The change in workforce

Posted on May 7, 2016 by robertjrussellcompanies

Bob Dylan hit the nail on the head when he sang, “The times, they are a-changin’.” Even though that was written decades ago, it still applies, especially to today’s workforce. And brokers need to adapt if they want to survive.  c

The American workforce continues to expand beyond full-time W2 employees to an increasing number of contracted and part-time employees. According to the Bureau of Labor Statistics, there are now 27.7 million people working part-time (less than 35 hours a week) in the U.S.

Critics of the Patient Protection and Affordable Care Act say the growth of part-timers is the direct result of health care system pressures pushing employers to reduce hours. Others point to innovative business models like Uber, which are bringing more contracted employees into the workforce. No matter what the cause, brokers need to be in tune with this growing part-timer trend.

A golden opportunity

Virtually every company — whether it’s a small or mid-size business or a massive corporation — employs part-time workers. While their role may not be as significant as full-time employees, part-timers are integral to the success of these companies.

Therefore, retention of part-time workers is just as important as full-time employees. Plus, the majority of part-time employees don’t have access to a core benefits program. This opens up a world of opportunity for brokers. If you can present clients with perks to keep their contracted and part-time employees healthy, happy and loyal, you’ll be way ahead of the competition.

Part-timers are Uber important

In this day and age, contracted W-9 associates are critical to the success of many companies. Take Uber for example. Recently valued at an unprecedented $41 billion, this smartphone-based ride-sharing car service has exploded in the past six years. Without part-time drivers, Uber wouldn’t even exist.

In fact, I recently caught a ride from a young Uber driver, who told me the part-time gig is a great way to earn extra cash while she pursues another career. When I told her about some of the benefits solutions that are out there now, she said they sounded awesome. Although Uber provides some benefits, she said it’s nothing she actually needs.

This got me to thinking. If Uber continues to expand at its current breakneck speed, the company will continue to hire more and more part-time workers. Other companies will undoubtedly follow suit, mimicking Uber’s genius business model. Smart brokers will cater to this demographic and offer solutions designed to boost part-time worker retention for employers.

As a broker, what’s in it for you? Let’s see… Client retention, additional revenue and an expanding brokerage firm, just to name a few. After all, you’re adding a different employee to the voluntary scenario: part-time associates. Plus, providing benefits to part-time and contracted workers helps you round out your employee benefits practice, which gives you an edge on the competition.

There are a variety of solutions designed to help part-time employees stretch their health care and lifestyle dollars. From vision to lab and imaging to prescription drug discounts, these valuable benefits reduce out-of-pocket expenses for part-timers. Telehealth also provides a low-cost option for part-time employees to receive care for non-emergency medical issues.

The most successful brokers are full-service; and part-time employees represent yet another essential gap that needs to be filled. Offer your clients knowledge and expertise about part-time populations and customized solutions for these workers, and you’ll be as good as gold

Posted in Business | Tagged , , | Leave a comment

Finances – Who is in the dark?

Posted on May 6, 2016 by robertjrussellcompanies

For all the promises exchanged at the altar, parties rarely commit to telling new spouses what’s going on in their bank accounts.

As a result, 33 percent of newlyweds are surprised by a partner’s financial situation and 36 percent don’t know anything about the partner’s spending habits, according to a recent survey of Americans by credit-tracking firm Experian Plc.

When asked what the maximum amount was that they would spend before discussing it with their spouse, men replied $1,259. Women said $383. Men were more likely to hide money from spouses: Some 20 percent had secret financial accounts their partners didn’t know about, compared to 12 percent of women. Experian conducted its survey, of 1,002 U.S. adults married in the last year, online from Jan. 21 to Feb. 1 of this year.

“It could be the people who have the higher salary are the ones who keep it a secret,” said Michael Slepian, a post-doctoral researcher who specializes in secrecy at Columbia Business School. “It does make sense to me that men would keep those financial details secret more because I find that women disclose more toward other people.” Forty-nine percent of survey respondents identified as men and 51 percent as women. The survey did not ask respondents if they were in same-sex or heterosexual relationships.

The latest survey from America Saves Week indicates that these workers have a long way to go in meeting retirement…

Despite the importance of a healthy credit score to such married life milestones as getting a family car or a starter home, only 40 percent knew their partner’s credit score before getting hitched. Fifty-six percent of those polled agreed with the statement: “Before I was married, I considered how a potential spouse’s credit score could affect my finances.” Credit scores were a source of marital stress for 39 percent of newlyweds, and 19 percent required a cosigner after getting married—about a third because of poor credit.

