Bumping Up Against the 200-DMA

The S&P 500’s 200-day moving average is important to trend-following tactical investors looking for signals about whether they should be in or out of the market. How might this work? Here’s one simple and popular iteration.

If the S&P 500 is above its 200-DMA, own it. If it closes below, shift to bonds (say, the Barclay’s Aggregate). This approach has provided slightly better returns than the S&P with lower drawdowns since 1997, when daily data became available. However, that result assumes perfect execution, free trading, and no taxes, none of which are available. Moreover, it assumes we’ll be able to stick to the model through thick and thin, through 160 signals during that time. Were you using that approach currently, for example, you’d still be out of the market despite its big gains since Christmas.

Anyway, last week provided a good example of how the 200-DMA can impact the markets. The S&P 500 has been recovering nicely since Christmas, but on Tuesday it ran up against the 200-DMA, leading to losing days on Wednesday and Thursday and only a slight uptick on Friday. Prior to those two losing days, the stock market had had only six losing days this year. The down-up market of the last few months has drawn out a nice little “V” sign on everyone’s stock chart. We’ll see if this difficulty is a blip or has the makings of a “W.”

Now the news.

Domestic stocks moved very modestly higher last week, helping most of the major indexes record their seventh consecutive weekly gain. Within the S&P 500, utilities shares fared best, followed by the larger industrials and information technology sectors. Energy stocks fared worst as oil prices drifted lower.

The Sino-U.S. trade dispute moved back into the headlines last week and seemed to play a large role in driving sentiment. Stocks reversed an early rally Thursday and headed lower following remarks from National Economic Council Director Larry Kudlow, who told Fox News that negotiators had “miles to go before we sleep,” echoing not only Robert Frost but also Commerce Secretary Wilbur Ross, whose remarks about being “miles and miles” from an agreement sent markets lower in late January.

Later Thursday, CNBC reported that President Trump and Chinese President Xi were unlikely to meet before March 1, the 90-day tariff truce deadline the U.S. has established prior to raising the tariff rate on Chinese goods to 25 percent. CNBC also reported that the U.S. was likely to keep the current 10 percent tariff rate steady in the absence of a meeting, but confidence in a delay seemed to diminish Friday, sending stocks lower again. Weak economic data from overseas, particularly from Europe, also seemed to weigh on sentiment.

The pan-European STOXX Europe 600 was slightly lower on the week amid fresh trade worries and weak data that underscored the extent of the growth slowdown in the eurozone and its largest economy, Germany. In Asia, Japanese were down a bit more for similar reasons while Chinese markets were closed last week, as the country brought in the Year of the Pig, symbolic of wealth.

After the Fed’s dramatic reversal nearly two weeks ago, analysts have been left to ponder why Chairman Powell and his colleagues changed course. The best bet is because of China, where the economic data are troubling. Three years ago, then Fed Chair Janet Yellen executed a similar course correction in response to weakening Chinese data. Instead of four rate hikes in 2016, as previously signaled, the Fed proffered only one. China’s manufacturing numbers today are back to where they were when Yellen’s Fed made its turn. A new turn is not predetermined, obviously, but Powell’s remarks give him that flexibility, should he decide to exercise it.

Last week’s jobs report was terrific, as I reported here a week ago, but the bond market’s reaction to it has been surprisingly subdued. On Friday, the benchmark 10-year U.S. Treasury note closed at 2.63 percent. That level hardly suggests an overheating economy. Indeed, Yellen recently said that it’s possible that the Fed’s next move could be a rate cut. I wouldn’t say that’s likely, but it’s hardly unreasonable. The evidence keeps getting clearer that, as I argued here a week ago, the Fed won’t likely do much on interest rates in 2019, which is good news for stocks.

Other news and notes follow.

The latest SPIVA results are in from S&P and they are consistent with what we have seen before. Institutional money managers routinely underperform their benchmarks, largely on account of fees. Morningstar came to a similar conclusion: 2018 was yet another year to forget for active managers.

I am not the only one identifying China as a key threat to the stock-market rebound, a month after warnings of a slowdown in the world’s second-largest economy rattled markets across the globe. However, international investors poured more money into Chinese stocks last month than in any month on record. As noted above, stock markets in China were closed last week, which also means at least seven days without any disappointing data. The U.S. is dispatching its chief trade negotiator, Robert Lighthizer, and Treasury Secretary Steven Mnuchin to Beijing to continue trade talks as a March 1 deadline nears. While the two sides have made progress, they are still a long way from a deal. And President Trump probably won’t meet Xi Jinping before the deadline.

