to boot.
  3. Forgetting to update forms when life changes happen.  Probably worse than not naming beneficiaries to begin with is having your money go to someone you no longer like, such as ex-spouses, profligate adult offspring, or "out"-laws.
  4. Not having a plan B.  Always name multiple beneficiaries.  If your primary is a single, 100% beneficiary, then name a couple first & second contingent beneficiaries.  If you have just one beneficiary and you both die together in a skydiving accident then the court gets to decide who gets the procedes.
  5. Naming minor children as beneficiaries.  This is how I construct beneficiary designations but you want to be sure you have guardianships detailed in your will and/or trust.

Closely Following the News Will Make You a Better Investor

Yesterday, during my lunchtime jog, as the stream of consciousness flowed, snippets of the week's news kept bobbing by.  I never watch the news; why compound the damage?  The only time I ever listen to the news is in the car.  And then only to NPR/FOX.*

"Two men caught in Paris with bomb-making materials"
"The DOW is up 68 points"  (to what, they don't say)
"North Korea launches missile over Japan"
And so on.

Years ago when I would catch a program on NPR my usual response was, "Wow, I'm glad I had time to listen to that!".  Now my usual response is, "What the hell do I need to know that for?"  Or, "I wish I hadn't heard that!".  There are common elements among the newsesque programs which are ubiquitous and that is the editor's desire to fabricate the illusion that:

  • We humans rarely get along and, in fact, are normally at one anothers' throats
  • The world is dangerous
  • I have my finger on the pulse of the world baby! ("The DOW is up 68 points".  I would have trouble coming up with a more useless tidbit.)
  • Other people are basically stupid and dangerous
  • My "tribe" is superior
This sets us up to be fertile ground for corporate & government intrusion into our lives and the lives of others, driving our focus into the base brain where fear & anger lurk.

On the other hand, I get all the daily news I need in my morning meditation:
  • Life is pretty awesome
  • People are amazing, essentially loving beings
  • The older I get the less I know
  • All of us have suffering
  • All of us have the capacity to decrease suffering
  • In that important respect, we're all the same
So what does that have to do with investing?  Calm & contented investors make better decisions than angry, fearful, suspicious investors.

*Yes, it seems like NPR has adopted the lizard brain focus of FOX

Your Constructive Comments are Welcome!

Tuesday, August 1, 2017

The Fed Funds Rate is Significant and Warrants Close Attention

I hope I don't repeat myself too often in pointing out that the titles of this Financial Myths blog are, indeed, financial myths.  Especially this one.  All the Fed Fund rate is is the rate that the Federal Reserve suggests that banks charge each other for overnight loans to meet their reserve requirements.  Financially sound banks can negotiate better terms amongst themselves.  The rest can pay the set rate or, failing that, go to the Fed's discount window.
For the sake of simplifying this, imagine that you and a friend each have a coffee cart.  You're on different corners so you don't mind cooperating.  One way you do that is if, at the end of the day you don't have enough cofee to meet demand the following morning you can borrow from your friend, who may have coffee left over from today.  Then when your suppliers open the next day you restock and also buy enough to pay your friend back.  And vice versa.  You agree to pay each other 0.1% of the value of the borrowed coffee for the overnight loan.
This has nothing to do with the prices you charge for your coffee!  No relationship whatsoever.  But suppose the public doesn't know that.  You meet with your friend and decide to double your loan rate to 0.2%.  Then you both announce that your Coffee Beans Overnight Rate has doubled so you must also double your coffee prices.  The public says, "Well, yes, that makes perfect sense".  But the fact is, you have not incurred any additional costs no matter how high you raise the Coffee Beans Overnight Rate because you borrow from, and pay, each other almost equally.
Banks and other financial institutions use the Fed Funds rate as an excuse to raise the cost of their money even though they had plenty to loan out at lower rates.  It is merely one of many parts of the one-way wealth valve that has decimated the middle class and enriched the already enriched by removing virtually all connection between productivity and income.  If the Fed were really interested in fulfilling its mission of Full Employment, it would inject funds directly into the economy, straight to individual human consumers.

Your Constructive Comments are Welcome!

Thursday, June 1, 2017

Top Ten Attributes Millionaires Share- Guest Contributor

These are not myths!  Becoming a millionaire seems out of reach to many people. It appears as if you need money to make money. However, several studies have been applied to millionaires and billionaires. These studies covered habits of the upper class instead of just their financial status. Take a look at the habits or attributes that these successful people share so  you can emulate a few of them. You might find yourself managing a huge, bank account .