Debt wasn’t discussed in detail prior to marriage, with 31 percent of those polled not knowing their partners’ student loan balances.

Regardless of whether the financial information withheld from a partner centers on credit, salary, or debt, Slepian said keeping information hidden can damage a newly wedded relationship: “People often believe that revealing a secret will have negative consequences, but holding off and revealing it later won’t make things better.”

Posted in Business | Tagged , , | Leave a comment

Better Prospecting

Posted on May 5, 2016 by robertjrussellcompanies

Are you a nice person? Could that be said of you? In fact, do people remark that you are a pleasure to be with? Do they tell others? I read a book some time ago that impressed me on the value of being a nice person. It was called “The Power of Nice: How to Conquer the Business World with Kindness.” That book really expressed the importance of being nice and what it means to business. At the time, my wife Carol told me that I was not very communicative and friendly in social situations. I have a tendency to be a loner and stay to myself. Small talk is not very interesting to me.

I had to learn to be nice. It has been a difficult journey. I have to pay particular attention to others around me and not only acknowledge their presence, but be sincerely interested in interacting with them. I am a type A personality and don’t see the point in non-essential discussions. It’s not easy sometimes, but very important. I am getting compliments.

Can people expect you to come through…every time? Gaining a reputation for reliability is critical to getting referrals. Paying attention to small details is a critical part of reliability. An incomplete task screams “unreliable.”

I was encouraging a young man on his desire to build a lawn-care business. Upon observing his work, I noticed that his edging wasn’t sharp because he was rushing the job to get to the next yard. One of his problems was that he was relying on low price to get yards for lawn care. I encouraged him to slow down, and improve his quality. That would allow him to increase prices and make more for less work. The neighbors would also be impressed with his work and want his service.

This is good advice for producers as well. We all have the same products to sell. So what can make us different? Reliability!

Can your clients get you on the phone easily? Do you get answers in a timely manner? Do you follow up to be sure that the effort was helpful for the client? Your clients should be able to call you even for simple requests. They should not feel like they’re putting you out, annoying you, wasting your time or made to feel unimportant. If you feel a client is unimportant there is something wrong with your qualifying process. You should try to engage clients that are profitable enough where you are compelled to go the extra mile. If you aren’t earning enough to be reliable, then it will cause you to be resentful and therefore unreliable.

Any survey that asks the question, “What would you like in a financial advisor?” would most certainly be answered with, “A person I can rely on to be trustworthy, attentive and act as a fiduciary when helping to decide on best strategies.” The foundation of that statement would be reliability. Where will your next client come from? Are you relying on some method or on your performance and reliability? Clients should be compelled to brag about you. They will do so if they have enough to brag about.

I was working with an attorney on some joint work cases. The relationship started well, but I soon discovered that he treated my clients very poorly. It would sometimes take days to return phone calls. He took much longer than should be necessary to prepare legal documents and after he collected his fee, it seemed like he dragged his feet with every stage. I lost credibility with several clients and had learned another lesson. Be very careful about referring clients. The reliability of the service reflects your judgment.

I’ve said many times that a fellow with just a high school education can make a very good living in the insurance industry. Reliability does not require a college degree but it can be more valuable.

Being a nice person doesn’t require any more effort than being otherwise. Why not go the extra mile with a smile and excellent follow-up?

Posted in Business | Tagged , , , | Leave a comment

Posted on May 4, 2016 by robertjrussellcompanies

Penthouse becomes NYC’s most expensive ever
A home on Manhattan’s Fifth Avenue has become the city’s most expensive listing. The former home of financier John Gutfreund, the CEO of Solomon Brothers who died in March, is listed at $120 million.

The 12,000 square foot co-op includes 20 rooms on the 7th and 8th floors of 834 Fifth Avenue and was bought by Gutfreund and his wife in the 1980s. The home has a master suite and three additional bedrooms, servants quarters and stunning views over Central Park.

The listing is with John Burger and Richard Ziegelasch of Brown Harris Stevens; and A. Laurance Kaiser IV and Craig Dix of Key-Ventures

Significant jump for home sales in Texas
The first three months of 2016 were great for realtors in Texas. Sales increased 7.8 per cent from a year earlier with 65,265 homes sold statewide.

