The word “suitability” evokes a unique reaction within the financial services industry. It carries legal as well as emotional baggage that goes well beyond the synonyms of appropriateness or correctness. And, for anyone active in the annuity business, being accused of enabling or advocating an unsuitable transaction can have far reaching (and career harming) implications.…

One of the many disorienting feelings that eventually hit you once you arrive in Japan – or at least for people who think about demographics for a living – is the lack of young children. I was in and about Tokyo for almost two full days before I actually saw any kids. It’s not that…

The wealth and investment management industry is full of performance benchmarks and value-added metrics, from stock and bond indices, Sharpe Ratios to alphas and betas, and more. We now expect financial advisors to report aggregate returns and risks relative to suitable, neutral and unbiased benchmarks, at the end of each month, quarter and year. This…

Most readers of this column know that the annuity is one of the most misunderstood — and often abused — terms in the lexicon of retirement income planning. Financial services companies currently offer variable annuities, fixed annuities, deferred annuities, income annuities, immediate annuities, longevity annuities and equity-index annuities, to name just a few; each with…

In my recent travels through the world of retirement income planning, it seems to me that many industry participants have forgotten two important facts about the current economic environment. First, a substantial demographic segment of the U.S. population is still very much in accumulation mode and quite far from retirement income needs, especially after last…

In the practice of retirement income planning, financial advisors routinely toss around survival probabilities for clients — “there’s a 10% chance you’ll live to 100” or “there’s a 50% chance one of you will reach 90.” Numerous web-based calculators allow you to determine these probabilities with only a few basic inputs. The mathematical operation underlying…

If a client asked you how much of her retirement nest egg should be allocated to risky stocks versus safe bonds, I presume you’d have an answer. And if she then asked you how much of her equity should be in domestic stocks versus foreign stocks, or growth stocks versus value stocks, I’m equally sure…

The sales pitch sounds too good to be true, and should instantly set-off financial alarm bells. Here is how I have heard it. Give us your money today and we will guarantee you at least 5%, 6% — and some still promise 7% — for the next 5, 10 or 15 years.  And, if-and-when the…

Over two and a half years ago, in the pages of this fine magazine, I described my Road-to-Damascus like conversion from a Variable Annuity (VA) critic to mild advocate. These products had become personal pensions in an era of declining corporate pensions. However, in the same piece, I also expressed bewilderment at the extra fees…

The ancient biblical story of Joseph and King Pharaoh tells of a famous dream of the King in which the land of Egypt was prophesized to experience seven years of plentiful harvest and seven years of horrible drought. And, as the book Genesis goes on to tell, this scenario actually played itself out over an…