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...]

A reader suggested a post dealing with two of his concerns with purchasing a Life Insurance Policy. These concerns were the same as many of my clients had. So let’s discuss them.

His first concern was that the insurance company could “jack” up the fees once the policy was in place. There are limits put in place on the amount of fees insurance companies are allowed to charge and there are contractual limits. Now, first off I need to point out that with Minnesota Life they have never increased the fees associated with a life policy on policy owners since at least WWII. So, even though they could increase some of them, they never have [the exception is insurance charges]. The reason they haven’t is pretty simple, they manage their risk well and have never found themselves in the position of having to make up for poor reserve management by extracting more money from their policy owners.

There are several classifications of “fees.” [Read more...]

My mom always told me I liked to do things the hard way and by now I understand she was right! I could be selling mutual funds to folks and call it financial planning but nooooo, I need to be a little different and really help people get their retirement on the right track. But that means dealing with a lot of roadblocks both psychological and other.

Most people are happy to just go along with what everyone else is doing and hope it all works out well. So they let Wall Street and the government plan their retirement. How do you think that will work for them? Haven’t we seen exactly who Wall Street cares about? And the government, however well-meaning, would be the last folks I let plan my retirement. [Read more...]