Jim Gaines, Ph.D., economist with the Real Estate Center at Texas A&M University, added, “The Texas economy is experiencing a cooling-off period after a five-year boom, so the Texas housing market’s strong gains despite the current uneasiness in the state economy are remarkable.”

The median price of a Texas home increased 5.4 per cent year-over-year to $195,000 in the first quarter. Inventory was down to an all-time low of 2.8 months.

Thor actor downsizes in Malibu
Actors Chris Hemsworth and Elsa Pataky have sold their Malibu home for $7 million; and bought another for around half the price. The couple spend much of their time in Australia and have seen a hefty profit on the home they bought from Crocodile Dundee actor Paul Hogan three years ago for $4.8 million. That profit almost covers the cost of the couple’s new Malibu pad costing $3.45 million.

← Back

Thank you for your response. ✨

Posted in real estate | Tagged , , | Leave a comment

Are you getting ready for Retirement

Posted on May 3, 2016 by robertjrussellcompanies

When it comes to finances, it seems that Americans are woefully unprepared for retirement, according to a 2015 report issued by National Institute of Retirement Security (NIRS). The Continuing Retirement Savings Crisis, states the typical American household was further behind in retirement readiness in 2013 than it was in either 2010 or 2007. As a matter of fact, nearly 40 million working-age households, accounting f or 45 percent of American households, do not own any retirement accounts at all.

The report, based on data from the 2013 Survey of Consumer Finances (SCF) from the U.S. Federal Reserve, found that the average working household has virtually no retirement funds put aside. Taking into account all households—those with retirement accounts set up and those that don’t have an account set up—the median retirement account balance amounts to just $2,500 for all working age households, and $14,500 for households nearing retirement age.

Even if they do have retirement accounts set up, Americans aren’t adequately prepared to maintain their standard of living after they quit the workforce. They simply don’t have enough saved. More than six in ten (62%) of working households in which members are between the ages of 55 and 64 have minimal retirement savings, less than one times the amount of their current annual income.

Higher-income-earning households are more likely to have retirement accounts in place. In fact, says the report, the households that do own retirement accounts have more than 2.4 times the annual income of households that don’t have retirement accounts set up.

Estimate of how much individuals need to save for a secure retirement vary and depend on several factors, including the rate of return on assets, age when saving begins and age of retirement. According to a brief from the Center for Retirement Research at Boston College (CRR), people need about 80 percent of their pre-retirement income in retirement. “An average earner who starts saving at 35 and retires at 67 needs to save 18 percent each year, assuming a 4 percent return,” according to the report, which adds that starting early and working longer are more powerful levers for gaining a secure retirement than earning higher returns.

In general, Americans aren’t prioritizing their retirement savings. Many are spending more than they’re making. As they approach retirement years, they’re finding that they need to delay quitting the workforce, or find they need to find some sort of employment after retirement if they don’t want to alter their lifestyle.

A comprehensive and diversified financial plan can benefit individuals who find they are nearing retirement age but who aren’t adequately prepared for the financial requirements. Aging individuals might be wary of some investments after witnessing market volatility over the past several years and unsure how to invest to catch up on retirement savings without the risk inherent in stock market involvement.

As fixed indexed annuity (FIA) can be a great option. FIAs offer guaranteed income and upside earning potential while minimizing risk during market downturns. Including an FIA in retirement portfolios may not help clients catch up on years of savings, but it can help put their minds at ease that they will have a measure of financial security into their golden years.

← Back

Thank you for your response. ✨

Posted in Retirement | Tagged , , | Leave a comment

Real Estate and Prospecting

Posted on May 2, 2016 by robertjrussellcompanies

Why does the profession of selling real estate pay so much to some and so little to the rest? What’s the secret of top producers? What do they do that is so different?

The answer is to START prospecting. Let’s start by identifying the three most common “crimes” REALTORS commit.

The Three Deadly Sins of Sales are:

  1. Not prospecting consistently
  2. Not prequalifying properly
  3. Not following up with past clients effectively

Not Prospecting Consistently

All real estate agents know that it is important to prospect; that’s how we get business. The more people you talk to, the more sales you make. There are two types of prospecting — passive and active.

Passive Prospecting is “waiting for them to come to us.”  Examples are mail drops, newspaper ads, some social media and video, etc. Does it work?  Yes, but you have less control over your results and it can be expensive.