Small business owners’ confidence in the economy fell for the fourth straight month in December, while their outlook on business conditions sank to the lowest since late 2016. Consumers’ future expectations for the economy posted the largest three-month decline since late 2011. The Fed’s latest survey of senior loan officers found that banks expected tighter standards, weaker demand, and worse performance for business and household loans this year. Such measures of sentiment continue to show negative economic expectations while actual economic trackers, such as the most recent jobs report, continue to be strong. That sort of divergence often augurs a coming downturn, sometimes within six months or so.

Twenty-six of the 30 stocks in the Dow Jones Industrial Average and 465 of those in the S&P 500 have climbed this year. All 11 S&P 500 sectors are in the green for 2019. After months of downward revisions, analysts now expect the S&P 500 to post a year-over-year earnings decline in the first quarter of 2019, according to FactSet. As recently as September 30, analysts predicted the earnings growth rate for the current quarter would hit 6.7 percent, in part due to the impact of the 2017 tax cuts burning off. Earnings growth in the fourth quarter of 2018 is on track to hit 12 percent, with nearly half of S&P 500 companies having released quarterly results so far. If their estimates prove to be true, it would be the first year-over-year contraction of S&P earnings since the second quarter of 2016.

How are President Trump’s tariffs working? A typical American family will spend $60 extra per year due to tariffs. Duties on steel and aluminum cost Ford $750 million last year, according to the company. As a result, profit-sharing checks to Ford’s hourly workers were slashed anywhere from $750 to $1,850 each.

Americans 60 years old or more owed $86 billion in student loan debt, their children’s and their own, at last count. Student debt is a major contributor to the overall increasing debt burden held by seniors.

After a banner year, many small businesses are becoming more cautious about their investment and hiring plans. Just 14 percent expect the economy to improve this year, while 36 percent expect it to get worse.

U.S. stocks and bonds have been rallying together of late, an atypical pattern that some worry suggests the January rebound in equities is fated to run up against a painful reversal.

Bill Gross, the one-time “Bond King,” retired after a disappointing final act. His farewell interview is here. Despite Gross’s misfire, active managers need to make risky wagers, even if they could go bust, if they are to outperform.

Senators Bernie Sanders and Chuck Schumer argue that it’s necessary to put limits on how much stock companies can buy back and on the dividends they pay, and at least five declared or likely Democratic presidential candidates want to restrict how much stock U.S. companies can buy back from shareholders. It may be good politics, but it is an argument lacking supporting evidence. Instead of restricting share repurchases or dividends, we should make it easier for Americans to invest in America via the stock market.

Amazon founder Jeff Bezos, President Trump’s foremost nemesis in the business world, has profited more than anybody else during the Trump presidency. Since the 2016 election, Bezos has become the world’s richest person, his net worth swelling by $66.8 billion, to $135.4 billion, making his fortune a third bigger than Bill Gates’s, and almost 50 times greater than the president’s, according to the Bloomberg Billionaires Index. Bezos also made big news last week by taking on The National Enquirer (leading to obvious jokes, such as “Alexa, destroy my enemies,” and an obvious New York Post cover). Under the headline “No thank you, Mr. Pecker” (referring to David Pecker, CEO of American Media, publisher of the Enquirer, and close friend and supporter of the president), Bezos posted the full text of emails from the publisher — including the cell numbers of two executives — that he said constitute “extortion and blackmail.” This will be a fight to watch.

General Motors began more layoffs last Monday, axing 4,000 workers. The new round of cuts means GM has eliminated more than 14,000 jobs in the U.S. and Canada since November. Car dealers are beginning 2019 with a heavier inventory of unsold vehicles on their lots.

Concerns about the government shutdown and a drop in new orders crimped the U.S. services sector’s pace of expansion in January. The Institute for Supply Management’s non-manufacturing purchasing managers index fell to 56.7 in January from 58.0 in December.

President Trump gave his State of the Union speech last week. Mr. Trump said only three things stand in the way of an “economic miracle” taking place: foolish wars, politics, and ridiculous partisan investigations. Notably absent from the list of impediments was the Federal Reserve.