1. Keeps Up With Financial News

The "Wall Street Journal" is a classic newspaper that's dedicated to the financial world. Financial information is also found in certain sections of any other newspaper around town. Currently you might skip over this news section. But consider changing that habit. The majority of wealthy people are deeply involved with each day's financial news. They're aware of businesses that are expanding or declining in value. Mergers, stock information and other data contribute to your financial health in the long run. Any piece of information in the financial news can guide your choices as you refine your 401(k) investments or stock purchases on the side. Understanding how the financial world works is a first step toward being a wealthy individual.

2. Improves Their Education

If you examine a millionaire's educational background, he or she may have a list of degrees, certifications and classes earned over the years. Successful people thrive on education. They want to constantly improve themselves, especially if they manage employees at some point. Millionaires take classes on psychology, marketing and other broad subjects so that they can apply that information to their everyday operations. Some individuals may want to change industries entirely so they go to school to learn about a specific trade or sector. Every piece of knowledge only improves the millionaire's outlook on life as more opportunities open up in response.

3. Maintains a Budget

When hardworking people look at millionaires in the news, it appears that there's a never-ending flow of money. Successful people know better, however. You might be surprised to hear that millionaires have budgets. They may have more wiggle room in their grocery shopping budget, but there's still a limit on spending patterns. By being conservative with the spending, any extra funds can be invested back into stocks or bonds. Wealthy people tend to make the money work for them as interest adds up over time. Anyone can start a budget and gain more wealth. It simply takes some dedication to the process in order for it to be successful.

4. Rises Early

Sleeping in is not on the millionaire's list. On most days, including the weekend, they wake up between 5 a.m. and 7 a.m. The early morning is normally a productive one for any human being because the body's circadian rhythms tend to be the strongest at this point. Millionaires take advantage of the clear mind upon waking, and they'll start their day. Emails, meetings and work responsibilities can be the priorities with the morning open to career opportunities. If anything can't be taken care of during the morning, the entire afternoon is still open. Millionaires know that hard work pays off when you spend time on your goals.  But having said that, everyone is different.  Some people do their best work well into the wee hours.  It’s important to be sensitive to your unique cycles and capabilities.

5. Leads Healthy Lifestyles

For the most part, millionaires lead healthy lifestyles. They'll prioritize exercise while eating a balanced diet. Some entrepreneurs even have gyms or workout equipment in their offices as a way to streamline the workday. Although there are some exceptions to this rule, the healthy lifestyle tends to be a main habit shared throughout the millionaire set. It's possible for anyone to acquire this attribute with a little perseverance. You can't be fresh and ready for opportunity if you feel tired and sick with unhealthy foods and no exercise. Millionaires actively seek out restaurants with a healthy spin on their favorite foods, or they might hire a cooking service to help them out at home.

6. Limits Media Distractions

If you're inclined to sit in front of the TV for hours at a time, a millionaire status may not be in your future. Most wealthy people don't spend a lot of time dabbling with media distractions. Television, social media and movies are all distractions from other tasks that can be completed in a day's time. In general, millionaires might spend about one hour in front of the television each day. Turn off your TV so that you can challenge yourself in other ways.

7. Sets Daily Goals

You may have lifelong goals in mind that include scaling a mountain or meeting the President of the United States, but millionaires create daily goals. They'll take some time each day to write down their goals for the next 24 hours. It's a fact that not all goals will be achieved so successful people prioritize the list with numerical highlights. Once the day begins, millionaires start on their to-do list and try to complete it by the day's end. Goal setting is a habit that everyone can get into with some dedication to the art.

8. Takes Real Breaks

Millionaires also understand the value of a break from hard work. Lunch hours must remain sacred. Eat, socialize and unwind during this period so that your mind can be focused when afternoon responsibilities arise. This break concept applies to your nighttime rest as well. Adhere to a reasonable bedtime hour, such as 11 p.m. Shut off lights and electronics as you fall asleep. By maintaining this bedtime and break schedule, you'll be fresh to take on the day's challenges.

9.  Takes time for Creative pursuits

Being creative with your funds is also a part of a millionaire's habits. Any extra funds might be put towards an invention or concept that you've been nurturing for the past few years. At some point, you may have a new product or service that catapults you into an even higher tax bracket. Be a millionaire who's happy with life by investing in things that are important to you. It can pay off in the end.

10. Is Generous and grateful

Although in mainstream media we see mostly stories to the contrary, in general the wealthy are also generous with their time and money.  They view the world as abundant.  Gratitude for what one has is more important than constant striving after more and more.  

Jessica Kane is a professional blogger who focuses on personal finance and other money matters. She currently writes for, where you can get personal checks and business checks.