Active Prospecting is going to the marketplace and “asking for business.”  It includes phone calls, door knocking, open houses, social media, video, and face-to-face networking. Typically this is more effective, less expensive, and requires more effort.

← Back

Thank you for your response. ✨

ixact_sins-of-real-estate-sales

Posted in Business | Tagged , , | Leave a comment

What age is it a good idea to look into life insurance?

Posted on May 1, 2016 by robertjrussellcompanies

I get this question more than any question about Life Insurance so here is my answer:

Life insurance can be acquired at a variety of life stages.  You may hear about life insurance being used as a tool for infinite banking, college planning, mortgage protection, and more – this reflects the variety of potential benefits that can be provided by life insurance (outside of the obvious death benefit).  You will have more utilization options when you acquire life insurance at a younger age, plus you’ll benefit from the lower rates that come with a lower age.

Even if you do not think you need any life insurance right now, if you can afford to get some – I’d recommend taking a look at a policy designed to cover end-of-life expenses and/or a modest policy now that could guarantee you’ll have some coverage should you develop a condition/illness that would prevent you from acquiring life insurance in the future.

← Back

Thank you for your response. ✨

Posted in Insurance | Tagged , , | Leave a comment

Crazy TAX LAWS around the world

Posted on April 30, 2016 by robertjrussellcompanies

From taxes designed to prevent frivolous lawsuits to those that limit the sunshine your property receives, there have been no shortage of odd tax laws over the years.

Imagine that you have a client that works as a professional clown. In this imaginary scenario, your client would want to know that his clown uniform, from the oversized shoes to the red nose, is deductible from his tax return. It turns out that these items are not usable anywhere else and, therefore, are officially labeled tax deductible.

(In case you’re wondering if that law also applies to horrible bridesmaid dresses: No, dear bridesmaid, you may not be able to wear that green satin nightmare anywhere else, but you won’t receive a tax perk for your sacrifice.)

We combed the Internet to find the weirdest tax laws out there, from odd deductions to strangely specific taxations. Here are some of the findings.

In the United States:

1. The professional bodybuilder tax deduction

According to Investopedia, the Internal Revenue Service (IRS) will allow taxpayers in certain professions to deduct expenses related to their physical appearance. The article, which you can read here, says that the tax courts have ruled that bodybuilders can deduct the cost of body oils and other products that they use to enhance the appearance of their skin.

They can’t deduct every work-related expense, however. Another article in The Fiscal Times says that a professional bodybuilder can’t deduct the “wheatgrass shots and buffalo meat he eats to tone his form.”

2. The starving artist tax deduction

LearnVe$t, a financial planning company that sells software, notes that performing artists can get a deduction for expenses incurred under certain circumstances. These circumstances include: “… [having] at least two employers, and receiving at least $200 in income from each; [incurring] job-related expenses that are more than 10 percent of income from performing artist jobs; and [having] an adjusted gross income that does not exceed $16,000. If they meet those requirements, they can deduct art-related expenses.”

3. The “hosting an exchange student” tax credit

Investopedia says that if you are hosting a student from a foreign country, then you may be eligible for a monthly tax credit of up to $50. Several conditions must be met in order to qualify for this credit. First, the taxpayer must have an official agreement with the organization that is sponsoring the exchange program, and that organization’s reason for existence must be either solely or primarily to provide educational opportunities and experiences for its students, the article says. The exchange student must also be a full-time high school or secondary school student and cannot be a relative or family member of the host.

4. The “jock tax”

TurboTax, the tax preparation software company, recounts that back in 1991, the state of California imposed a new tax after the Chicago Bulls beat the L.A. Lakers in the championship finals. The tax consists of taxing sports celebrities, performers and other entertainers who generate money, and was subjected as California State Income Tax.

Since it was originally enacted in California, additional states have adopted the “jock tax.”

5. A tax on litigation

According to efile.com, a tax filing software company, in Tennessee, there is a tax on all litigation. The amount varies case-by-case but it can be as low as $1 for a parking violation case. The tax is designed to discourage frivolous lawsuits.

6. People over 100 years old are tax-exempt in this state

Are you or your loved one over 100 years old? Then New Mexico might be looking really good right about now: Centenarians are exempt from New Mexico state income tax, according to efile.com, a tax filing software company. The one caveat is that the person can’t be classified as a dependent.