A steady decline in foreign demand for U.S. government bonds hasn’t seemed to have the impact on rates some predicted. Foreign ownership of U.S. government debt has been decreasing since it reached a peak of about 55 percent during the financial crisis in 2008. Foreign ownership fell below 40 percent in November.

A wave of bankruptcies is sweeping the Farm Belt as trade disputes add pain to already low commodity prices.

SunTrust Banks and BB&T said they agreed to combine in a merger of equals valued at about $66 billion, an all-stock deal that will create the sixth-largest U.S. bank in terms of assets and deposits.

New research casts further doubt on corporate welfare. When companies promise thousands of high-paying jobs in exchange for major tax breaks and incentives, those jobs often don’t show up.

Maryland has become the latest state to propose a fiduciary standard for brokers and insurance producers. The SEC’s delayed best interest standard will likely come this fall.

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Market Wrap-up | February 3, 2019

Written by: Robert P. Seawright, Chief Investment & Information Officer, Madison Avenue Securities, LLC

Domestic stocks moved higher last week, powered by good gains on Wednesday and Thursday. Communication services shares fared best within the S&P 500, helped by a sharp rise in Facebook after the company reported solid fourth-quarter earnings. Energy and industrials shares also performed well, with the latter helped by better-than-expected revenues from GE. A drop in longer-term bond yields weighed on the financial services sector by threatening bank lending margins.

Fourth-quarter earnings releases drove much of the market’s trading, with 117 companies within the S&P 500 reporting results. Stocks fell Monday after disappointing results from NVIDIA and Caterpillar. Stocks regained momentum at midweek, however, after Apple reported a slight gain in earnings and a smaller drop in revenue than many had feared given recent press over falling iPhone sales. The benchmark 10-year U.S. Treasury note closed the week yielding 2.70 percent.

The pan-European STOXX Europe 600 gained slightly, but its advance was tempered by ongoing Brexit and U.S.-China trade uncertainty, weak regional data, and news that Italy’s economy fell into recession. Chinese stocks gained as hopes for a possible trade deal with the U.S. offset concerns over an influential private manufacturing gauge that fell to its worst reading since 2016, the latest evidence of the country’s deepening growth slowdown. For the week, the Shanghai Composite edged up 0.6 percent and the large-cap CSI 300, China’s blue-chip benchmark, climbed almost 2.0 percent. Japanese stocks were flat to a touch higher last week.

Last week’s biggest news, while obviously impacting the markets, was not directly market-related.

According to the consensus view, two different trends have been moving markets of late. One is the China factor, which is manifested in two separate ways. The first of these is the health of the Chinese economy generally, a huge market for businesses around the world. China’s economic difficulties are sending shock waves worldwide as its growth is down to its slowest rate in three decades. At least 440 Chinese firms said their 2018 financial results deteriorated, with 373 saying they’ll post a loss. Roughly 86 percent of those incurring losses were profitable in 2017. The other part of this trend is the trade war between China and the U.S. Any sign of peace is deemed good for riskier assets (mostly stocks), and vice versa

The second trend is central bank action or the lack thereof. At the beginning of December, it seemed as if all the major central banks were set to tighten what had been remarkably easy monetary conditions, perhaps precipitously. Cheap money generally boosts riskier assets (mostly stocks) by providing greater access to capital and by pushing investors there in search of yield. 

After listening to Federal Reserve Chairman Jerome Powell’s press conference Wednesday, after the Fed raised short-term interest rates by a quarter point in December and signaled two rate increases were likely in 2019, and after nine well-telegraphed interest rate hikes since 2015, it now appears that higher rates are off the table, at least for now. The Fed might even dial back its plan to work down its bloated balance sheet. At his previous press conference six weeks ago, after boosting interest rates for the fourth time in 2019, Powell ushered in the final and most dramatic stage of the pre-Christmas sell-off in the stock market by sounding far more hawkish than anyone in the market thought possible. Now, he’s doing the opposite. 

The following sentence appeared in the Federal Open Market Committee’s December statement.

“Some further gradual increases in the target range for the fed funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective.”

That sentence was nowhere to be found in Wednesday’s statement, but the following sentence was added.

“In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate.

After just six weeks (and a significant market drop), the Fed went from a clear signal that more rate increases are likely to expressing the need for “patience” with no prediction about the future of rates. That’s about as dramatic a shift as you are likely to see from a central bank.

