“My advice to you is this: Don’t waste this crisis.”
Joseph Jordan, a senior vice president at a unit of MetLife Inc., New York, said that here during a kick-off general session of GAMA International’s LAMP ’09 annual meeting.
“Never before in our lifetimes have so many with so much money been so mad with their current investment advisor,” Jordan said. “This is the time for us and for the products and services we sell.”
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Jordan repeatedly invoked the recession during his one-hour talk as an opportunity for general agents, managers and producers to build their businesses, in part by speaking to the unique ability of insurance products to provide a reliable source of income in an uncertain economy.
Jordan said the insurance and financial service community had during the late information age created “left brain” tools to deal with “right brain” emotional issues. To spur prospects to action in the current conceptual age, he said, it’s not enough to appeal to the analytical- and statistical-based thought processes in which the left hemisphere of the brain specializes. The advisor also has to address the emotional and contextual orientation of the right hemisphere.
To aid clients in realizing retirement planning objectives, insurance professionals must help them manage their investment behaviors, Jordan said. To that end, advisors should promote three principals — faith in the future, patience, and discipline — along with best practices (“behaviors”) respecting asset allocation, diversification and proper portfolio rebalancing.
To ensure that accumulated savings will last through retirement, Jordan said, advisors must shift their clients’ focus from average investments returns (which are important during the accumulation phase of retirement planning) to the order of returns (a key factor during the income planning phase). The reason: Clients are more likely to run out of income if they experience negative returns on a portfolio during the early years of retirement and positive returns in later years than if the order is reversed–though both hypothetical portfolios may yield the same average return.