OK, we know you don’t use a crystal ball to peer into the future when it comes to building a financial roadmap for your clients. But what if you had tools that made it easier—and faster—to assess the hundreds of indices out there and home in on FIA options and allocations that really make sense based on your client’s unique goals? Tapping into resources from The Index Standard® is a great place to start.

During a recent episode of The Breakthrough Advisor podcast, Laurence Black sat down with InsurMark CMO Jack Martin to discuss some of the intriguing trends he’s seeing in the ETF and FIA landscape and how insight from Wall Street informs The Index Standard’s recommendations every day.

Laurence, a Wall Street legend and co-founder of The Index Standard, also shed light on the extensive research and tools his firm offers to help advisors demystify indices, overcome the challenges of predicting the future and simplify conversations for advisors and clients about complex index options.

We always love getting Laurence’s perspective on indices, because he spent over two decades developing and designing them. As co-founder of The Index Standard, Laurence views himself as more of a “gamekeeper” or steward, who evaluates indices and forecasts performance based on mountains of historical data, burgeoning trends and his many years in the industry.

“I founded The Index Standard for two reasons. One is I’m really passionate about helping people do better. I want people to retire with more money in their pocket. And I’ve also seen the dangers of retiring with all your money invested in one asset class. My father suffered a sequence of losses, so it’s a passion but it’s also personal,” Laurence says.

And Laurence’s second reason? Putting the expertise he built on Wall Street to work for advisors and their clients. As he explains, “I spent a number of years as a bond trader and then most of my career developing and designing indices. What we are doing is helping people decode this complexity, demystify it and make it easy for people to understand what’s going on.”

Laurence Black’s take on today’s headlines and what it means for investors

Interpreting trends from the past with a lens on the future is something Laurence does incredibly well. With that in mind, our Jack Martin asked him to weigh in on what investors should be paying attention to from today’s headlines.

According to Laurence, “We all have a recency bias. People always give more weight to what’s happened in the most recent past. Since tech has done incredibly well, people want to keep buying tech, or buy the NASDAQ or S&P 500, which has a lot of tech exposure. But the wisdom of Wall Street tells us it really makes sense to be very diversified. To be a successful investor, you have to be a little bit of a contrarian. You have to buy when you feel uncomfortable. You have to buy when markets are down.”

Based on the wisdom of Wall Street, Laurence shared three interesting insights for investors:

  1. Higher returns for European equities. “Everyone’s got such a negative perception on Europe. The aging population, low, low growth, the war in Ukraine … but Wall Street expects higher returns, and that’s primarily because European valuations are much lower.”
  2. Higher returns for emerging markets. “For the last 10 years, emerging markets essentially have been flat. They’ve returned nothing. After you’ve had a bad 10 years, things may get better. So, you think, there’s a lot of innovation in Asia, so maybe that’s going to help drive returns. Chinese equities have had a terrible time. They’ve dropped a lot and are looking very cheap. So, we actually see emerging markets’ expected returns at double digits. That’s pretty high.”
  3. Expected returns on fixed income is much higher. “We’re seeing a forecast for the S%P US Agg Bond Index at around 3, 4, 5%. Which is a lot higher than in the last couple years when they have been sub 1%. This really points to being very diversified. Don’t just put all your money into one asset class.”

Advisors need intuitive ratings and forecasts to optimize FIA solutions for clients

Along with discussing today’s headlines and trends, Jack and Laurence had an interesting exchange about indexes and how The Index Standard can benefit advisors.

We can all agree that one of the biggest challenges with indexes is there are just so darn many of them, right? While ratings are super helpful, ratings alone don’t provide the complete picture. Advisors need a forecasting component to help narrow down FIA options and identify those that best meet a client’s needs based on risk, longevity, diversification and other factors. The Index Standard provides both index ratings and forecasts.

Why do The Index Standard’s index ratings and forecasts make the advisor’s job easier? They take a deep dive into the data and do the legwork, so advisors don’t have to. And let’s get real, advisors don’t have the time or resources to unpack the inner workings of every index out there.

The first way Laurence and his team simplify indices for advisors is by way of their rating process. They evaluate and rate each index used in an annuity, then apply ratings that go from platinum, gold, silver, bronze (their top four ratings) and so on.

“If you see an index that has those top ratings, that actually means they’re all pretty solid. A couple years ago, we added forecasting. We take the wisdom of Wall Street and apply it directly to each index to help give advisors a sense of what could be coming down in the future. We take 10-year forecasts from major asset managers—about 35 of them—aggregate them and apply that to each index,” explains Laurence.

Through InsurMark’s strategic partnership with The Index Standard, advisors have access to index ratings and monthly reports that break down the components and nuances of the top indexes in the market. Your ADC can provide details.

Ratings and forecasts are terrific—but what about allocations?

One of the biggest challenges financial professionals face after selecting an annuity is figuring out how to choose from the different lines within that annuity. With its latest innovation, The Index Standard is taking forecasting to the next level by creating model allocations for FIAs.

Says Laurence, “A lot of these indices are very unfamiliar, so it’s hard to allocate. And we all know the S&P, but you might not know XYZ bank or ABC bank. Which one should you allocate to? Which one is going get the highest returns? Well, that’s hard to do. What we do is forecast a net credit for what you may expect from each crediting line. Then we simply choose the highest, allocate to those and produce two model allocations.”

This process, performed by The Index Standard, not only helps ensure there’s diversification, it also saves advisors time because they don’t have to overthink things.

“It’s a complex process, and we’ve done a lot of the hard work. We provide a base allocation that you can start off with and have a conversation with your client—whether they’re a little bit more risk adverse or they’re actually seeking higher returns. So, you can use our allocations as a good starting point for a conversation,” Laurence says.

Our strategic partnerships help advisors distinguish themselves in the marketplace

As an advisor development organization, InsurMark seeks out and invests in strategic partnerships—like our partnership with The Index Standard—to help advisors provide better solutions for their clients. When clients benefit, advisors benefit from referrals and upselling opportunities that result from happy clients.

To learn how InsurMark can help you streamline and grow your business, contact us. You can reach us by phone at (800) 752-0207 or connect with us online.

As an ADO – Advisor Development Organization™, InsurMark provides solutions to meet the ever-evolving needs of financial professionals with a mission to protect and enhance the financial security of every home in America.