That said, the market’s reaction to this news was far more muted might be expected. The benchmark 10-year U.S. Treasury note yields fell three basis points to 2.68 percent, having been as low as 2.54 percent at the start of the year, and at 2.89 percent on the eve of the previous Powell press conference, while the yield curve steepened. The S&P 500 had a good day, jumping 1.55 percent to bring its gain since the day before Powell’s previous press appearance on December 19 to 5.30 percent. The damage of the previous appearance, in other words, had already been undone in the stock and bond markets. In barely six weeks, we have gone from the Fed leading the markets to the other way around.

A hawkish Fed generally leads to a stronger dollar, which makes life harder for emerging markets, undermines the U.S. trade agenda by weakening the competitiveness of American exporters, and impedes the dollar-denominated profits of U.S. multinationals. Now: the opposite. And it’s not just the Fed. A slowing global economy and low inflation has central banks around the world rethinking plans to pull back on financial stimulus. However, bear in mind that the last three times the Fed was forced to stop its rate hike cycle, a recession soon followed. 

Friday’s jobs report was outstanding. The economy added 304,000 jobs in January — significantly more than the 170,000 economists were expecting — while the unemployment rate ticked higher to 4.0 percent, reflecting the impact of the government shutdown. Average hourly wages for private-sector workers grew 3.2 percent from a year earlier. Neither the federal government shutdown nor market turmoil had any apparent impact on private hiring. The job market is also getting stronger. In the last three months job creation was its fastest in three years. Most notably, the U.S. is defying its demographic headwinds. The participation rate (the share of the population working or looking for work) is supposed to be falling as the baby boomers retire. Instead, it has climbed to 63.2 percent, a five-year high. That’s largely thanks to surging participation among prime-age workers, especially women, whose participation, at 76 percent, matched its highest rate since 2003.

Other news and notes follow.

Banks and smaller companies propelled stocks to their best January in 30 years, a sign that investors are favoring sectors tied to the U.S. economy. The Dow and the S&P 500 both closed with their biggest monthly gains since October 2015. The blue-chip index’s 7.2 percent rise was its best January performance since 1989, while the S&P’s 7.9 percent advance marked its best start to the year since 1987. The Dow and the S&P have each climbed 15 percent since Christmas Eve, their largest such percentage gain between the trading day before Christmas and the end of January since 1975, according to Dow Jones Market Data.

From 1926 to 2016, just 90 stocks of 26,000 account for half of all gains.

Europe’s economy is giving people the jitters. Investors are backing away from European assets, as worries over slowing growth and political uncertainty push the European Central Bank to rethink plans to tighten monetary policy this year. EU GDP grew at a tiny 0.3 percent in the fourth quarter of 2018, capping a year of low showings and as Italy slipped back into recession. Slow European growth is a concern for the global economy, too, particularly as China’s growth lagged last year, too.

Greg Mankiw, Harvard professor and Chair of the Council of Economic Advisers under President George W. Bush, took a look at President Trump’s economic plan and found it wanting.

The Department of Justice is seeking to shut down EcoVest, a sponsor of real estate investment programs, all focused on conservation easements, that it deems fraudulent. 

Overall, only 39 percent of Americans are well-disposed toward socialism, with older people and men particularly negative. However, 61 percent of Americans aged 18-24 have a positive reaction to socialism while the positives for capitalism are at only 58 percent.

President Trump announced new sanctions against Venezuela, targeting the wealth of Nicolás Maduro. “The world’s democracies are right to seek change in Latin America’s worst-governed country,” The Economist writes in a lead editorial.

The Treasury Department will have to borrow $1 trillion to pay for the government’s growing budget deficit, a consequence of increasing government spending and smaller revenues due to President Trump’s 2017 tax cuts. Meanwhile, the 35-day government shutdown eroded the economic benefits of tax reform and spending increases, according to the White House’s projections. $3 billion in economic activity was permanently lost to the shutdown, the Congressional Budget Office estimates. Even worse, the tax cut has had no major impact on business capital expenditures.

New York’s top financial regulator will allow life insurers to use data from social media and other nontraditional sources when setting premium rates, although they will have to prove the information doesn’t unfairly discriminate. 

PG&E, which is California’s largest utility, filed for bankruptcy protection as it struggles with billions of dollars in potential liabilities from its role in sparking California wildfires, triggering one of the most complex corporate reorganization cases in years.

