Insurance Machine

After an completely confusing few weeks on Wall Street – including a string of bank failures and near failures, several doubtful rescue attempts and the biggest one-day drop in the Dow Jones Industrial Average ever – financial advisors and investors are worn out. The $700 billion bailout package, passed by the House of Representatives and signed into law Friday, did not succeed in training around market, but a coordinated global interest rate slash announced Wednesday managed to hold up markets, at least temporarily, with the Dow concluding the day up in the triple digits. In the meantime, emotions have been running high, and insurance representatives have been struggling to keep themselves, as well as their clients, sane. Several experts were queried as to how branch insurance managers might act to alleviate some of the growing anxiety and get back to business as usual.

The question was posed as to what managers should be telling their clients at a time such as this? Here are their responses. The first suggestion was to avoid rash decisions. The chief executive at California based Tiburon Strategic Advisors, Chip Roame said that he thought that Suzy Orman had it right when she said that those who have more than 10 years until retirement, should reconsider their asset allocation but, at the same time she said that by and large, they should stay the course. What Roame says agrees with that voiced by Dr. Richard E. Otto, an associate professor of Economics at Pace University, when he said that even the greatest financial experts don't really understand securities values and for that reason it makes no sense to make any drastic moves.

On the other hand, advisors are agreeing that if a client is less than a decade from retirement, he or she should probably not have money in risky investments. They are saying that such retirement plans need to be reconsidered. It should also be noted according to advisors, that Babyboomer clients are ultimately going to spend a long time in retirement and will need those equity market returns. Now, they are saying, is a great time to buy if you will be in for the long haul. Clients, they say, who are close to retirement should consider possibly the need for higher returns from the equity market due to the increasing life spans, and the fact that the market has greater volatility than it used to be. Because of this, he says that they need to carefully watch their asset allocations in respect of their lifetime income needs.