Answers to 9 Most Frequent Client Questions

Q: Can you prevent me from losing 40% again? 
A: Yes.  In fact, products with principal protection features can guarantee that it won’t happen again.

Q: Does ‘Buy and Hold’ really work today?
A: As advertisements for securities investments routinely state, past performance doesn’t guarantee future results. When principal protection is important, products with principal guarantees should be used.

Q: How safe is my money? 
A: Different investment and savings vehicles have different levels of safety, from extremely risky to guaranteed.  It’s important that you consider you personal situation, individual needs and risk tolerance as well as the potential risks and rewards of all products being considered before you make any purchase. 

Q: How safe are bonds compared to stocks? 
A: Experts see investment grade bonds as safer than stocks because, if held to maturity, the bond will return its principal value plus interest so long as the issuer of the bond doesn’t default.  However, because the value of a bond fluctuates with interest rates until maturity, an investor who sells a bond prior to maturity does bear significant risk. 

Q: I thought my money was “diversified.” Was it really? 
A: The most recent market meltdown shows what should have been obvious – diversification isn’t a cure-all when essentially every investment vehicle is losing value.  Simply stated, diversification doesn’t insulate against all losses.  You need insurance guarantees for that.   

Q: How can I avoid paying fees, even in years when I lose money? 
A: Investments like mutual funds and variable annuities charge annual fees every year, even when they lose money.  When investments like individual stocks and bonds are bought or sold, commissions are charged.  However, when you purchase a savings vehicles like a fixed and fixed index annuity you are not typically charged annual maintenance fees, transaction fees or agernt commissons  . 

Q: How do I address inflation risk in times like these? 
A: Many annuity products provide inflation protection of various types and kinds.  Be sure to consider the latest innovations.  

Q: Is this really just a “paper loss”? 
A: A so-called “paper loss” is a real loss; it just isn’t realized (and felt) until the product is sold.  An investor able to hold onto an investment that has lost money indefinitely may see its value go back up, but many don’t have that luxury.  It’s also important to remember that if you lose (for example) 40% on an investment, a 67% return is then needed to get you back to where you started. 

Q: How can I prepare for a “Black Swan” event? 
A: According to the author of the book of that title, a black swan is a highly improbable and unpredictable event that carries a massive impact, like 9/11.  Because such events are, by definition, unpredictable, they are difficult to prepare for.  But by carefully building guarantees, life insurance, long-term care and income planning into your financial plan, the impact of a potential “black swan” can be lessened or even eliminated.

Are you running your business or is it running you? Do you feel like there aren’t enough hours in the day to get it all done? If you have more to-dos than time, you could benefit from using the services of a marketing organization to keep your head above water. Field Marketing Organizations (FMOs) provide business and marketing consulting to insurance professionals who want to increase their production goals and create a professional look and feel for their marketing campaign without spending a lot of money. In fact, many FMOs charge only for the cost of materials and are compensated by the insurance carriers the agents are licensed with. Need an FMO? If you’re interested in learning more about working with Asset Marketing Systems and how we can support you as your FMO, visit our web site or just reply to this e-mail, and we’ll get in touch.