As the two sides resumed talks last week, the U.S. and China were sharply divided on trade issues, suggesting a hard slog ahead of a March 1 deadline. However, progress was said to have been made and President Trump expects to meet with Chinese President Xi Jinping later this month to resolve the conflict that has rattled the global economy. 

Brexit keeps going nowhere fast.

Pending home sales fell 2.2 percent in December, meaning almost 400,000 fewer contracts were signed to buy existing homes. It’s part of an ongoing slump that’s seen 12 straight months of year-over-year declines. It’s also the lowest December sales reading since 2013. Existing home sales had been trending higher but also reversed course last month, falling 6.4 percent from November to a seasonally adjusted 4.99 million sales in December. That’s down 10.3 percent from December 2017’s 5.56 million sales when the metric was moving in the opposite direction.

More than 50 investment advisers are under pressure to settle federal claims they steered customers to mutual funds that charged excessive fees, even though asset manager fees are being squeezed generally. Meanwhile, the outsourced-CIO market is booming – and its influence is reverberating across the asset management industry.

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Do your Clients have enough Coverage from their Life Insurance Policy?

Josh Ver Hoeve, VP of Annuity Sales

84% of Americans agree that most people either need or need more life insurance. However, out of those surveyed only 30% of them actually had any sort of life insurance coverage.

Unfortunately, people do not think of life insurance as a necessity until it’s either too late or until they have a near death experience, both of which are instances when you can no longer buy it. Is there another product on the market that people want to buy the least when they can get it, and want it the MOST once they can’t get it? Perhaps nothing fits that description more than life insurance. Things like retirement income, disability/long term care, medical expenses, personal debt and living costs are much larger concerns of Americans nearing or in retirement. The great thing about life insurance is that even though the primary purpose is a death benefit, it can actually provide relief in all of those areas of concern mentioned. Long Term Care rider innovations over the past five to seven years, disability riders, chronic and critical care riders, and tax-free income are all features of… that’s right LIFE insurance! Perhaps the greatest act of love is purchasing a life insurance policy, not just for yourself but for those who you love. Let’s continue to remind our clients of all the things life insurance can do for a person outside of just providing a death benefit!

Take a look at Asset’s new Life Insurance Needs Calculator to help your clients better understand how much insurance they should be buying. Contact our sales team with any questions or illustrations you may need!

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Introduction to Social Media: The Basics

Skott McKinney, Director of Marketing & Creative Services

Social media is a term used to refer to the online communities (also known as social networks) of people who connect and communicate via specialized websites, and these websites have both similar and unique features. There are hundreds of different social media sites available to users, including those with broad appeal (e.g., LinkedIn, Facebook, Instagram, and Twitter) and those that are designed for a specific group of indi­viduals (e.g. Chegg Study for college/ university students seeking homework help, and Slack for work professionals to communicate with colleagues and connections from across the globe).

For financial advisors, online social networking represents a powerful addition to traditional networking activities, such as meeting friends, acquaintances, friends of friends, and business associates at social and community events.

Why is Social Networking so Popular?

Social networking is no longer just popular, it is an integral part of our lives. It enables us to communicate with one another, regardless of location, sharing ideas and opinions, making new connections, or engaging with personal or professional content. Social media platforms allow users to do everything from viewing restaurant recommendations to checking in on loved ones and former colleagues.

Where Social Media Adds Value

Social media is incredibly flexible and enables users to accomplish a wide range of tasks, such as:

  • Promote your skills and your business, demon­strating your expertise to your peers, customers, and potential employers (in accordance with firm compliance guidelines).
  • Reconnect and stay in touch with people that might otherwise drop out of your life due to various reasons such as a lack of time, changes in residence, etc.
  • Express your personal views and values by sharing content related to your favorite people, places, things, and ideas with others close to you.
  • Get useful feedback from people with similar attitudes about potential vacation destinations, restaurant recommendations, and any type of major purchase such as a car or appliance.
  • Enable organizations (whether businesses, non-profits, civic/school/religious groups or social clubs) to foster dialogue and schedule gatherings among members and/or employees.
  • Disseminate discussion materials for classes and encourage participants to exchange ideas via forums and chat features.
  • Reach out to people with similar values to rally support for fundraising and to raise awareness of charitable causes.
  • Highlight news and ideas that could have a positive impact on government policies; whether at the town, state, or national level.
  • Create and distribute content for artistic, personal, or professional purposes such as videos, blog articles, imagery, music, and artwork.

