Summary: (Complete Show Notes Below) In the 58th episode of the Financial Procast: TIAA-CREF Says People Don’t Trust Financial Advice According to a research report commissioned by TIAA-CREF that surveyed 1000 Americans, nearly 50% say that they aren’t really sure who to trust with regards to receiving financial advice. Now that probably means the other half of people aren’t working with a credible resource either…they just don’t know it. Hmm… What’s even more disturbing? It seems that 37% of those people surveyed say, “they don’t like talking to anyone about their finances.” Uh oh…that’ not good. In our experience, that means these people are likely too embarrassed with their lack of planning to admit their failure to anyone. So, basically we now know the percentage of Americans who aren’t totally delusional about the fact that they’re not saving enough money. That 37% isn’t doing a good job of planning and they don’t wanna talk about it. Additionally, 1/3 of those surveyed said they don’t have time to deal with it. What? It really doesn’t take that much time, so…maybe people should start telling the truth. What’s the truth? The truth is most people are clueless and talking about it with someone just reinforces that fact. This reminds us of the world’s most famous excuses for not exercising…”I don’t have time”, “I’m too busy for that” etc. Really? How about that four hours of television you watch every night, you got time for that...right? The esteemed senior managing director of advisory services at TIAA-CREF, Eric Jones, says “When it comes to financial advice, trust and personal touch are key if we expect individuals to take action.” Ummm…nope, that’s not the key. We can tell you what the two most crucial factors are: 1. Having the right knowledge and/or a competent resource 2. You have to do something—just talking about it won’t help, people have to set the wheels in motion It’s time for a little personal responsibility to take root with regards to planning your finances. A trusted advisor can certainly help but their advice will be much more valuable if you have a destination in mind. Life Insurance Carriers Say “Meh” (18:25) In the last couple of weeks, we’ve had a couple of people ask us specifically about how life insurers will deal with a Treasury default. And does the whole government shutdown really matter? Don’t life insurers invest heavily in treasuries? After all, just last Thursday, the Treasury said “In the event of a default, the U.S. economy could be plunged into a recession worse than any seen since the Great Depression. The U.S. dollar and Treasury securities are at the center of the international finance system. In the catastrophic event that a debt limit impasse were to lead to a default on Treasury securities, financial markets could be shaken to their core as was seen in late 2008, which resulted in a recession worse than any seen since the Great Depression.” Guess what life insurers had to say about all this? Not much. Why is that? Well, life insurance companies are pretty savvy when it comes to invest their general account money. According to industry surveys, the life insurance industry’s general account assets show us that the most of their portfolios are invested in corporate bonds and mortgage loans. Not treasuries. Jack Dolan, the spokesman for the American Council of Life Insurers, “Only 8 percent of our general account assets are held in long-term government bonds. In comparison, about half of our general account assets are in corporate debt.” That’s a pretty small percentage of general account assets invested in government bonds. Also, let’s not forget that just being in the life insurance business is profitable even if your investment return isn’t so great. The life insurance business is inherently profitable—claims are very predictable which makes underwriting profits almost a certainty.
