037 Beer and Cheez-its

(Complete Show Notes Below)


In the 37th episode of the Financial Procast:

Your 401k Statement Might Soon Tell You What Sort of Income Your Balance will Produce

That's right…a recent statement from the Department of Labor announced an advance notice of a proposed rule change that signaled they are considering a rule that might require your accumulated benefits be expressed as an estimated “lifetime income stream” in addition to the normal account balance. The announcement was made early last week and now has a comment period open for the next 60 days.

We think this is a step in the right direction, however, we're not really sure how they are going to execute the rule if passed.  The danger behind income projections is that they have to assume a number of variables that are subject to change as people move closer to retirement. Not the least of which is a rate-of-return on the investment accounts.  If the assumption for income uses too high a rate, the retiree could be faced with less income than they anticipated…generally not a positive thing.

So, it'll be interested to see how things shake out and we'll definitely keep you posted on any developments on this story.


Advisors Can't Seem to Get Past 2008

A recent study has shown that almost half the advisors surveyed are still struggling with the fallout from the market crash of 2008.  In fact 47% of them said that the “financial crisis has caused me to question what I thought I believed about how to help people create the life they want.”

It would appear that many advisors have changed from the old “buy and hold” mantra to a more tactical based approach to money management. They want to limit the downside exposure their clients have and are still very sensitive to the trauma of the last few years.


Some Data That Might Upset Financial Advisor Recruiters

There seems to be a large sucking sound that has set in amongst the profession of financial advisers.  According to recent data gathered by Cerulli Associates, Inc.  the number of financial advisers is expected to contract by nearly 19,000.  It seems the average age for a financial adviser is currently 52 years old and that those folks are planning on a retirement by 68.

This contraction is occuring in the independent broker-dealers and the wirehouses alike. Which makes sense considering that most advisers who retire from an independent b/d, start out at a wirehouse.

But do we think this is really a problem that consumers are worried about?


However, it's definitely something the brokerage firms are worried about.  In fact, the research also points out that when an adviser retires from his/her firm, less than 20% of that adviser's assets stay with the firm.  The majority scatter to the wind.  That has the industry running scared.


More News Stories about Using Life Insurance to Generate a Retirement Income?

Yep, you read that right.

It looks like more and more folks are coming around to the realization we had a number of years ago…

Life insurance is a viable tool to generate tax-favored income during your retired years…gasp!!  And it seems that people are actually seeking this out on their own.

The devil's in the details of course and the policy has to actually be designed for this purpose.  There's the rub.

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