How Social Media is Used

 

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Main Types of Social Networks

There are three types of social networks: profes­sional, open, and personal.

Personal and professional networks usually operate by mutual consent of the participants; access is by invitation only, with users free to accept or reject someone as part of their network. Open networks, as the name implies, do not require approval to join and are open to everyone.

Professional Networks = LinkedIn 

LinkedIn is primarily intended to help business people contact other business people about jobs and industry trends, serving much the same func­tion as online versions of industry associations and trade groups. However, the network is also used to communi­cate with clients, identify new prospects, and share relevant video, imagery, and written content with respect to various industries.

Open Networks = Twitter, Instagram, Snapchat, YouTube

Open networks offer users the ability to communicate between any group of participants as well as share relevant content. Twitter, for instance, enables users to share (aka “tweet”) their thoughts, content, opinions, or reactions, as well as engage in conversations with others within a 280-character limit. Instagram allows users to share photos and video content with captions, and comment on other users’ content. Snapchat lets users send video or photo content to other users. Snapchat content, however, will delete after a certain period of time, which can be set by each individual user.

Personal Networks = Facebook, Instagram, Snapchat 

Primarily intended for socializing with friends and acquaintances, personal networks also have business applications, such as the promotion of products and services to potential buyers. Facebook, Instagram, and Snapchat, while personal in nature, all offer businesses the ability to have distinct “pages” on the platforms. Within these pages are native advertising opportunities, designed to reach a company’s target audience.

Asset Marketing Systems offers a number of tools to get you going with your social marketing plan. Click here to download our how-to guides to posting ads to Facebook and LinkedIn.

If you’re a financial advisor, call us today to learn how Asset Marketing Systems can help you.

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Direct Mail – Do It Right or Not At All!

Skott McKinney, Director of Marketing & Creative Services

Direct mail marketing has surely evolved, shifting mainly to the digital. In fact, according to USPS, mailbox volume is down from previous years. However, as those numbers decline, USPS notes that 62% of all mail received is classified as direct-mail advertising, either by first-class or commercial.

So, what’s that mean to you? Simply put, don’t rule out marketing opportunities that still create results. In fact, some 124 billion pieces of mail were received in 2017, with 42% of respondents reporting that they had read a catalog. Even more insightful, the Direct Marketing Association says that more than 100 million people made a purchase or used a service that came from a direct mail offer.

While the stats tell us not to abandon a tried and true method for reaching potential clients, that doesn’t necessarily mean you’re going to hit the mark on every mail campaign. But, you can improve your odds of success if you know what to look for.

Here are 3 tips you can start using today that can get you started on better direct mail campaigns.

TIP#1

Craft Your Message – What keeps your clients up at night? Honing in on those messages brands you as the expert and drives future engagements.

TIP#2

Set Attainable Goals and Test with Purpose – Direct mail has been a tried and true method for decades. In order to get those strong results, set attainable goals and build on your past successes. Careful testing brings favorable results.

TIP#3

Partner with the Right People – Having the right partner can focus your efforts to work with your clients and can help drive engagement. Consider working with individuals who challenge and educate.

So, how do we know this works? Simply put, we’ve been managing campaigns for two decades. We combine expert advisors with direct mail trends and industry insiders to craft results-based direct mail marketing that outpaces some of the competition. Our GOAssetDirect direct mail program utilizes proven messaging that builds empathy and increases engagement, which resulted in an across-the-board average response rate for 2018. Some campaigns even saw rates above 2%.

Download our whitepaper that outlines 7 Must-Have Components Every Direct Mail Campaign Should Have.

Don’t take my word for it. Call us today to learn how we can help your campaigns.

 

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Create Comfort for Your Clients and Their Loved Ones

Josh Ver Hoeve, VP of Annuity Sales

February is The Greatest Act of Love month, and we of course believe that life insurance could potentially be just that. Unfortunately, not all clients are the perfect life insurance prospect for one reason or another. We want to make sure you’re aware of an amazing income and legacy option on the annuity side. Take a closer look at the Athene BCA with Family Endowment Rider Max (FER MAX). Just recently they increased the guaranteed roll-up on the death benefit base to 4% compound, PLUS index credits.

This means if you earn 0% in a given year, you will still get 4% credited to your death benefit base. But let’s just say that you earn 3% on average in index credits on the BCA with FER MAX, this essentially means you have a death benefit base growing at 7% compound! Better yet, this growth continues until age 85. This is perhaps the most attractive wealth transfer annuity in the market.