Your Constructive Comments are Welcome!

Saturday, April 29, 2017

Financial Journalists are Always a Good Source of Unbiased Advice

Yes, the title of this blog is a myth.  In fact, I find most evidence to the contrary.  Part of the reason is that like everyone else in business, journalists want "customers" and often resort to a bit of hyperbole or even outright falsehood to get more eyeballs.  The myth is that journalists have nothing to sell, they're just here to educate us with sober, neutral information, right?  Nonsense.
A good example is this Dan Caplinger article in Motley Fool:

Nothing like a little name dropping to get attention.  I'm not a fan of Robbins' late entry into the financial services world but Caplinger's critique is way off base, to wit:

  1. Caplinger wites, "Robbins has some financial experts raising their eyebrows" and then fails to mention any of them or why they're raising their eyebrows.  In admiration?  Astonishment at how great his advice is?  A shift in consciousness?  Constipation?  This is an evidence-free and meaningless statement.
  2. "The key to his process involves creating income for life".  Oh. My. God!  That is so disgusting and horrible!  What could he possibly be thinking??  And Caplinger left out the most important word "guaranteed".  By way of comparison, Social Security is an annuity and we can see how many lives that program has utterly ruined.
  3. "Unfortunately, the reality of how indexed annuities actually work often leaves them missing the mark in terms of being a perfect investment solution for many people."  Give me a break.  You could plug anything else into that dodgy sentence substituted for "indexed annuities" and it would be true.  All investment & savings options have pros and cons.  Not a single option is "perfect".  That goes without saying.  But apparently, until this article was written, nobody knew that before.  Thank you so much Dan for bringing us back down to Earth.
  4. "Wall Street's own self-regulatory agency has put out an investor alert about indexed annuities".  I have intense problems with that totally misleading sentence.  Go read the "alert".  Mr. Caplinger makes it sound like a dire warning when the "alert" is actually a better more informative and unbiased article than his.  Yes.  Please read the alert.  And understand, too, why Wall Street doesn't like annuities:  because annuities don't pay as well as "managing" assets; annuities don't require "management".  Frankly, most assets don't either.
  5. "surrender charges of as much as 20% can apply . . .granted, not all insurance providers have these draconian provisions".  Actually, none of them do.  I couldn't find any annuity product with such onerous terms.  None of the ones I use have more than 10 year periods.  Besides.  Annuities are designed to compete with other principal-protected, long term vehicles like Treasuries and CDs, which they soundly trounce.  Everyone has some money they won't need for 10 years or more and annuities are great places for it.  Short term money should be elsewhere.
Let me finish by saying, I could not write an article like Dan Caplinger's.  Because I'm a legal fiduciary

Your Constructive Comments are Welcome!

Friday, March 31, 2017

Oregon is #1 in Financial Literacy!

Sadly, this is a myth.
According to, we rank 27th overall.  It's not like I'm not trying!
Come to one of my classes and workshops.  Let's raise this score!

Source: WalletHub
Your Constructive Comments are Welcome!

Thursday, March 9, 2017

Annuities and the F-WORD Belong in the Same Sentence.

I've had the good fortune to meet and work with Frank Maselli.  He is a brilliant, affable and hilarious adviser to advisers.  Below I've simply cut and pasted a great and timely article he just wrote for us advisers.

I never pitch products in my training programs or keynotes because I believe that advanced skills are product neutral. It's up to each advisor to decide what's best for the client.
But I am seeing a confluence of market and demographic forces right now that is causing me to line up enthusiastically behind one particular product strategy. 

I think we have entered the Age of the Annuity!

If you've never done one before, it's time to take a hard look at them. And if you're already using them…you might want to double your efforts for the next couple of decades.
DOL & the “F-Word!”The Department of Labor “fiduciary rule” is currently stuck in the mud of Washington confusion at the moment. No one can say today if this thing is going to survive or what form it might take after all the bureaucratic sputtering is finished. [as of 6/2018 the industry managed to kill the rule]
But even if DOL disappears completely...The F-word will not. “FIDUCIARY” is here to stay!
Acting in our clients' best interests is what we do every day. So this is not a major shift in anyone's business philosophy. But it is a big shift in perception. 
The public is being told by regulators and the media to ask advisors right up front, “Are you a fiduciary?” 
Few clients understand the implications of that word, but they're certain a “No” answer, or any hesitation, is bad news. And it's likely to become a major differentiation. 
The choice to become a fiduciary is a big one and there are several sides to this issue. But being a fiduciary means a lot more than simply avoiding high fee products. In fact, when you identify the greatest threat to financial survival that most Americans are facing, fees and commissions are a minor concern. 
By far the biggest danger ahead is the very real risk of outliving our money and not having a reliable income in retirement. 
The second biggest danger is in trying to navigate retirement without some kind of professional help. Sadly, that's what the DOL rule may mean for millions of Americans.
Combined...these two risks mean that if you DON'T show the client an annuity option, you may be in for a seriously expensive lawsuit down the road. 

