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A Few Minutes With … Jim Poolman, Executive Director, Indexed Annuity Leadership Council

Jim Poolman was twice elected to serve as North Dakota’s Insurance Commissioner. While Commissioner, he worked to strengthen laws to protect citizens against insurance fraud. The scope of consumer protection widened, in North Dakota and nationally, with landmark legislation related to suitability of sales, life settlements and a host of other issues.  Poolman served as Chairman of the Life Insurance and Annuities Committee for two years and Vice President of the organization in 2004. Before being elected Insurance Commissioner in 2000, he served four terms in the North Dakota House of Representatives, and was a trust officer for the Bremer Bank system. In 2007, Poolman left his post to start an independent regulatory consulting practice. He advises insurance companies and producer clients on regulatory issues, and works with regulators on their behalf.  Poolman also serves as the Executive Director of the Indexed Annuity Leadership Council. The IALC is a coalition of company and producer interests that have come together to raise the dialogue around fixed indexed annuities.

 What is the IALC? How can it help investors?

The Indexed Annuity Leadership Council is a consortium of insurance companies that are committed to providing complete and factual information about the use of indexed annuities as part of any balanced financial retirement plan. Our mission is to help educate consumers, the media, regulators and industry professionals about the benefits of fixed indexed annuities. Namely, that these products provide a source of guaranteed income, principal protection, and interest rate stability in retirement. For retirement savers, IALC can provide information to help build a retirement portfolio. In addition to the information we have on FIAs, we also have retirement calculators.

Why are fixed indexed annuities (FIA)s a good choice for part of one’s retirement portfolio?

Savvy and conscientious consumers, looking for smart solutions and control of their long-term finances during uncertain times, recognize the important role fixed indexed annuities play in any balanced financial plan. That’s because fixed indexed annuities provide protection from stock market volatility, guaranteed interest and income and the opportunity for additional interest when markets are up. Fixed indexed annuities have minimum guarantees, so the value can only increase due to index growth; it will never decline, even if the index declines. Benefits unique to fixed indexed annuities include:

• Provide guaranteed lifetime income through annuity riders

• Provide liquidity provisions allowing a portion of the principal to be withdrawn each year after the first year, penalty-free.

• Surrender fees are often waived, in part or whole, if a person suffers from permanent disability or if nursing home care becomes necessary.

• Allow individuals to pass on the proceeds upon death directly to a beneficiary.

Jim, can you explain why or why not these investments would be a good choice for high-net-worth individuals? 

These investments are a good choice for high-net-worth individuals. A fixed index annuity provides a guaranteed return versus equities, which can fluctuate and be more volatile. Most high-net-worth individuals traditionally invest in a mix of stocks and bonds. The addition of annuities or FIAs will add more balance to their overall portfolio, along with added security everyone needs.

Your recent survey found that while Millennials have the least amount of money saved for retirement among similar groups, like baby boomers, genXers, etc., yet they are more interested in annuities than any other group. Why do you think that is?

Millennials have the least amount of money saved because this is the age group that is just beginning to save for retirement. The landscape of retirement is changing. We see that in the news with articles on pensions being cut, and social security dwindling, and etc. Millennials are seeing these things, too. Because of this, they understand the need to balance their retirement portfolio with more stable products – that still offer growth.

Some Millennials have recently landed their first “real job,” while others have returned to school to pursue a different career once they have been in the working world, and found their goals have changed. What advice do you have for people who have recently graduated or returned to school after working for a few years?

Stay home one or two nights a month.

While retirement, right now, may seem far away, saving a little at this point in your life adds up to a lot later. Discover small ways to cut back. It’s perfectly okay to go out to lunch, have fun with your friends, travel or enjoy a Starbucks latte. That being said, it is just as important to start thinking ahead as soon as you start collecting a paycheck to discover small changes you can make to save. For example –staying home one or two nights a month instead of going out will make an enormous difference in the long run.

Take good care of yourself physically, and financially. You can expect to be around for a long time.

Although only 1 in 10 pre-retirees expect to live to age 91 or older, 48 percent of pre-retirees reported their longest living family members reached age 91 or older.  Truth is, Americans are living longer, and it’s important to have retirement savings that will last as long as you do. You take care of your body by following a healthy diet and exercising. It is just as important to take care of your fiscal health.  When saving, consider the healthy, long and fulfilling life ahead of you. Make sure your retirement portfolio includes savings products that will last your entire retirement. The IALC site has a downloadable checklist to guide you.

What is the future for FIA investments?

The future for Fixed Indexed Annuities is bright!  The sales of the product will grow as more people learn that this can be a valuable part of a balanced portfolio for retirement, or long-term financial planning.  The product will continue to change to respond to consumer demands and needs, just as it has done in the past.  The future of retirement and financial planning is changing, and the FIA is destined to be part of those products that consumers are choosing from.

About The Financial Poise Editors

Financial Poise provides relevant, plain-English intelligence and continuing education for investors, private business owners and executives.

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