Category Archives: Independent Insurance Agent

The cost of keeping your nest egg in cash

nest egg
By Walter Updegrave

My wife and I have about $2 million in savings spread among a series of bank savings accounts, CDs and money-market accounts that we plan to draw on for retirement income in the near future. I keep it all in cash because I like the feeling of security I get from looking at my bank statement and seeing it’s all there. Am I being too cautious? –Richard N.

I get why you would prefer the security of bank accounts to putting your savings in more volatile investments like stocks and bonds. Even before the Greek debt crisis roiled the financial markets, many investors were concerned that stock prices had risen to the point where the market could be vulnerable to a significant setback. So if you know you’ll soon be tapping your nest egg for steady retirement income, it’s understandable you wouldn’t want to put it in harm’s way.

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Watch an Elite Financial Adviser Hack His Own Retirement

Michael Kitces could drive a hot new car, work out in a high-end gym, and relax in a sprawling house. He can afford it. He just doesn’t want it.

What does the 37-year-old financial planner, a partner and director of research atPinnacle Advisory Group, want? To save enough so that he doesn’t need to earn any income from his work.

And when he reaches that point, he’ll probably just keep working—and driving his Kia Spectra, which just turned 10.

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Effective Investment Diversification Is Not As Simple As Most Think

Bruce McCain

We have long been told that diversification eliminates unnecessary risk from our portfolios, but how many investors know how diversification works or how to do it effectively? Is it simply enough to distribute assets across a range of investments, or is the process more complicated than that? Diversification, when it is done well, does have some complexities, so a better understanding of the tradeoffs and pitfalls can be helpful in diversifying more effectively.

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Article By: Bruce McCain

SEC To Examine Retirement Advice

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The SEC is starting a multi-year examination initiative on how broker-dealers and advisors ensure their clients are prepared for retirement.

the Securities and Exchange Commission examinations will evaluate issues such as whether registrants, advisers and broker-dealers are selecting the appropriate account for their client and whether they are performing due diligence on investment options.

Other questions examiners will determine is what type of initial investment recommendations are being made for clients nearing retirement age and whether they are providing ongoing account management, the SEC’s Office of Compliance Inspections and Examinations (OCIE) said in a Risk Alert.

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Understanding The Longevity Calculation!

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We all know that Americans are living longer than in generations past and that this impacts retirement planning.  An ongoing debate rages about how much money is needed for retirement, at what age we should start taking social security benefits, and when or if we should retire at all.

How long we will live is, of course, a great unknown.  Many clients don’t like thinking about it, but it has a tremendous impact on how we should plan and how much needs to be saved.  Yet even though we likely haven’t considered exactly how long we will live, companies that manage retirement dollars have and so has the government which oversees our social security payouts.  And guess what, they may have it all wrong.

First, some statistics on longevity in America which may surprise you.

  • Since 1900, the average life expectancy has increased by 31 years, so the average American can now expect to live past age 78.
  • The number of Americans 100 or older has risen by an astounding 2,200% since 1950.  More than 53,000 centenarians call the United States home.
  • 47% of baby boomers are at risk of outliving their retirement savings.

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One in four insurance agents will be gone by 2018!

According to a report from management consulting firm McKinsey & Co., the average age of a US insurance agent in 59. As such, one-fourth of the industry’s work force is expected to retire by 2018. And assuming a related MarshBerry study is correct, balancing out the numbers means hiring three young producers for every producer currently employed.

“This data makes it clear that agencies cannot afford to continue to do business as usual when it comes to hiring new producers,” researchers wrote. “The most relevant agencies of the next decade will not only hire aggressively in the short-term, they will work to improve their retention in the long-term to ensure success.”

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