How detrimental were past bear markets?

You are undoubtedly getting phone calls each and every day from your weary and worried clients about what they should be doing with their investments and how today’s events will affect their financial plan. You’ve helped navigate them through the ups and downs of the market in the past, but this is the first time guiding them through a worldwide pandemic. What do you tell them?

PAST BEAR MARKETS

While staying the course may be a great strategy for some clients, the market can still fall further, and possibly set clients back years in their retirement. What amount of risk are your clients willing to take in these tumultuous times? There are options to help take the risk out of the market that provide clients with piece of mind through principal protection. The time to buy principal protection is now. One option to talk to your clients about principal protection is a Fixed Index Annuity or FIA. If the market does go up, your client receives a portion of the gains at the end of the contract year based off the crediting method selected, if it goes down the contract value remains steady and takes no market losses. Any future gains are now locked in at this level and the returns are calculated from the new contract date moving forward, resetting annually. This is the right time to discuss principal protection and upside participation with your clients.

HOW FIXED INDEX ANNUITIES PERFORM THIS CENTURY

Begin the conversation on principal protection by utilizing our consumer facing sales tool Do you have bear market insurance? We set the stage on how detrimental bear markets were in the past to advisory accounts, and how a hypothetical FIA would have performed through these massive bear markets (Black Tuesday, The Dot-Com Bubble, and The Great Recession). The second page helps easily explain the power of annual reset and principal protection. Focus on the locks, as they represent sharp downturns in the S&P 500®. The locks matter today, because in these instances, the contract value in the hypothetical FIA returned 0% and thanks to their feature of principal protection, while the market experienced negative returns. The following rally’s gains were captured up to a participation rate. In 2008, the S&P 500® experienced a 38.14% loss while the FIA with a 40% annual point-to-point Participation Rate in the S&P 500® would have returned 0%. When the market rebounded by 25.32% in 2009, the FIA, which started at pre-crash 2008 levels, would have returned 9.38%. Between 2008 and 2009, the S&P 500® advisory account experienced a loss of -22.47%, while the FIA with a 40% Participation Rate in the S&P 500®, returned 9.38% over the same period. Start conversations around the concept of principal protection in order to protect your client’s retirement savings during this bear market.

Download the sales tool; Do you have market insurance? Here

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