Thriving in a Changing World - BILTIRThriving in a Changing World. External Drivers of Change...
Transcript of Thriving in a Changing World - BILTIRThriving in a Changing World. External Drivers of Change...
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2018 Bermuda International Life & Annuity Conference
Thriving in a Changing
World
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External Drivers of Change
•Technology•Regulations•Demographics
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TechnologyThe 6 D’s of Exponentials•Digitized•Deceptive•Disruptive •Dematerialized•Demonetized•Democratized
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Wall Street Journal
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“I very frequently get the question: ‘What’s going to
www.asset-map.comAsset-Map, LLC © 2018 All Rights Reserved.
change in the next 10 years?’ … I almost never get the
question ‘What’s not going to change in the next 10 years?’ And I submit to you that the second question is actually
the more important of the two – because you can build a
business strategy around the things that are stable in
time…” -Jeff BezosFounder and CEO
Amazon.com
http://www.asset-map.com/
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When decisions are complex or there is a high cost of being
wrong, people want another
human’s insight for confidence.
The Financial Services Business...
Source: Duran, Joe. “Clash of the titans: Bionic advisers vs. Robo-advisers”, InvestmentNews.com. 4 Dec 2014. Web 12 Aug 2015.www.asset-map.com
Asset-Map, LLC © 2018 All Rights Reserved.
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www.asset-map.comAsset-Map, LLC © 2018 All Rights Reserved.
http://www.asset-map.com/
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2017 Noble Prize Winner for Economics
People don’t think rationally when making financial
decisions.
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Mitch Anthony
Financial Advisor magazine, May 2018
Emotion-Driven Planning Will Accelerate SoonPeople want their money managed in ways that improve their lives.
Old Premise
Do you have enough money?
New Premise
Are you managing your money in a way that improves your life?
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DOL Rule•DOL Fiduciary Standard•Robo-Advisors, RIA•Commoditization of transactions without adviceLEADING TO NEW DIFFERENTIATED COMPETITION•Low Cost Advisors•Alternative Channels•Comprehensive Solutions
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Commissions Under Pressure
Commissions banned fee for service
Norway Finland United Kingdom Netherlands
Australia
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Maximizing the Social Returns of a Career in FinanceApril 12, 2015
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Now in Five Languages
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PURPOSELiving a Life
of Significance
Wheel of Fulfillment
INSPIRED
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Critics of Capitalism“Acclaimed as one of the
most influential books of the decade”
THESISCapitalism only benefits the rich
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“Firms that subscribe to a PURPOSE for being, that is
different from and goes beyond making money.”
Defined
By Raj Sisodia
10/01/98 – 9/30/13
S&P+5.32%
Firms of Endearment
+21.17%
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Why Stories Work
• Builds trust relationships• Stories are memorable and co-creative• The more emotional the more impactful• Stories begat stories• Create a biochemical bond
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Wheel of Fulfillment
PURPOSELiving a Life
of Significance
COMMITMENT
INSPIRED
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Face Your Fears
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How would you like to know everything you need to know about
capital markets?
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Consider Ownership vs. “Loanership”Stocks Have Historically Outperformed Cash and Bonds
Average Annual Returns 01/01/1928 through 12/31/2017
3.06% 3.43%
4.93%
11.37%Stocks, Bonds, Bills & Inflation
01/01/1928 through 12/31/2016
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Consider Ownership vs. “Loanership”Stocks Have Historically Outperformed Cash and Bonds
Average Annual Returns 01/01/1928 through 12/31/2017
3.06% 3.43%
4.93%
11.37%
0.38%1.88%
8.32%
• Inflation Erodes Return - Cost of living goes up…Purchasing Power goes down.
• Longer Life Expectancies may require higher “real returns”
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-70.
-35.
0.
35.
70.
105.
� 28 Down Years
Past performance is no guarantee of future resultsSource: Historical data from Dow Jones and Company, Inc..