This doesn’t just work well as a death benefit product, but also as an income product – especially for qualified money. This is because when you take a withdrawal from this contract with the FER MAX rider, the death benefit base reduces DOLLAR FOR DOLLAR up to a 5% withdrawal. Take a look at a case study here. You will notice in the brochure the example shows the “FER MAX WITH BONUS” which also gives a 10% bump up front on the death benefit base. The total fee for the FER MAX with bonus is 0.85%/year or without the bonus it is 0.50%/year. What do you think about that income and the death benefit at life expectancy? Not so bad!

Even better, Athene does beneficiary IRAs. Not only do they do them, but they illustrate them. We will talk more about this transition from Athene BCA with FER MAX to their inherited IRA examples in coming months.

Talk about an act of love! You could potentially reposition qualified dollars, pull required minimum distributions from it, and still have a remaining amount of money that will be passed on to loved ones.

Contact our team today and we can run any of these scenarios for your client!

(888) 303-8755

And have you seen our most recent Top Annuity Product grid yet? Click here to view the most updated version.

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The Client Review Kit

Lexie Giusti, Sr. Marketing Consultant
Sheeva Izadi ,Marketing Consultant

You’ve been working with a client for months on end, providing them with the tools and strategies to enhance their financial plan. It feels as if things are going smoothly and their money is producing the results they want to see, so why not just leave things as they are?

Well, because a lot can change in a person’s life in a period of time as short as a month. Any number of events could occur ranging from a death in the family to a wedding or the birth of a child or grandchild. All of these happenings could lead to a change in the financial reality they are living with or see themselves living with in the future.

Scheduling an annual client review is often overlooked in the financial planning process when it could arguably be the most important step. Having a face-to-face, personalized meeting with your client to go over their progress and discuss any adjustments is an elemental part to creating that deeper connection and loyalty with them.

So why exactly is scheduling an annual client review so important? Let’s take a deeper look.

Statistics show that about 79% of consumers view their relationship with their financial services provider as purely transactional.

The modern client wants to feel that personalized touch from your services. They want to feel like a part of the family and simply sitting down with them for an hour to discuss their goals and needs can be the difference between positive client referrals or them switching advisors.

This leads to our next point – Increased personalization correlates to increased customer loyalty which correlates to more positive referrals. The more an individual feels they can trust you and that you care, they more likely they are to share that with their friends and family and encourage them to handle their finances with your firm. Even just showing them just how well their assets are performing can solidify your place in their lives and add value to why they are working with you to begin with.

Meeting with your client to go over their portfolio and its performance over the course of the year allows you to open the conversation into uncovering new assets they may have come into since your last meeting. Perhaps they would want to invest those assets into an existing policy, or maybe they’d like to look into a new account for those assets. You will never know what your client could be interested in until you sit down to really talk to them.

Everything included in our Annual Client Review Kit is there to enhance the time spent with your client and make the process as seamlessly smooth as it can be.

You will receive a customizable letter to invite your client to sit down with you, a comprehensive checklist to utilize during the meeting to be sure you cover all necessary topics, a fund allocation model to be used as a visual representation in your meeting to discuss how to best allocate funds, and finally an educational video of Angela Sloan discussing why client reviews are so important to her practice and the immense benefits they provide.

Set yourself apart from the competition and create deeper, everlasting relationships with your clients and download the Annual Client Review Kit today.

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The Silent Killers to Financial Wellness

Sam Payne RICP®, Business Consultant

He did everything right… he ate right, avoided excess carbs, sugar, and alcohol.  He exercised regularly, kept his weight and body fat (BMI) well below suggested levels. He did not smoke. He was the picture of health. So much so that he coached other individuals and helped them reduce their stress, weight, and increase their physical activity. Then he had a heart attack…

Bob Harper, the host of Biggest Loser, was struck by one of the silent killers of men and women in our society.  Fortunately, his physical condition helped him survive and subsequently recover from the attack.  Now he is on a mission to alert the public to the importance of health screening for the various Silent killers.  Conditions like Heart Disease, Hypertension, Cancer, Diabetes and Stress to name a few.

Many parallels can be drawn between Bob and any number of clients and prospects we come into contact with on a daily basis as it relates to their financial wellness.  Do any of these sound familiar…?

