In an era of increasingly sophisticated financial transactions, many consumers are falling further and further behind in understanding how to use such products.
The result is tremendous friction between consumers and product providers. Product sales fall far short of their potential.
Consumer suspicion and distrust become the dominant features of the buyer-seller relationship.
And government, when it steps in to provide yet another layer of regulation, is often out of touch with consumer needs.
Long-Term Care Insurance
Roughly 8 percent of aging Americans have purchased long-term care insurance. It provides support for people with physical and mental disabilities that prevent them from doing basic activities—feeding and dressing themselves, using the bathroom, getting around, and the like.
About two-thirds of us will need the services covered by this product at some point in our lives. The costs of specialized care in a nursing home or assisted living facility can quickly wipe out the assets of even financially sound households. Health bills are far and away the leading cause of personal bankruptcies. Even with these cautionary tales and a growing arsenal of tax and other advantages, long-term care insurance continues to struggle to make its case.
Better 401(k) options
Retirement investment companies constantly reassure us that their defined-contribution accounts are successful, or would be if consumers set aside sufficient funds for retirement.
Of course, they fund these commercial messages and voluminous studies with the enormous fees they earn by "managing" retirement accounts, often with mediocre results. Is there any doubt we need new ideas to achieve better retirement outcomes?
Bringing annuities to the masses
I have been writing about annuities for 40 years and they remain alien to the very people they're supposed to help. Unless you have a boatload of money and a good financial adviser, the annuity industry has not developed a successful way to speak to you. The irony is that surveys of middle-income consumers find them clamoring for secure and predictable returns, even as annuity payment guarantees are being pummeled by today's low interest rates.
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