Marketing Corner – March 24th, 2016
CD Replacement Month April 2016
A Short History of CD Replacement Months
You might know that April and October are CD replacement months. But do you know why? The history that lead to these sales opportunities is actually rather interesting and shows how economic events can ripple far ahead in time.
Nearly thirty years ago, on October 19, 1987, the Dow Jones Industrial Average dropped a whopping negative 22.61%–the index’s largest percentage drop. This event would become known as Black Monday and many thought this was the precursor to another Great Crash. While markets rebounded, there remained a great amount of volatility, with after-shocks and mini-crashes like the drop that happened on October 13, 1989.
Even though the economy has been beaten and torn since 1987 (Great Recession of 2008) the effects of Black Monday are still felt today. As markets tanked in 1987, consumers pulled out of exposed investments and transferred their money into Certificates of Deposits.
Hence October and April are now CD replacement months, with six-month and twelve-month CDs up for renewal. For some consumers, CDs can seem like a great option for their money—certainly they did in 1987. With guaranteed interest rates and FDIC backing, CDs seem like a relatively sturdy ship to navigate the sometimes choppy waters of the market.
However, because of their low interest rates, CDs do not hedge against inflation well, when compared to other products, like certain annuities. This is especially true with long-range CDs that many consumers automatically renew out of habit. This means that some consumers may be losing real-world value that could be parlayed into another solution that works better against inflation and could provide lifetime income.
Obviously every consumer presents a different situation. For some, CDs may track well with their needs. Others may not even be aware that there are other options. However, what this means is that April and October are good opportunities for review, discussion, and product sales.
To help agents and advisors take advantage of these CD replacement opportunities, Legacy Financial Partners is offering our CD replacement kits. Fill out the form the to claim your free CD replacement kit.
Don’t forget out about our complimentary 1040 Overlay Kits as well.
CD Replacement Kit
Fill out the form below to receive
your complimentary copy.