Around the world:

7. The window tax

Taxing architecture has been a common practice throughout human history. One of the many examples includes the seventeenth-century United Kingdom, where it was common practice to impose a “window tax.” The idea behind this was to tax the wealthy, who generally lived in nicer houses with more windows.

To a certain extent, this plan backfired. An article on efile.com points out that the tax led to many houses having very few windows in order to avoid paying the tax, which eventually aroused health concerns and led to the tax’s repeal in 1851.

8. A tax on political opponents, aka the “decimation tax”

Can you imagine if President Barack Obama suddenly decided to impose a tax on everyone and anyone who isn’t part of the Democratic Party? I think the whole country would be up in arms, but that’s exactly what Oliver Cromwell — an English military and political leader who later became Lord Protector of England, Scotland and Ireland in the 1600s — did to his political opponents, the Royalists.

The tax took one-tenth of the Royalists’ property, and the money was used to fund Cromwell’s activities against the Royalists, according to a paper on the University of Wisconsin website.

9. Baby names have to approved by a tax agency

You read that right! In Sweden, all baby names need to be submitted and approved by the Swedish tax agency, before the child turns five years old. This, according to an article on CNBC, which also explains that the law was put in place to prevent people from using royal names or selecting an offensive or confusing name.

Some names like “Ikea” and “Allah” have been rejected. One set of parents tried to protest the law by submitting the following name: “Brfxxccxxmnpcccclllmmnprxvclmnckssqlbb11116.” The Swedish tax agency shut that one down, too.

However, CNBC says that the Swedes overwhelmingly have a positive view of their tax agency, according to a 2013 survey that found that, among government agencies, the tax agency had the second-best reputation in the country, with an 83 percent approval rating.

10. The “how wide is your house” tax

In Amsterdam, there used to be a tax on the width of the canal-facing front of your house. Initially, the tax was imposed to raise money for the city’s expansion project. So, how did people get around it? They built the now-iconic narrow houses that line Amsterdam’s canals — which are also quite deep, allowing residents to lower their taxes without sacrificing space.

The narrowest house in all of Amsterdam is no longer than 5 feet wide on the front and almost the same width on the back, according to website Amsterdam.info. I’ve seen TVs wider than that!

Posted in Taxes | Tagged , , , | Leave a comment

The annuity 99% of clients should avoid (and one that’s better)

Posted on April 29, 2016 by robertjrussellcompanies

Jane Bryant Quinn’s new book is “How To Make Your Money Last: The Indispensable Retirement Guide.”

It’s naïve to assume that Jane Bryant Quinn, who writes monthly columns for AARP Bulletin and AARP.org, would pass up the opportunity to caution folks against certain types of annuities; and she does so in both the book and an interview with LifeHealthPro sister site, ThinkAdvisor. (Generally, the veteran journalist has harsh words about “greedy financial salespeople [who] go after the retirement accounts of people in midlife and later,” as she writes.)

Variable annuities with living-benefit guarantees get the red-flag treatment; in the book, Quinn brands them “sexy, confusing, high-commission annuities that financial advisors love to sell.”

However, the personal finance expert, who penned a column in Newsweek for 30 years, reveals that, in researching the book, she “developed a new respect for immediate-pay annuities” and praises those from TIAA-Cref and Vanguard, in particular.

For her annuity chapter, she consulted with several industry experts, including Moshe Milevsky, finance professor at York University in Toronto; Wade Pfau, professor of retirement income at The American College of Financial Services; and Michael Kitces, partner in Pinnacle Advisory Group and author of the popular financial blog Nerd’s Eye View.

Quinn, author of bestseller “Making the Most of Your Money NOW” (Simon & Schuster, 2010), has written for The Washington Post and Bloomberg.com. She is an Emmy winner who has hosted PBS telecasts and appeared extensively on CBS news programs. As a young reporter during the consumer movement, she wrote for The Insider’s Newsletter, published by Look Magazine.

ThinkAdvisor chatted recently with the New York City-based Quinn, 76, whose comprehensive new book covers changes in Social Security and health insurance. Toward the end, there’s a chapter called “Investing for Income: Not What You Think,” which talks about asset allocation, and stock and bond funds — and which, interestingly, is twice as long as the one with all the annuity pros and cons. Here are highlights from our conversation:

ThinkAdvisor: Annuities have taken a bad rap over the years. Are they starting to be seen in a better light?

Jane Bryant Quinn: I hope so. People are looking at their friends who have pensions and saying, “Gee, I wish I had a pension.” My answer is: “Well, you can buy yourself one.”

