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Achieving financial longevity


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  • 1. Protect Your Principal - Retain Your GainsMitigate Tax - Guarantee Your Income
    Our Goal
    To create a substantial,
    sustainable, structural advantage
    for your financial portfolio.
  • 2. Disclosure and Disclaimer
    Any yield or return figures or examples appearing in or referred to in this presentation, are for illustrative purposes only, and are not intended to represent, predict or guarantee the future or past performance of any financial product. Brian Singer is not licensed to render any advice about purchasing, selling, liquidating, surrendering, replacing, or withdrawing securities; including tax consequences and any possible related fees or charges associated with such securities transactions.
    Singer Financial Group
    480 E Northfield Dr– Suite 300
    Brownsburg, IN 46112
    If what you believed to be true about your money wasn’t, when would you want to know??
  • 4. There is a huge financial service industry that ignores the need to protect principal, when it comes to retirement and income planning.
    John Bogle – Founded Vanguard in 1974
    • His research found the financial system costs $600 billion per year
    • 5. Institutions, mutual fund managers, hedge fund managers, stock brokers, investment bankers (what we call loosely, Wall Street)
    “Wall Street has become a casino with the only winners being the croupiers—the traders, the brokers, the investment bankers, and the money managers who facilitate the trades [bets]. Wall Street creates a whole lot of ‘innovation’ products that are designed to enrich the marketers and not the buyers, and that’s what the industry is all about. There is too much cost in this industry and not nearly enough value; too much speculation and too much complexity.”
  • 6. “Entrepreneurs or international conglomerateurs, or large financial institutions buy or create mutual fund management companies to create a return on their own capital. It's capitalism at work, where the rewards tend to go to the managers rather than the investors”.
    The average mutual fund returns 2% less per year than the stock market returns in general. So, what are the chances of an investment advisor picking the winning funds for his/her client?
    Mutual fund investors are hit with annual management fees as well as 12b-1 “marketing” fees ranging from .25 to 1.00%.
    Every time a mutual fund manager sells a stock at a profit, you may get hit with the tax bill, even if the fund or your account lost money for the year.
    Most mutual fund stock positions can represent no more than 5% of the entire portfolio; therefore when a stock starts to soar, the manager has to sell the “winners”, creating capital gains taxes for investors whether you’ve been invested for years or days.
    When another investor wants to bail out of your fund, the cash redemption comes from cash on hand and the sale of stocks.  Cash on hand drives down performance, while the sell off of stocks increases the tax bill of those investors who stay in the fund.  A dollar set aside for redemption requests is a dollar not invested. 
  • 7. Dec 7, 2010
    Paul Farrell, PhD has been a MW columnist since 1997 and has published more than 1,400 columns plus nine books. Previously he was an investment banker with Morgan Stanley; Executive Vice President of the Financial News Network; and head of the Crisis Management Group.
    “Do not buy stocks. Not for retirement. Not in the coming decade.
    Don’t! Huge risks!”
    Peter Morici, former chief economist at the International Trade Commission: America’s divided into two stock markets: one for Wall Street’s rich insiders, another for Main Street’s suckers. (FT – 12-17-10) FBI arrests 4 people in connection with its long-running investigation into insider trading on Wall Street.
    New ‘big short’ dead ahead: Derivatives con game will crash again. In a Bloomberg story, “Big Short” author Michael Lewis says; WS insiders have no intention of ceasing their prop trading, They are merely disguising the activity, by giving it some other name.
    Morici goes on to say, J.P.M. and BoA went through the entire third quarter without a negative trading day, no losing days on proprietary trades. Unless you believe in perfection, something stinks…. If someone is winning all the time, then someone else is losing. That’s the ordinary investor. Stocks have become a rigged game.
    Farrell – Stocks are a sucker bet at Wall Street’s rigged casino. Buy stocks and lose. In fact, you’ll probably lose more that 20% when the third meltdown of the 21st century explodes. Bigger losses than in 2000 and 2008 combined.
  • 8. We live in perilous times!
    • Every 3 years we have a bear market.
    • 9. Every 8 years we have a significant bear market.
    • 10. We’re in the “M” times.
  • 11. Real Historical Returns
    S&P 500
    Dow Jones
    40 Year – 6.65%
    20 Year – 7.27%
    15 Year – 5.15%
    10 Year – 1.85%
    5 Year - 1.32%
    40 Year – 6.58%
    20 Year – 7.34%
    15 Year – 4.66%
    10 Year – 0.98%
    5 Year - -0.25%
    * Source:, as of 3/20/2011. Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends.