Dow Jones Industrial AverageAnnual Percentage Change (1/1/1929 through 12/31/2011)
� 56 Up Years
•Nobody knows when the market direction will turn
•Understand the difference between “Risk” and “Volatility”
Stock Market Goes Up and Down
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Series1
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66.78
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-2.97
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-15.33
7.57
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12.07
26.66
-8.14
2.26
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8.43
-3.77
43.97
20.77
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33.97
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14.56
10.89
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17.87
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22.58
2.26
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20.32
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Series10-17.17-33.76-52.67-23.1166.784.138.5624.84-32.828.04-2.97-12.72-15.337.5713.8212.0726.66-8.142.26-2.1512.8617.6414.368.43-3.7743.9720.772.27-12.7733.9716.4-9.3518.7-10.8117.0114.5610.89-18.9415.24.28-15.194.816.1214.58-16.58-27.5838.3317.87-17.27-3.154.1914.94-9.2319.620.27-3.7327.6622.582.2611.8526.96-4.3420.324.1813.722.1433.4526.0122.6416.125.22-6.17-7.1-16.7625.323.15-0.6116.296.43-33.818.89.45.6
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Left Brain – Right Brain
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Investment Principles
Principles1) Faith2) Patience3) Discipline
Behaviors
1) Asset Allocation
© 2008 Nick Murray All rights reserved. Used with permission. From Nick Murray's book Behavioral Investment Counseling
www.nickmurray.com
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Asset Allocation
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Investment Principles
Principles1) Faith2) Patience3) Discipline
Behaviors
1) Asset Allocation
2) Diversification
3) Rebalancing
© 2008 Nick Murray All rights reserved. Used with permission. From Nick Murray's book Behavioral Investment Counseling
www.nickmurray.comAsset allocation does not ensure a profit or protect against a loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit orprotect against a loss.
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What is the defining Issue of the 21stCentury?
•Terrorism?•Global Warming?•Energy?
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DISCOVEROctober, 2012
The Aging Population of the World
© 2012 Kalmbach publishing
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“It seems likelythat the future
will favor women
entrepreneurs”
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Many people greatly underestimate the time they will spend in retirement
The Risks
85 92
88 94
9792
65
65
65 At least one person has a chance of living beyond:
Male
Female
Couple
50% chance of living beyond
25% chance of living beyond
Popularretirement
age
Source: Society of Actuaries, RP-2014 Mortality Tables Report
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Bloomberg BusinessWeek July 28, 2003 © 2003-2010 The McGraw-Hill Companies Inc.
Everyone Wants to Retire(Preferably before they die)
“We need to move back in
with your parents”
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Wall Street Journal, April 23, 2003
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Mother-in-Law
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Caregiving Ramifications are a Particular Issue for Women
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America Is Running Out of Family Caregivers, Just When It Needs Them Most
Smaller, more far-flung families mean fewer unpaid helpers
Wall Street JournalJuly 22, 2018
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Robyn Lewis-Oglesby
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New Challenges
Turn assets into income
Manage risk not just money
Make the most of what you got
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Consumer Change of Focus
Return onInvestment
Reliabilityof Income
Accumulation Phase
Distribution Phase
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Purchasing Power Risk/ Inflation
1988Postage stamps cost about $0.25
2018Postage stamps cost about $0.50
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Year 5 Year 10 Year 15 Year 20 Year 25 Year 30Income $115,927 $134,392 $155,797 $180,612 $209,378 $242,726
How $100,000 income must grow to keep up with 3% CPI
Chart1
Year 5
Year 10
Year 15
Year 20
Year 25
Year 30
Income
115927
134392
155797
180612
209378
242726
Sheet1
Income
Year 5$115,927
Year 10$134,392
Year 15$155,797
Year 20$180,612
Year 25$209,378
Year 30$242,726
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1988
S&P 500
272.21
(8/1/1988)
$.25 cost
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2018
S&P 5002,813.36
(8/1/2018)
$.50 cost
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Photo © Joseph Jordan
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MDRT Excerpt
Video by MDRT
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Life of Significance
Photo Public Domain; published before 1923 and public domain in the U.S.
Chief Seattle
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Photo © Joseph Jordan
Slide Number 1External Drivers of ChangeTechnologySlide Number 4“I very frequently get the question: ‘What’s going toThe Financial Services Business...Slide Number 72017 Noble Prize Winner for Economics�Slide Number 9DOL RuleCommissions Under PressureSlide Number 12Slide Number 13Wheel of FulfillmentSlide Number 15Slide Number 16Slide Number 17Why Stories WorkWheel of FulfillmentFace Your FearsSlide Number 21Slide Number 22Slide Number 23Slide Number 24Stock Market Goes Up and DownLeft Brain – Right BrainInvestment PrinciplesAsset AllocationInvestment PrinciplesWhat is the defining Issue of the 21st Century?The Aging Population of the WorldSlide Number 32The RisksEveryone Wants to Retire�(Preferably before they die)Slide Number 35Mother-in-LawCaregiving Ramifications are a Particular Issue for WomenAmerica Is Running Out of Family Caregivers, Just When It Needs Them MostSlide Number 39Robyn Lewis-Oglesby New ChallengesConsumer Change of FocusPurchasing Power Risk/ InflationHow $100,000 income must grow to keep up with 3% CPI19882018Slide Number 47Slide Number 48Slide Number 49Slide Number 50Life of SignificanceSlide Number 52