You write that financial advisors and stockbrokers are salespeople who want to sell their most expensive products so they can earn the biggest commissions. That’s a widespread image.

I understand that [some] people make their living selling commission products, but my job on the consumer side is to point these things out. This has been a running problem with annuity sales. I give the talks – I hear people stand up and say, “My 90-year-old mother was sold this annuity…”

You say that “fundamentally, annuities are not an investment even if they’re tricked out to look like one. They’re management tools.”

Yes. Their purpose is to guarantee that your money will last for life.

What advice do you have for advisors who sell variable annuities?

They should make sure they have a deep understanding of the product and know where consumers are confused. They should make very clear how much it costs – though you can’t find that out, in full, with a fixed index annuity – what the guarantee means and how good the market has to be over periods of time when you can get something [above] the guarantee. Explaining it fully ought to be advisors’ duty, though they would have fewer customers if they did that. But it’s also the customer’s duty to find out about the annuities from an independent source.

What type of client could be a good candidate for a variable annuity with living benefits?

Someone who understands the product and knows exactly what they’re getting – which, I believe, eliminates 99 percent of [consumers]. It would be for people who think the costs are low enough and their timeframe is long enough to have a chance of getting more than the minimum guarantee. But you’re not going to get anything much out of variable annuities with a living benefit as an investment because of their 3.5 percent — and higher — fees.

You point out that living benefits are paid with the consumer’s own money first – in other words, you’re paying yourself.

Yes. If you’re using the guarantee, you’re getting your own money back in 5 percent increments. You have to live well past life expectancy before you start using the insurance company’s money. Most annuity buyers, in general, think they’re earning a guaranteed 5 percent on their money. Usually they’re shocked to discover that’s not the case.

You write about confusion of nomenclature, noting that with fixed index annuities, such beclouding “makes it dangerous for the average person to stray into what amounts to the financial industry’s worst neighborhood” and that FIA advertising “has been rife with misleading claims…” You say: “Stay out of expensive investments that tout ‘no loss, all gain.’ It’s a snake pit down there.”

All true.

Do you think the industry purposely obfuscates?

Well, look at equity index annuities. They were sold as being linked to the stock market and that you could make some market gain. But as soon as the regulators started [scrutinizing] that, the name was changed to fixed index annuities. So I’d say that was purposeful. There couldn’t be a clearer case of being purposeful.

Why, primarily, do you like single-premium immediate annuities?

Immediate annuities are very good in certain cases. If you have plenty of money to live on for life, you don’t need an annuity. Or if you receive Social Security and have a small amount of savings, I don’t think you should buy an annuity because you might need that savings – you’ve got to have flexibility. But for people who think their money will last for life but then in, say, two years, they’re not so sure and start worrying, that’s a very good case for taking money out of the bond part of their investments and using it to buy an immediate-pay annuity. I’m hoping more people will take a look at those.

You write that annuities “can be cash cows for financial advisors who choose to put their own interests ahead of yours” — for example, FAs who encourage annuity switching. They earn a new commission — and the customer starts a new penalty period.

Switching is a very big problem in the industry. Your advisor tells you they’ve got a much better annuity that’s just come out, so you should switch to it. Due to complaints from regulators, some insurance companies have been paying more attention to this. So I suspect some of it is being held down. Nevertheless, people need to be aware.

You argue that the majority of advisors know “almost nothing” about the rules for inherited IRAs. Should they be more knowledgeable?

A fee-only planner who takes care of estate planning and taxes ought to know that but might not. Certainly, I wouldn’t expect a stockbroker, or [a rep] at a wirehouse or an insurance company to know these things. So I hope advisors will read my book, too!

You debunk the notion of consumers losing control of their money when they buy an annuity. A popular belief is that they do.

If the purpose is to use your savings to make sure your money lasts for life, an annuity is a very good choice. How much you put into an annuity is your option, depending on what you need in monthly income.

That’s a difficult decision, though.

Some people feel more secure knowing they’re going to have a higher income for life. And then you can control, and leave to your kids, your other assets, like a house or investments. But your primary duty to yourself is to make sure your money will last for life. What’s the point of having control and running out of money?

Why do you suggest that people delay annuity purchase until they’re between 70 and 80 years old?

