The results are in and the readers have spoken. Boomer Market Advisor undertook its 2008 Readers' Choice Awards survey to call attention to the products advisors are using to address boomer retirement needs. As in years past, longevity and income issues, as well as rising health care costs, are just a few of the risks with which boomer advisors are grappling. But add oil, war, an election year and volatile markets to the mix and 2008 is something different altogether; which is why it's that much more impressive our winners achieved the success they did. Each was singled out for its ability to help advisors in turn help their boomer clients. As is almost always the case, some of the results were predictable, some were surprising, but all were educational.
Question No. 1
Which company has the best marketing and educational materials to assist you in calming nervous clients in the current market environment?
American Funds continues to roll. This is the first of three appearances in this year's survey (as happened last year) from a company that shows little sign of slowing. Readers called attention to the clear, easy-to-understand material that clients have little trouble grasping.
"They provide us with a world of information on their Web site that we can pull down. The literature and seminars for existing clients are first rate. The graphics they use don't have a bunch of arrows going here and there; they're simple illustrations, which makes it easy to explain. What's particularly effective is the use of historical data that shows the performance of the funds in good times and bad. Their oldest fund is from the 1930s, and they'll take you right through World War II to the recent technology implosion and beyond. They'll explain what was happening and why, but throughout it all the arrow is steadily increasing."
-- Reader Lionel Boger,
vice president, Employee Benefits Administration Inc., Winchester, Va.
We're not at all surprised to see Prudential make this year's cut, as the firm has been a favorite in the annuity category three years running. This is the first of three appearances this year, and two are behind American Funds (they're in good company). The company's Retirement Red Zone marketing and education campaign, in particular, gets kudos for explaining the relationship between emotions and investment decision-making. If you're looking for help with your "stay the course" message, Prudential is here to help.
Question No. 2
From a service and support standpoint, which financial services company makes you feel as if they are a true partner in your business as opposed to trying to sell you product?
One of the reasons readers named American Funds for the category win was that they appreciate the comfortable, low pressure tactics of American Fund's distribution force. They stop in just enough to make the advisor feel appreciated, but not so much that it interrupts their daily business functions. One reader in an out-of-the-way locale appreciates the effort the wholesaler puts forth in getting to his office. But we'll go out on a limb and say we suspect the American Funds' story - and returns - make the wholesaler's job just a bit easier.
"I understand American Funds has a job to do, which is sell their products. But their wholesalers do it in a way that helps me help my client. They're not pushy; it's never forced. I like the team approach to their management style. They have, what, 29 funds? Each one is able to sustain itself during the downtimes. And their service is really good. If I have a problem, they solve it."
-- Reader Frederick Chow,
registered representative, Transamerica Financial Advisors, Honolulu, Hawaii
As we said; good company. The entire Retirement Red Zone campaign is meant to explain retirement planning holistically: issues first, product second. Readers were especially impressed with Retirement Red Zone micro-site (www.retirementredzone.com) that explains what the red zone is and offers sober explanations and statistics that help get boomer clients on track.
Question No. 3
Which company currently offers the most cost-effective and comprehensive long term care insurance?
We'll continue to give props to Manulife for its acquisition of John Hancock in 2004. Call it paying dividends in spade. Along with Genworth, it was one of the first companies to enter the LTCI business, starting out in 1987. The company that has paid more than $1 billion in claims touts 905,000 long term care policyholders, a number sure to exponentially rise as baby boomers age.
"Originally, I stuck with Aegon companies for LTCI, like Transamerica. When they pulled up stakes, I looked around for a new provider, one that had stability and a long-term track record. John Hancock has been around for 140 years, so that definitely meant it has a track record. They're in the individual, group and federal LTCI business. What that tells me is that when a company puts itself out there and takes that kind of exposure, they're committed to the LTCI marketplace."
-- Reader Mark Randall,
InterSecurities Inc., Allison, Iowa.