He/She worked hard for 40 years, always saved, contributed to a 401K or IRA, kept life insurance and health insurance in force, paid off his mortgage and reduced his debt to zero.  Then he retired…

  • Within a couple of years, the equity markets took a substantial bite out of his portfolio, to the extent that he is worried about his ability to maintain his lifestyle…
  • Or
  • 2 years later he was diagnosed with dementia and is worried about the affect the cost of care will have on his portfolio and the income it is expected to generate for his wife and himself….
  • Or
  • He/She retired at 67 and now, 3 years later, he is required to take RMD’s from his sizeable portfolio.  In the 3 years since his retirement, there has been a substantial shift in the political powers and new tax rates are in affect that will take a bigger bite out of his RMD’s than he anticipated.

These are examples of the silent killers to financial wellness.  Things like Market/sequence of returns, Taxes, Longevity, Inflation and Extended Care costs.  Our role is to help screen clients and prospects for their exposure to, or likelihood of being adversely affected by, these silent killers.

This month, Financial Wellness month is a perfect time to remind the public to be on guard for and to get screened by a financial professional for these silent killers.

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Considering Your Annuity Replacements Options Due to The Recent Market volatility

Josh Ver Hoeve, VP of Annuity Sales

A frequent conversation the annuity sales desk is having right now is related to annuity replacements. Due to recent market volatility we are receiving more and more calls looking to replace variable annuities that have market risk and/or high fees. Most clients are not able to handle the market volatility, especially when limited to their investment choices for upside potential. Some of you may have seen back in October that Ohio National announced to eliminate brokerage arrangements and stop the sale of variable annuity business.

Click Here To Read The Whole Article.

Others are aware of a choice made by VOYA about a year ago to settle out variable annuity income riders to clients, and now like Ohio National, VOYA is no longer in the annuity business. Even with a predominate bull market the past ten years, just a couple of volatile days in the markets have clients asking for safety – and rightfully so. FIA sales are beginning to increase while VA sales decrease. What advisors and clients are realizing is that with recent product innovation, FIAs are the best of both products.

Let’s start off this new year by making sure our clients are financially well. Based on these recent trends, we should be asking our clients the following questions:

  • Do they have annuities purchased within the last ten years that are doing what they wanted them to do?
  • Did they have an income rider but no longer need income or vice-versa?
  • Do they have an accumulation product that now is needed for income?

Asset Marketing Systems is committed to providing you with the newest and most competitive product solutions for your clients. This month we are highlighting two annuities you may not be too familiar with:

North American Versa Choice: An FIA loaded with benefits; high liquidity and income guarantees that double for home health care (2 out of 6 ADL trigger). The product also has accumulation potential.

Click on The PDFs below to Learn More About These Benefits

NAC versa choice 10 ELB

3 in 1 design

North American also has a great client brochure to help understand income needs.

Bridging the retirement gap

Delaware Life: Another FIA with an incredible income guarantee product called the “Target Income 10.” They recently increased their income guarantees on this product to be even more competitive. Delaware Life will not always be #1 on a guaranteed income spreadsheet but they are almost always in the top three and are #1 in many scenarios. If you are going to stick with a guaranteed income product and are not sure the exact year in which you want to trigger income, this is a great option. They will win in a lot of cases, but will always be competitive if something changes and you need income sooner than later. Click on the product guide here.

Contact our team today for more information on any these featured products! We can also help with any niche product recommendations and positioning, comprehensive product detail analysis, and sales concepts.

(866) 546-5267 | Option 1

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Social Media

Written by: Skott McKinney, Director of Marketing & Creative Services, Asset Marketing Systems

I recently posted a blog and whitepaper focusing on the challenges advisors continue to face using social media. These challenges still exist, but there are ways around them and plenty of opportunities for your marketing to improve using social.

According to a recent report provided by the GlobalWeIndex, 30% of social users use social to research/or find products to buy. Additionally, they’ve identified that 1 in every 3 minutes online is spent on social media.

While surveys and research show increasing trends, I still believe that a successful marketing plan will include digital and traditional methods to produce the best results. The best advice I can give is “When you see the shiny penny, don’t assume it’s going to stay shiny. Give yourself options, and you’ll be successful.”

Download this insightful report here to see the trends dominating the social media space and to understand:

  • Which demographics are engaging with social media,
  • how users are spending their time on these platforms,
  • which devices are being used for social networking.

Click here to download the complete report summary.

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