5 Minute Read
Posted by Michael Bradburn on July 13, 2017

In a recent study published by InvestmentNews1, Alternatives in the Mainstream:  A Potential Growth Opportunity for Advisors, several points come to light that indicate a growing desire, driven primarily by investor sentiment, for more alternative investment solutions to be offered by their advisors.

Alternative investments can provide significant benefits to investor’s asset allocations.  Investors, primarily long stocks, bonds, mutual funds and ETFs are overwhelmingly concerned about uncertainty-driven market volatility. The unique, non-correlated nature of the Senior Life Settlement Alternative Asset Class can provide diversification against market risk, produce an attractive illiquidity premium and remove investor’s exposure to the downside capture risk exposure to their principal.

However, there is a general reluctance by both advisors and investors alike to embrace the use of alternative investments due to their perception of being too complicated. Advisors generally do not yet understand how alternatives fit into their clients’ asset allocations.

The chart below illustrates some very simple characteristics about the Senior Life Settlement Asset Class that you will find compelling as to why, according to the study, 83% of investors are interested in alternative investments. The statistics cited are from advisors’ concerns collected in the InvestmentNews survey:

Perhaps the most compelling statistic derived from the survey is that it is estimated that allocations to alternative asset classes will increase by $150 Billion over the next few years.

The broad categorization of alternatives noted in the study include alternative strategy mutual funds, fund of funds, private equity, hedge funds, private real estate, business development companies, banks loans, non-traded REITs, leveraging strategies, currencies and structured products. The one overriding characteristic of the list of strategies to achieve the objectives and/or mitigate the risks illustrated in the table above is that although these strategies are designed to reduce exposure to losses in down markets, they all can potentially lose money, default entirely or mute returns in up markets.

The primary differentiating factor with Senior Life Settlements is that they do not derive market-dependent yield. Senior Life Settlements create wealth from the contractual obligations of highly rated US Legal Reserve Life Insurance companies. An investor’s Total Projected Yield is the spread between the acquisition cost and the face amount of a life insurance contract. The eventuality of human longevity and the non-correlated nature of a life settlement contract removes risks commonly associated with the market-based sub-sets of the above-noted risk mitigation strategies.

Time is the primary risk to life settlements. But time is equally-weighted to the strategies mentioned herein. If for instance, you were primarily a real estate investor and your exit strategy was to liquidate your holdings for retirement in 2006, you were a genius.  In 2007, you were bankrupt.

Additionally, life settlement industry projections2 estimate that over $100 Billion of value evaporates annually from seniors over the age of 65 who unknowingly allow their coverage to lapse worthless of value. By making a market to capture this lost value that equates to two-thirds of the growth potential of the alternative space noted by InvestmentNews, as advisors, you have the potential to grow your practice by performing a socially responsible service to seniors who no longer want, need or can afford their life insurance coverage but as importantly, you have the opportunity to provide an intelligent solution for which, according to the survey, 83% of your clients are asking you to provide.

Capstone Alternative Strategies is a leading educator amongst advisors that recognize the utility of the Senior Life Settlement Asset Class. Senior Life Settlements are an idea that’s time has come and we stand at the ready to show you how The Capstone Platform will allow you to deepen client relationships and do well by doing good. Differentiate your practice and learn the Senior Life Settlement story. It will be an outstanding investment in the growth of your practice.

For more information on Senior Life Settlements and The Capstone Platform, call Jason Bokina at 404-504-7006 or email contact@capaltstrategies.com.

1 http://www.investmentnews.com/dcce/20170313/4/4/WP_SPONSORED/3447504

2 https://globenewswire.com/news-release/2015/02/24/709266/10121642/en/American-Seniors-Forfeit-112-Billion-in-Benefits-Annually-Due-to-Lapsed-or-Surrendered-Life-Insurance-Policies-According-to-Research-Presented-at-LISA-Institutional-Investor-Confer.html 

Bradburn Michael J. Bradburn 

Michael Bradburn started his career as President and General Manager of a small automotive sales conglomerate, where he oversaw and managed several domestic and Asian manufactured retail dealerships. After selling the dealerships, Michael then worked with Prudential Preferred Financial Services in life insurance and annuity sales. He later advanced his career in private wealth management at Morgan Stanley-Dean Whitter and subsequently Merrill Lynch. Following that, Michael served as Chief Financial Officer of a metals manufacturing and distribution startup, where he was instrumental in securing patents and developing a completely virtual, vertically integrated, manufacturing and distribution technology serving the global powder metallurgy industry. At Capstone Alternative Strategies, he oversees marketing and advisor development. Michael attended Indiana University where he became a member of the Sigma Chi fraternity and later earned his BS from Ball State University.