  • 12. Our financial system is complex, complicated, inter-connected, and fragile. You haven’t seen your last “Crisis”.
    “The Crisis”
    Who or what can we blame?
  • 13. Wall Street’s financial alchemy fueled the financial meltdown.
    Synthetic CDOs spread the sub-prime mortgage problem to thousands of institutions that bought “fantasy” financial derivatives based on those mortgages. It’s possible we would have avoided the economic meltdown were it not for synthetic derivatives that also crashed along with housing prices.
  • 14. 1) Banks create CDO’s from RMBS2) Banks often retain the “Super Senior” (highest rated) top tranche3) The bottom portion “Equity” is often sold off to hedge funds, pension funds, other banks4) The middle portion or “Mezzanine” often goes into new CDOs The main buyers of those new CDOs are often the same banks
    A CDS would pay off as these CDOs defaulted
  • 15. Wall Street innovation is not designed to help mainstreet. Dominoes that were ready to fall….
    • 03/24/08 –The NY Fed provides $29 billion for JPMC to save Bear Sterns
    • 16. 09/15/08–BoA buys Merrill Lynch for $50 billion. For the previous four quarters, ML has posted losses totaling $17 billion.
    • 17. 09/15/08 – LehmanBrothersdeclares the largest bankruptcy ($600 billion) in American history
    • 18. 09/16/08 –The NY Fed lends $85 billion to save AIGFP
    • 19. 09/21/08 – The Federal Reserve Board approves applications of investment banking companies Goldman Sachs and Morgan Stanleytobecome bank holding companies.
    • 20. 10/12/08 –Wells Fargo acquires Wachovia for $15.1 billion
    • 21. 11/23/08 –The Fed saves Citigroup with an injection of $326 billion
  • MNL Annuity Division located in West Des Moines, Iowa and its Life Operations located in Sioux Falls, South Dakota. Midland National was founded in 1906 and is part of the Sammons Financial Group (one of the largest ESOPs in the US)
    In the midst of the turmoil, “who isn’t” going under?
    October 7, 2008: Midland National Life field memo
    ….in September 2005….[our]Chief Strategist stated that we were going to see a residential real estate crisis of “Biblical Proportions”.
    For us, this became a call to action and is the reason that we have less than one-half of one percent of our assets in subprime mortgages.
    ….we have absolutely no loss exposure to Fannie Mae, National City, or WaMu in our investment portfolio. For AIG, Bear sterns, Freddie Mac and Lehman Brothers, Midland has realized losses and taken impairment write-downs of less than 0.1%.
    Not“On the Brink”
  • 22. In a financial collapse, it is likely that the Life Insurance Industry would be second only to the U.S. Government to fold.
    The Five Pillars of Safety:
    1. Legal Reserve System (solvency ratio)
    2. State Guaranty Funds
    3. Reinsurance
    4. Holding companies
    5. Strict regulatory investment practices
    Reality Check!!
  • 23. Center for Retirement Research at Boston College – October 2010 Report
    The National Retirement Risk Index (NRRI)
    (Measures the share of American households ‘at risk’ of being un­able to maintain their
    pre-retirement standard of living in retirement)
    To achieve real security in retirement, households need to get as much as possible out of their nesteggs in the drawdown period.
    Annuities guarantee that households do not outlive their money.
    Aninflation-indexed annuityprotects a household’s purchasing power.
    Annuities provide more monthly income than other approaches, such as the
    “4-percent rule” or living off the interest on assets.
  • 24. The Ultimate Roth StrategyCan you name a principal protected asset class that beats this over the last 1, 3, 5, or 10 years? Tax free?!?!
    Index Growth & Index Credits for Month Ending 02/28/2011
    Above data is for illustration only, and does not guarantee future or past performance
  • 25. What’s luck have to do with it?
    What if you retire at the wrong time?!?Consider the following hypothetical “Sequence of Returns” example: John and Bob both had the same $100,000 when they retired and planned to withdraw the same 5% amount, with annual adjustments for inflation. 
  • 26. Planning
    Protect Your Principal
    Retain Your Gains
    Guarantee Your Income
  • 27. Finsurance
    "It's the triumph of financial engineering"
    How will we create and maintain a substantial, sustainable, structural advantage for YOUR financial portfolio??