"Annuity Now!"

There's a classic episode of Seinfeld where Frank Costanza (George's father) tried to reduce his stress by shouting “Serenity now!” My annuity mantra may be a slight modification, but the idea is the same.
To effectively reduce the stress and fear that millions of retiring Boomers are about to face, an annuity in some form may be the best, if not the only answer. 
And you have a wide range of options to accommodate nearly every need including immediate, fixed, indexed, variable and investment there really are no excuses anymore. There may be a slight learning curve, but the effort will be richly rewarded.  
Bottom line: If annuities are not part of your product mix in a major way…you need to re-think your approach fast. 

From Hater to Fan

As a former wirehouse stock-jockey, I used to pitch against annuities. I was never a fan. But times have changed. 
John Maynard Keynes famously said, “When my information changes, I alter my conclusions. What do you do, sir?” 
I believe today that annuities are the only reliable way to guarantee a steady stream of income in retirement. And before you say “Bonds do that too.” I hasten to point out that the 33-year falling interest rate cycle is over. Very few advisors today know the pain of destroying client wealth in a bond portfolio. 
The reality is that most people are living far longer than their money will last. Given that fact, annuities might be the only salvation for tens of millions of Americans. 
Plenty of advisors are already on board with annuities, but far too many are not yet. Add to that the fact that the whole DOL debacle feels like a direct assault on the annuity industry just at the time Americans need these programs most. The irony there is painfully sad. 

Best Interests! Really?

So go back to the whole “fiduciary” thing for a minute. What is truly in the client's best interests? (Allowing for different needs and objectives of course.) 
Is it better to show a client an annuity with some kind of commission charge…
Or should you try to build a portfolio of super low-fee, passive ETFs or mutual funds and craft a lifetime income stream from that?
If you said “Both” that's fine! But at least put a portion of the portfolio into something that's protected forever. Why would anyone disagree with that? 
And if costs are your concern...what if the annuity itself was also low fee? 
Annuity firms right now are bringing new programs to market that look better than anything we've ever seen with lower fees, great investment choices, fantastic liquidity, and more income flexibility.
They might never get as cheap as an index fund, but let's say for the sake of argument that the incremental fee for an annuity was around 100 basis points per year. How would you ever go to a client who had depleted their assets by age 80 and say, “Gee Bob, I'm really sorry. I had a chance to guarantee a portion of your retirement income...but I was really worried about charging you 1% more in annual fees!” 
That is not a conversation you want to have. Your Monte Carlo simulation and low-fee argument won't stand up in court. And folks, there's no doubt that as many retirees start running out of money, some attorney will dig into their portfolio to find where an advisor failed to recommend some kind of safety and a guaranteed income. We haven't seen the panic yet, but just look at the's coming like a freight train!

Why is now the right time?
In my new book, 40 Tips for the Under 40 Advisor, Tip #35 states: 

In really good or bad times...prepare clients for the opposite!
The markets have been strong and I'm not predicting a downturn here. But none of us needs a massive loss to convince us to protect some of our client's retirement savings. It's just common sense.
An annuity puts client assets into the hands of very large, very solvent and historically conservative companies who are much more tightly controlled than any bank. There is no better way to stabilize the retirement ship in a stormy sea and to take some of that longevity risk off the table! 

“The AGE of the Annuity!”
So the new era is upon us. I wrote about "The Year of the Annuity" in early 2016, but I think we are going to be in this protection business for the next 30 years. And whatever happens with the DOL rule, the F-word will likely be with us forever. Truly acting in a client's best interests transcends the trivia of commissions and fees.

  • It demands that we protect them from the greatest threat to their future…outliving their money. 
  • It mandates that we instill and insure some kind of guarantee and peace of mind in what will be for most a long retirement. 
  • It says that if you haven't done so already, it's time to open your mind to new financial instruments that help people safely DOWN the mountain...not up.  
  • It puts annuities front and center, standing tall in the line-up of solutions we offer. 
In the end we will all be judged on how well we got our people through to their goals.
Annuities used to be one simple product choice among many…but not anymore. 
They are now a core fiduciary responsibility!
Your Constructive Comments are Welcome!