The company's simple claims-paying process once again made it a hit, as did its track record. As we mentioned last year, with a number of sudden exists from the LTCI business recently, Genworth has its longevity to thank. But it was Genworth's pricing of the product (a constant objection voiced by advisors that argue in favor of self-funding) that was heard in the results more often this year. The company's wealth of information on what exactly LTCI is and the odds of using a long-term care policy will help advisors convince their baby boomer clients of its rapidly increasing need.
Question No. 4
Which mutual fund family is effectively incorporating the needs of boomer retirees and pre-retirees into their product design?
Yes, here they are again. As we mentioned last year, who wouldn't want to be in the enviable position of boring people with success? And boring is a key word we repeatedly heard. Forget fancy bells and whistles or a focus on the hot new thing; not a whole lot of hot money running in and out. American Funds' methodology is staid and predictable, and so are their returns. For baby boomers who want steady, solid growth, American Funds is it.
"The main thing is that for a lot of baby boomers, the Great Depression is still on their minds. Even though they didn't live through it, their parents did and it's the asset protection that is ingrained in them. But they also don't want to lose out on the upside potential. So for this, American Funds is great. Their products are built for baby boomers and they really make an emotional connection within their marketing material, whether it's an American flag or an oak tree; things baby boomers identify with. I've been doing this for 18 years, and early on I got sucked into products that were the hot, new thing that ended up with unpleasant surprises. There are no surprises with American Funds. They're plain vanilla, and they work.
-- Reader Mark Lamkin,
president, Lamkin Wealth
Management, Louisville, Ky.
Franklin Resources rocked the investment world in 1992 when it acquired Templeton Galbraith & Hansberger, and the landscape hasn't looked the same since. We marked the passing of Sir John earlier this year. According to The Wall Street Journal at the time of his death, a $10,000 investment in the storied Templeton Growth Fund in 1954 would have grown to $2 million by the time Sir John sold his company to Franklin Resources for $913 million. That translates to an annualized 14.5 percent return. The company's income and global funds were singled out as especially appealing in meeting the needs of baby boomer retirees. Considering they've placed well in a number of categories in our annual survey over the years, we expect continued success from the San Mateo-based company.
"(Franklin Templeton's) expense ratios are low and they have a tremendous track record, which is exactly what baby boomers are looking for. They're easy to understand and nothing pops up that surprise anyone. Their income funds in particular, are effective at addressing the longevity and income issues boomers will face. They have a great back office from a service and support standpoint, so yeah; I'm very pleased with them.
-- Reader Stephan Rogers, senior investment advisor, Delta Equity Services, Cold Springs, Fla.
Question No. 5
Which exchange-traded funds are generating the most interest?
Granted, with $11 trillion in mutual fund assets compared with only $600 billion in ETF assets, ETFs have a long way to go in catching the investment mainstay (still the fly and the elephant). However since they answer so many of the complaints voiced about mutual funds, ETFs have taken off in recent years (maybe too much; visit "The backlash begins" in our September issue, which can also be found at www.boomermarketadvisor.com). iShares remain our readers' perennial favorite. With products that track just about everything -- and we do mean anything -- $2 trillion in assets and clients in 54 countries, it's easy to see why.
"The primary research we look at tells us that it's an asset class as opposed to a specific stock that will do the best for the client. ETFs, and specifically iShares, do this in a low-cost manner. It gives you a chance to focus on asset class and then overweight in key areas. And again, it's in a low cost environment, which is very important, especially to baby boomers."
-- Reader John Ferguson,
president, Ferguson Asset
Management, Potomac, Md.
Powershares is getting quite a bit of press lately with its inception of the first actively traded exchange traded fund meant to compete more directly with actively traded mutual funds. But even prior to the product announcement, the company was a hit with our readers. The potential of actively traded ETFs is still under debate, but we refer you to the convincing case made by Bruce Bond, Powershares president and CEO, in his piece entitled, "Why the world should embrace active ETFs." It can be found in the June issue of Boomer Market Advisor or online at www.boomermarketadvisor.com.
