The science of decision-making has made significant progress over the last decade in examining how decisions are made. I know I have mentioned it before, but it bears repeating — our emotions play the part of the captain of our decision-making ship. Working in the sales arena I have seen this play out in fascinating ways. That is why the vast majority of people are really bad at the money game. Money carries such heavy emotional baggage that from the start our decisions are rarely rational even though most people would disagree with this statement.

Fear, greed, envy, distrust are all very strong emotions. I recently had a potential client bail on purchasing an EIUL that strongly demonstrates this process. I know that Jeff has seen this in play with his business, as have most people in a sales position. Sometimes when you expose the process people can adjust and overcome. Warren Buffett has been making statements for years with this in mind like this; “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” [Read more...]

I was talking to a potential client today and our discussion really stoked my thinking. I get most of my best thoughts talking to the very smart people who I do business with! He thinks that the market is going to tank and wants to wait until that point to purchase an EIUL. That would make perfect sense if we were talking about stocks or mutual funds. But an EIUL is a very different animal.

From a strategic standpoint this product is really hard to market time in general because it takes a month to process through the system and then up to two weeks to get the index leg started. With stocks and mutual funds you can purchase any time you want with little lead time and buy and sell multiple times a day if you like.

But let’s look at what advantage there is to waiting:

Example 1: You were so unlucky as to have your index leg created at a market top then what do you lose?

Well, in real terms nothing, but there are some opportunity costs.
At the end of year 1, say the market is down 50% from when you started you suffer no loss.  The index leg is done and you start a new one at the new starting point of 50% less than the original leg. When the market rebounds you stand to gain up to 15% per year. [Read more...]