InsuranceNewsNet Magazine January 2010 : Page 17

Your Industry. One Publication. ADVERTISEMENT the home run and got greedy for the rate of return. I’ve been in this business for 45 years and I’ve seen those tough days come probably six or eight times because we live in a cyclical world.” One of the tools Baker uses to show risk is the bell curve. His clients come away with a clear picture of how their financial security is protected while maximum gains are pursued in the long term. But although the illustration helps people understand that investments have an average over time, Baker agrees with those who caution that advisors should not depend solely on the bell curve and models. That is particularly true these days because information and reaction to information move much quicker, making for more erratic markets. “The problem is salespeople can sell anything if they’re good,” Baker said. “I have to be careful when I show the bell curve not to have them believe that they’re safe. The models are not guaran- tees. AsMilevsky and others have shown, if you’re doing distributions, the timing of disasters is far more important.” Black Swan strategies Clifford Caplan, founder of Neponset Valley Financial Partners in Norwood, Mass., has written about financial plan- ning in aBlack Swan universe.He is con- cerned that some investors and his fel- low advisors are jumping back into the rising equitiesmarkets, disregarding the danger of another Black Swan Event. What worries him is that if clients are burned significantly a second time they will stay away from any investing for decades, just as the Depression genera- tion did, and this tendency could result in an even deeper recession. The message is getting across to some of his colleagues, though. “I knowpeoplewhowere anti-annuity who have nowincorporated it in some of their planningwith clients,”Caplan said. “I see more advisors who’ve said that they would never touch variable annui- ties (VAs) and in the past year have said certain clients need them.” Caplan, who began his career selling insurance, said he is selling more life Continued >> our Industry. One Publication. ADVERTISEMENT the home run and got greedy for the rate of return. I’ve been in this business for 45 years and I’ve seen those tough days come probably six or eight times because we live in a cyclical world.” One of the tools Baker uses to show risk is the bell curve. His clients come away with a clear picture of how their financial security is protected while maximum gains are pursued in the long term. But although the illustration helps people understand that investments have an average over time, Baker agrees with those who caution that advisors should not depend solely on the bell curve and models. That is particularly true these days because information and reaction to information move much quicker, making for more erratic markets. “The problem is salespeople can sell anything if they’re good,” Baker said. “I have to be careful when I show the bell curve not to have them believe that they’re safe. The models are not guaran- tees. AsMilevsky and others have shown, if you’re doing distributions, the timing of disasters is far more important.” Black Swan strategies Clifford Caplan, founder of Neponset Valley Financial Partners in Norwood, Mass., has written about financial plan- ning in aBlack Swan universe.He is con- cerned that some investors and his fel- low advisors are jumping back into the rising equitiesmarkets, disregarding the danger of another Black Swan Event. What worries him is that if clients are burned significantly a second time they will stay away from any investing for decades, just as the Depression genera- tion did, and this tendency could result in an even deeper recession. The message is getting across to some of his colleagues, though. “I knowpeoplewhowere anti-annuity who have nowincorporated it in some of their planningwith clients,”Caplan said. “I see more advisors who’ve said that they would never touch variable annui- ties (VAs) and in the past year have said certain clients need them.” Caplan, who began his career selling insurance, said he is selling more life Continued >> u u 17

Annual Review Millions

 

Loading