New York Life Taps Ibbotson to Offer a Unique Asset Allocation Model That Factors in the Missing Link of Human Capital

Holistic Approach Allows Clients to Evaluate Their Total Economic Wealth, Make Informed Choices

NEW YORK--(BUSINESS WIRE)-- New York Life Insurance Company has tapped Ibbotson Associates to help develop Lifetime Wealth Strategies, 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. These tools 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.

Mr. Gordon continued, “It’s not a complicated discussion, but the key is a questionnaire that was developed by New York Life in cooperation with Ibbotson Associates, based on Ibbotson’s groundbreaking research on asset allocation strategies. Once the client fills out the questionnaire, the registered representative can give them three different proposals. The registered representative can propose investments only, insurance only, or an integrated investment and insurance solution. My recommendation to agents is that they always show all three proposals. 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.”

“We are pleased to be able to leverage our pioneering expertise in asset allocation to help create real-world solutions for investors that account for their human capital – often the largest asset, but typically an underappreciated component of financial plans,” said Peng Chen, president of Ibbotson. “Working with the completed questionnaire, the Ibbotson modeling provides a tailored portfolio assignment for each individual client based on their human capital, financial capital, and risk tolerance.”

New York Life has a patent pending on one aspect of the Lifetime Wealth Strategies system. Called the Protection Solution Decision Model (PSDM)*, this proprietary tool is an essential part of each proposal prepared for clients by New York Life agents using the system. 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.

Model Also Addresses Retirees’ Need for Income

“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. This 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,” Mr. Gordon said.

A Changing Landscape in Wealth Management

“The financial crisis has changed the way people think about their wealth and risk-taking. Now more than ever, clients are seeking a financial strategy that balances protection needs with goal achievement. With the financial wealth of the world’s richest investors expected to grow 8.1 percent annually to $48.5 trillion by 2013,** many investors want their financial professionals to treat their portfolios holistically, factoring in all relevant pieces in order to help meet objectives for safety and income. The collaboration of two respected brands – Ibbotson Associates and New York Life – offers clients the confidence that comes from many years of experience and knowledge in both asset allocation and insurance protection. Human capital cannot be traded like a stock, but it is a vital component of wealth that must be diversified and protected. The fruits of our collaboration provide both registered representatives and their clients with the tools needed in today’s environment to help client’s see and understand their total economic value in one platform,” Mr. Gordon said.

About New York Life

New York Life Insurance Company, a Fortune 100 company founded in 1845, is the largest mutual life insurance company in the United States*** and one of the largest life insurers in the world. New York Life has the highest possible financial strength ratings from all four of the major credit rating agencies. Headquartered in New York City, New York Life’s family of companies offers life insurance, retirement income, investments and long-term care insurance. New York Life Investments**** provides institutional asset management and retirement plan services. Other New York Life affiliates provide an array of securities products and services, as well as institutional and retail mutual funds.

Please visit New York Life’s Web site at www.newyorklife.com for more information. To read Ibbotson’s academic research on the topic of asset allocation, human capital and life insurance, visit www.ibbotson.com/humancapitalandlifeinsurance.com.

About Ibbotson Associates

Ibbotson Associates is a leading independent provider of asset allocation, manager selection, and portfolio construction services. The company leverages its innovative and ground-breaking academic research to create customized investment advisory solutions that help investors meet their goals. Founded by Professor Roger Ibbotson in 1977, Ibbotson Associates is a registered investment advisor and a wholly owned subsidiary of Morningstar, Inc.

*The Protection Solution Decision Model (PSDM) is New York Life’s patent-pending, proprietary tool designed to help financial professionals build upon their existing relationship with clients by providing them with a standardized protection solution recommendation. The model evaluates four solutions: (1) Whole Life Insurance, (2) Variable Universal Life Insurance, (3) Term Life Insurance with a Side Fund of Traditional Investments, and (4) Self-Insuring with Traditional Investments Only.

**13th annual World Wealth Report, by Merrill Lynch Global Wealth Management and Capgemini, June 24, 2009

***New York Life is the largest mutual life insurance company based on the Fortune 500, ranked within industries, Insurance: Life, Health (Mutual), Fortune magazine, May 4, 2009.

****New York Life Investments is a service mark used by New York Life Investment Management Holdings LLC and its subsidiary, New York Life Investment Management LLC

New York Life
William Werfelman, 212-576-5385
[email protected]
or
Ibbotson Associates
Alexa Auerbach, 312-696-6481
[email protected]

Source: New York Life Insurance Company