Mainly to preserve your options. At 60, you don’t know how things are going to turn out. By 75, you have a better feel for whether your money is going to last or not. You may discover you’re doing just fine and don’t need an annuity or that there’s a sudden, serious [costly] health problem. You should try to go with your savings, Social Security, a pension – and then at a later age, if you feel you’re going to run short, move some savings into an annuity. That would be a good time to improve your income.

Many clients think that their advisors are watching out for their best interest and abiding by the fiduciary standard, when in fact they’re adhering to the suitability standard.

Yes. Otherwise why would they stay with them? There’s a lot of research showing that even when consumers aren’t sure their advisors are looking out for them, they stay with them out of politeness or fear of irritating them or not knowing where to move if they want to.

Surprising!

Some of the research shows that if an advisor declares his or her conflict of interest and then gives [obviously] bad advice, people are actually more apt to take that advice because the advisor appears to be honest. It’s crazy.

Indeed, the advisor-client relationship is more psychologically complex than it appears.

People become very dependent on their advisors, and they don’t want to think they’re being misadvised. So even those who suspect they may not be getting the best advice, stay. I’m not saying that every single advisor who takes a commission is a bad advisor. There are some very good advisors. I’m saying that people don’t always understand the conflict of interest they’re facing.

Why do you tell readers to be wary of “senior specialist” designations?

Because many of them are courses in sales. They’re not courses in understanding the product or knowing the right person for the product or knowing whether the person shouldn’t be sold. You get awarded various letters after your name that say you’re a specialist in investment products for older people, but that doesn’t mean anything. However, some designations are definitely worthwhile and can be relied on, such as Certified Retirement Counselor (CRC) or Retirement Income Certified Professional (RICP).

Your views on robo-advisors?

They’re possibly useful. They’re low-cost and use index ETFs, which is my philosophy. So you’re not going to get anything crazy. And Betterment has started doing a project to help people make their money last over their retirement and get a monthly check for life – though I don’t know how it’s going to work out.

What’s your chief advice to consumers about annuities?

It’s very difficult to get information about annuities that does not come from salespeople of some sort – wirehouses, insurance agents, financial advisors. What these companies [and people] do is sell. So the question is: When a consumer makes the purchase, how well informed is it and where does he or she get the information? I think it’s quite hard to get it from the financial industry.

http://www.lifehealthpro.com/2016/02/26/the-annuity-99-of-clients-should-avoid-and-one-tha?eNL=56d30aeb150ba0ad0ea832f3&utm_source=LHPro_Weekender&utm_medium=EMC-Email_editorial&utm_campaign=02282016&page_all=1

Posted in Business | Tagged , , , | Leave a comment

Consumers lose confidence in home prices

Posted on April 28, 2016 by robertjrussellcompanies

Fewer Americans believe that home prices will increase over the next twelve months according to a survey by Fannie May. Its Home Purchase Sentiment Index increased 1.2 per cent to 82.7 in February but the share of respondents who expect to see higher home prices dropped 4 per cent, following decline in January.

“Our February results show the most modest consumer home price expectations since late 2012,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “A slower pace of home price appreciation may provide some relief for potential homebuyers, especially first-time buyers who couldn’t reap the benefits of selling a home at high prices to buy another one.”

Sixty-three per cent say now is a good time to buy a home, rebounding from a survey-low in January. The net share of those who say mortgage rates will go down rose 2 percentage points to negative 50 per cent this month, as fewer consumers say mortgage rates will go up.

There still aren’t enough homes to meet demand
Analysts say that home demand is still outpacing supply and it fueling concern for the wider US economy. New River Investment’s Connor Sen wrote Monday that there are not enough construction workers, one of the reasons builders give for low supply of new homes. Sen says that: “the housing cycle is the business cycle, and on this basis “potential output” should be much, much higher than it is today. We’ve underbuilt housing, particularly single-family, for years, and Millennial housing needs will be immense for the next two decades.”

Accreditation for Realtor University
The online training resource for real estate agents created by the National Association of Realtors has been given accreditation by the Distance Education Accrediting Commission. Realtor® University was established to provide a Master’s degree program for real estate professionals and bring even more value to their home buyer, seller and investor client.

NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida. “We are excited that this is only the beginning for the university, and there are plans underway to expand the programs available and further advance professionalism in our industry.”

The university offers 8-week courses and taught by PhD-level academics and practitioners. It has the largest real estate library in the world.

Posted in real estate | Tagged , , , | Leave a comment