Question No. 6
Which living benefit best addresses the income and longevity issues your clients face?
Prudential Annuities continues to dominate our living benefit category. The Highest Daily Lifetime Seven rider was singled out by readers as the latest example of the company's continuing innovation in the space. In a field crowded with living benefits, second generation living benefits, hybrids, hybrids of hybrids and Heaven knows what else, Prudential's products clearly stand out. It might have been the LTCI/nursing home reference in the latest product design that did the trick. Like American Funds, if history is any indication, we'll just reserve some space for them again next year.
"They're just a very strong company; they've been around and The Rock imagery really resonates with everything that's going on. They're very well-known and very well-respected. And they're a very diversified company that isn't overextended in one particular area. Not too many other companies can say that at the moment."
-- Reader Stewart Weitz, CLU, ChFC, LUTCF, Creative Benefit Plans, Dresher, Penn.
It isn't just for old folks, and as Allianz likes to point out, 40 percent of people currently receiving long term care are adults 18 to 64 years old. More importantly, if clients want it cheap, they should get it young and baby boomers are at a prime age to begin the discussion (more so for later stage boomers). Allianz has had some problems of late (to put it mildly), but the addition of a chief suitability officer is just one part of a comprehensive effort to keep the company on track. Regardless, our readers like the LTCI product and named it as a favorite in this year's poll.
Question No. 7
Which separately managed account platform best suits your clients' needs?
AssetMark Investment Services
AssetMark takes the top spot in our reader survey for the second year in a row. As we've previously mentioned, Genworth's acquisition of the separate account provider raised the company's profile, and our readers once again took notice. The integration with Genworth Financial Wealth Management is now complete, which will provide even more resources to an already comprehensive wealth management offering. Readers specifically mentioned the quality of the educational outreach the company provides as a reason for the win.
Assetmark Investment services
"AssetMark has one platform with many choices. It's an umbrella with a host of managers with different investment styles and offerings. So it's very easy for me to really construct a customized program for my clients that address their individual needs. And I like their people. They're out there doing
everything they can to help me help my clients."
-- Reader Ray Kidalowski,
president, Kidalowski CPA,
Pershing's managed account platforms ends Curian Capital's two-year run of success in our annual poll. Despite losing SMA pioneer and Lockwood founder Len Reinhart to retirement last year, the company is a hit with readers that do business in the managed account space. It's part of a concentrated effort by Jersey City, N.J.-based Pershing to aggressively develop managed account platforms to suit almost any client portfolio that's appropriate for the product. The company claims advisors and clients can access 75 institutional money managers representing more than 150 different investment styles. It offers extensive research, including style analysis, customized asset allocation strategies, capital market research and comprehensive information on money managers.
Question No. 8
What technology platform is the most effective at helping you increase revenue and decrease costs?
Morningstar Workstation takes the top spot for the second year in a row. Its Web-based software platform features research and real-time delivery, flexible client reports, portfolio management, goal-based planning, asset allocation tools and much, much more. It's a hit with our readers and more than one claimed it's rapidly becoming a standard for financial planning software in the space. Last year, we joked about just how much functionality the product offers. But it's no joke to our readers who use the product, which they site as an increasing factor in the success of their business.
"Morningstar Workstation gives you so much information about performance over different time periods. It's a complete bird's eye view of a particular fund or holding that's in one centralized location, so I don't have to go running all over the place for what I need. And it's granular enough to use with certain clients, depending on their level of expertise."
-- Reader Bob Palmer, investment advisor representative, Woodbury Financial, Cookeville, Tenn.
Not all that surprised that Albridge made this year's cut. We talk with more advisors, broker/dealers, software developers, clearing firms, RIAs, etc. that speak highly of the reporting product and are incorporating it into technology platforms. Readers mentioned the ease-of-use in pulling client accounts together, and the clear, concise manner in which the information is presented. Clients also like it, and since we're hearing more about how confusing and inconsistent reports are a major reason accounts are lost to competitors, that's all that really matters.