Insurable Interest Canadian Insurance Blog

What You Need to Know CDs and annuities can both keep money safe. Some products could offer a higher rate of return. Some products could hit harder if a client takes cash out early. Bank certificates of deposit, or CDs, and annuities are two popular and safe investment options that can provide a steady income stream for investors. Both have advantages and disadvantages that depend on a client’s financial goals, time horizon, and risk tolerance. Rising interest rates have suddenly made both types of products much more attractive. Here’s a look at how the products work, along with the typical profiles of clients who tend to benefit the most from each type of product. CDs Basics CDs are deposit accounts offered by banks. They have  a fixed interest rate and a fixed “term,” or length of time that the account lasts. When the term ends, your client receives the original deposit plus the interest earned. CDs typically offer higher interest rates than regular savings accounts. They’re FDIC-insured, making them one of the safest places for your clients to put their money. The main downside of CDs is the lack of flexibility; withdrawing funds before the maturity date results in penalties....

There are some cautions and considerations in determining if a rollover to a traditional IRA is the right course of action: Does the client have issues that require the extra creditor protection of a 401(k)? If so, then perhaps leaving the money in a former employer’s 401(k) or rolling the money to a new employer’s 401(k) might be a better option. If clients are changing jobs and plan to keep working once they reach the age where RMDs commence, it may make sense to roll their 401(k) to their new employer’s plan if it offers the option to allow employees to defer RMDs on money in the plan while still working. Are the funds offered in their former employer’s plan, or the plan offered by their new employer if applicable, low-cost institutional quality funds? Do these investments constitute a better option than what might be available via the IRA to be used for the rollover? Is the client eligible to take advantage of the rule of 55 allowing for penalty-free distributions before age 59 1/2? The Rule of 55 The rule of 55 as it pertains to 401(k)s and some other employer plans says that those leaving their employer due...

Abacus Life, a life settlement company, has picked Dynasty Financial Partners to help it start a wealth division. Abacus CEO Jay Jackson said working with Dynasty to provide financial planning and investment management services “is the natural next step forward for Abacus.” Shirl Penney, Dynasty’s CEO, said his firm is thrilled to be working with Abacus. “Jay and the team are well-positioned to hit the ground running,” Penney said. What it means: Traditionally, life insurers and life insurance agents often expanded by offering wealth management services. Today, providers of other, related types of financial services may be more likely to enter the wealth services market. The players: Abacus is an Orlando, Florida-based company that began helping life policy owners sell their policies in 2004.

To David Scranton, CEO of Sound Income Group, “the real magic” is “the ability to get competitive returns with less risk.” Scranton, in an interview with ThinkAdvisor, argues that “adding a little bit of the riskier assets to a conservative portfolio can help increase your returns but lower your volatility and risk.” That’s been Scranton’s unusual income-generating strategy for about 25 years. When he switched from a growth approach, the advisor saw his business “explode,” increasing “10-fold in about six years,” he says. Scranton, a 2023 ThinkAdvisor LUMINARIES award finalist in Executive Leadership, focuses on boosting income with higher-dividend equity strategies and bond-like investments. That way, he’s able to offer “institutional-style money management” to his target clients, “mom and pop” investors, as he puts it, who have, perhaps, about $100,000 of investable assets. Scranton, who hosts a radio show syndicated in 40-plus states and has been in the industry since 1987, has four businesses, with assets under management totaling $2.5 billion. Sound Income Group includes his own longtime practice, Scranton Financial Group, in Old Saybrook, Connecticut, and three companies that support other independent financial advisors with marketing, coaching, practice management, investment services and franchise opportunities. In the recent phone interview...