PIMCOs Bill Gross: “We’re witnessing the death of equities”

There are a handful of people who – when they talk about their global economic outlook or speak passionately about their beliefs – their words resonate deeply in those who hear them.

Warren Buffett is one. Steve Jobs was another. Bill Gross is right up there with them. Gross is the cofounder of Pimco as well as its co-Chief Investment Officer. But most people simply refer to him as “The Bond King” because he runs one of the largest mutual funds in the world, one the focuses almost exclusively on bonds.

In his August investment outlook, Gross urged investors to think twice about buy-and-hold investments such as stocks. The heyday for consistent, annual returns in the stock market has long past, he said.

Or, as he colorfully put it: “The cult of equity is dying. Like a once bright green aspen turning to subtle shades of yellow then red in the Colorado fall, investors’ impressions of ‘stocks for the long run’ or any run have mellowed as well.”

Now I can’t speak much about the cross-seasonal hue of aspen tree leaves, but Gross is dead right about people losing faith in one of the most traditional forms of investment.

Truth is, the stock market is wildly volatile and will continue to be for a host of reasons: High U.S. unemployment, European debt crisis, China’s economic slowdown. All of stifling global trade across sectors, and none of those are showing signs of easing.

And that wild volatility is driving investor away like the plague.

Gross later writes that since 1912, stocks have only averaged a 6.6% annual gain when you factor inflation. Nowadays, slow global economic growth makes getting a 6.6% annual return from the stock market a “historical freak,” according to Gross.

I bring all this up specifically for those of you who are selling life insurance or financial planning.

Investors are losing confidence in equities or anything that has a whiff of the stock market to it. People are more leery of putting their money in equities, and it’s your job to create a demand in them for a safe and viable alternative.

And there is no better time than now to hone your message and harness this collective frustration and distrust in the stock market to sell cash value life insurance.

In case you have forgotten, cash value life insurance plans offer exactly what many conventional stocks are missing: safety, liquidity, guarantees and tax-advantages.

Fact is, cash value life insurance is one of the few investment vehicles out there that don’t face the headwinds of the unsteady stock market. That kind of safety is rare for any investment. This one reason alone will help prospects sleep better at night.

Come to think of it, not only is 6.6% a “historical freak” as Gross calls it, but even in the rare event you get 6.6% annual gain in the stock market, you still owe taxes when you cash them in.

There again does cash value life insurance look more appealing. Any withdrawal from a properly designed cash value life plan is tax-free for any use.

I could go on, but you know the benefits of your products and services better than anybody.

Bill Gross doesn’t mince words with his readers and neither should you with your prospects.

Being straightforward with a prospect is equally informative and self-serving to your business.

Just leave the poetic talk about fall foliage to Bill Gross.

Be valuable.

John McCarthy
Managing Editor, Leads4Insurance.com

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