New York Life Teams with Ibbotson on Asset Allocation Model

New York Life Insurance Company has tapped Ibbotson Associates to help develop a set of tools "to help registered representatives account for their clients’ total economic wealth and optimize their portfolios by making insurance and investment decisions together."
A press release said Lifetime Wealth Strategies put the appropriate questions in plain language and provide clients with the answers they need.

“When clients are asked about their wealth, or what they are worth, they immediately think of cash, stocks, bonds, and real estate. But they often need to be prompted to consider another aspect of their worth—their human capital. In textbook terms, human capital is the present value of future earnings. In the real world that translates into what a paycheck is worth to a family over a lifetime,” said Michael Gordon, first vice president of New York Life, in the press release.

Gordon explained that once a client fills out the Lifetime Wealth Strategies questionnaire, a registered representative can give him or her three different proposals. The registered representative can propose investments only, insurance only, or an integrated investment and insurance solution. “When clients or prospective clients see the options laid out next to each other they will usually see that the integration of insurance and investments gives them a better potential outcome and better manages their risk than keeping them separate,” Gordon said.

New York Life has a patent pending on one aspect of the Lifetime Wealth Strategies system, the Protection Solution Decision Model (PSDM). The PSDM produces the life insurance recommendation for the client, determining the most economically optimal type of life insurance product based on the client’s specific profile, including their risk tolerance.

“For retirees, the Ibbotson model also considers longevity risk, the client’s risk of outliving his or her savings, by incorporating a single premium immediate annuity in the asset allocation. That factors in the all-important part of retirement income—guaranteed lifetime income from a highly rated insurance company. With so few retirees covered by a defined benefit pension plan today, and the relative certainty that Social Security won’t be more generous in the future than it is today, more and more Americans are looking to immediate annuities to buttress this part of their portfolio,” Gordon said.