Word From The Wise Archives - Page 3 of 3 - Creative Edge

Does evolution of species occur in short million year bursts or gradually? While the fossil evidence is not determinative, it appears to be some of both.¹ An adaptive radiation occurred 530 million years ago during a “short” 20 million year period at the end of the dinosaur era. Something like modern-day rabbits, squirrels, gorillas, raccoons, bats, tigers, camels, whales, horses, and elephants came from a few prior species via rapid diversification and evolutionary specialization. Why did this happen, while other species ended up with no adaptation and no descending new species? We can’t know for sure, but more recently observed examples show that evolutionary success comes from environmental opportunity and a release or escape from competition. Perhaps stretching this analogy, I believe we are seeing the first real burst of product innovation and diversification in our fixed annuity industry since our nullification of SEC Rule 151a. With that uncertainty surmounted we have the opportunity to evolve our state-regulated secure insurance offerings.  

I observed my five-year mark as President of the premier Independent Marketing Organization in our industry last month. When I started in this role at Creative, we had just finished a $1.1 billion sales year in annuities, were located in a different building, didn’t know what mobile marketing was and had an advertising department of five. Our Tailor Made (elite level) agents numbered 20. Our 20th ranked agent did $4.6 million of combined life and annuity production.

From the viewpoint of a distributor of annuities and life insurance, the current unsettled economic environment makes 2012 planning difficult. Our business is heavily interest-rate and public-confidence dependent. Sales of fixed rate, new money-based products like annuities often do poorly with low bond and treasury rates. However, sales momentum at year-end 2011 seems stable, even with 1.5% to 3% fixed rates. After all, what is the alternative? Public confidence is more problematic. How will U.S. savers make long-term decisions when they are unsure of what will happen with their jobs, their medical insurance and care, their corporate pensions, their Social Security, their tax bills, or their unemployment benefits? Our current political gridlock offers little hope of clarity until 2013.