I recently read an article by one of LinkedIn’s leading life and annuity contributors. Her question: “Does the index you use make a difference, given that all indexed annuities are priced to return the same amount of interest over a long period of time?”

Yes, the index does make a big difference and not all indices will perform the same over time. Many of the proprietary indices that we are seeing in the market today are volatility control indices. For those of you that are not familiar, a volatility control index is designed to flatten the curve by decreasing large spikes while also mitigating big losses for a median return. All with the goal of providing more consistent positive returns. With all of the volatility controlled indices in the market, how many are back tested versus back casted? Do you know the inception date or are you selling based off of the highest return available? Are you taking into account the past 10+ years of a bull market?

With so much to consider with regards to choosing the right index, perhaps a simple story might be the ticket? You have heard from wholesalers about the aging demographic and the fact that it holds the largest concentration of wealth (roughly $32-35 trillion) in American history. There are 10,000 people turning 65 everyday and by 2030, 25% of the US population will be 65+. Armed with that knowledge, if you could jump in a time machine and go back 65-70 years ago, knowing there would be millions of babies born, would you have invested in diapers and baby formula? Fast forward back to today, no matter how great of an advisor or planner we are, there are two things we can not plan for: health and health care expense.

If you could offer your retiree and pre-retiree clients the opportunity to position their assets in an index that tracks health care spending based on this aging demographic and offers index returns on their health care spending, would that make an impact? Having an index that is forward looking, perhaps the only one of its kind, makes choosing the right index extremely important.

Call me today to learn more about the story and the solution to accompany!

*Fair shake is a cowboy phrase for making a fair trade.