    Moshe Milevsky (Executive Director of the IFID Centre in Toronto)is likely the world’s leading authority on the interplay between financial risk management and personal wealth management AND sustainability of retirement income.
    Moshe Milevsky On The Role of Downside Protection…
    • … it makes sense to seek out financial products that provide downside protection…In effect, this allows you…. to increase your sustainable spending rate, but without taking on additional risk.
    • 28. The "probability of retirement ruin" when drawing 5% on a 50% equity portfolio is about 89%.
    • 29. "Finsurance"--a blend of finance and insurance-- is emerging to provide innovative solutions for retirement income needs.
  • Downside Protection is Critical!Wharton School of Business study, directed by Professor David Babbel PhD, with a team of six PhD economists and two senior actuaries.
    “Since 1995, these [equity-indexed] annuities have easily outpaced the S&P 500 and bond indexes alike. ‘There is no asset category that outperformed them. We were extremely surprised, really justamazed,’ says David Babbel, professor emeritus of insurance and risk management, …(at the Wharton School of Business…) who conducted a study of equity-index annuity returns beginning in 1995…(through January 1, 2009). 
    8.60% APY
    Dr. Babbel has worked for the World Bank as their Senior Financial Economist and has taught finance, investments, risk management, and economics at the undergraduate, graduate, and the doctorial levels for 25 years at the University of California, Berkley and the Wharton School of Business. He is not paid for research, appearances or articles published on these instruments.
  • 30. 1210
    Year 1
    Year 4
    Year 3
    What goes up doesn’t have to come down!What if every year the market went down, you could demand your money back, and then reinvest at the lower price?How an FIA functions
    Year 2
    Day 1
  • 31. How Do They Do It?
    "It's the triumph of financial engineering”
    Initial Premium Deposit
    Insurance Company
    expenses & PROFIT
    Minimum Contract Value
    The Insurance Co purchases
    T-bills & investment grade bonds
    to provide the principal
    guarantees in the FIA contract.
    Index Return
    Insurers purchase Call Options on a
    market index, such as the S&P 500 (at a
    negotiated price due to the high volume).
    When the index value is higher at the
    expiration of the strategy term, market
    linked interest is credited to the FIA. If the
    index price is lower at expiration, the
    option expires with no negative impact
    to the Insurance Co or FIA owner.
    Heads I win! Tails I don’t lose!
  • 32. “We have got to have a fortress balance sheet! Every five years or so…something bad will happen.” Jamie Dimon– CEO , JPMC
    A Fortress Balance Sheet
    Five Keys To Financial Longevity
    1) Protect your money – lock out losses
    2) Grow your money – lock in gains
    3) Turbo-charge the growth
    4) Re-insure the growth
    5) Mitigate the tax
    Finsuranceprovides a substantial, sustainable, structural
    advantage for your financial portfolio
  • 33. The need for….
    “Guarantees” and “Safety”
    “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.” – Warren Buffett
    Eight critical lessons from the crisis….
    Be ready for the next one – “Fortress Balance Sheet” – you haven’t seen your last serious financial crisis.
    Choose to know.Be your own lifeguard!
    Know that hubris kills judgment.
    Volatility doesn’t have to be a bad word, IF you have a strategy/process to capture the good market volatility and avoid the bad.
    Your retirement plan must include a personal pension plan that will protect your principal, retain your gains, and guarantee your income.
    Identify someone or something you can put your faith in, then trust, but verify.
    Validate and then act! Change isn’t always better, but better always means change.
    Risks, both hidden & disclosed, are an inherent component of any financial instrument or advice offered through Wall Street.
    Use heads I win, tails I don’t lose strategies!
    Protect Your Principal – Retain Your Gains – Guarantee Your Income
  • 34. ?
  • 35. A B C
  • 36. How Much of Your Income & Assets Do You Want To Protect?
    • Are you ready to take the guesswork out of Retirement & Income Planning?
    • 37. Does a Fortress Balance Sheetconcept make sense to you?
    Protect Your Principal – Retain Your Gains – Guarantee Your Income
    A properly designed ABCPlan will assure you never lose money, and never run out of money in retirement!
    Implement your planwith someone you can trust!
  • 38. We help successful people and their families, enjoy the journey to, and through retirement!Email or call 317-852-9153