Retirement and Market Risks

Trillions of America’s assets are invested in stocks, bonds, mutual funds and separately managed accounts. The potential benefits of equity ownership are clear – it’s a way to create real wealth and hedge inflation over time. Unfortunately, owning equities also poses risks – specifically market volatility and bear markets - that can severely impact your retirement planning.

The chart below shows the annual returns of the S&P 500, a commonly used proxy of the stock market. While the market has offered the potential for growth over time, investors need to consider the implications of down markets. In the last decade, two such downturns occurred causing concern for investors planning for or in retirement.

Average Returns of the S&P 500^® (1990-2009)

Source: Standard & Poor’s as of 12/31/09. The S&P 500 is a free- float market capitalization-weighted index of 500 of the largest U.S. companies. The index is calculated on a total return basis with dividends reinvested. The index is unmanaged and not available for direct investment.  

As life spans increase, retirees must seriously consider the risk of outliving their assets should they live to an advanced age. Improvements in medicine and greater attention to health and wellness are translating into individuals living longer. Simultaneously, health care costs have risen significantly, placing increased pressure on retiree assets. As the chart below shows, a male age 65 has more than a 50/50 chance of living to age 85. So, if you are 65 today, chances are you’ll need to be financially prepared for 20 years of retirement…perhaps more.

Chance of a 65 Year Old Living to an Advanced Age

Age	Male	Female	Couple*	Source: Society of Actuaries’ Annuity 2000 Basic Mortality Table with projected mortality improvement *Chance of one living.
70	93%	96%	99%
80	71%	81%	94%
85	54%	67%	86%
90	34%	46%	70%
95	16%	23%	36%

At Investors Capital, we’ve set out to create a remarkable product that can be a meaningful tool and complementary to your overall retirement planning strategy.

Investor Protector^SM Model Portfolios

The Investor Protector^SM series consists of 4 fully-diversified portfolios that offer a 5% guaranteed income benefit through the Phoenix Guaranteed Income Edge^®. The Investor Protector^SM series features what we believe to be an optimal combination of actively managed and passive investments and has been constructed to offer a unique standalone guaranteed income solution. Investment minimums have been set at $100,000.

Target Allocations as of 12/30/09

Phoenix Guaranteed Income Edge^®

The Phoenix Guaranteed Income Edge (the “Guarantee”) is an insurance guarantee (for an additional fee) paired with four Investor Protector^SM asset allocation models. The Guarantee can provide guaranteed lifetime income, even after the Investor Protector account value is reduced to zero¹. The amount of income guaranteed is 5% of the Retirement Income Base (RIB), which is generally set at the initial account value and then can increase or decrease based on certain events.

Example of Investor Protector^SM in a Rising and Falling Market

This is for illustration only and is not meant to represent any actual investment. In this hypothetical example, the investor’s initial investment establishes the RIB. The illustration assumes the underlying market value increases year-to-year, the client elects to step up and as a result, a higher RIB is locked in on the anniversary date. When the market value declines, the RIB previously locked in is not affected by negative performance. Withdrawals reduce your account value.

Creating More Income

Every year, on the certificate anniversary date, you may lock in a higher Retirement Income Base (RIB) if the account value is higher than the current RIB. In essence, the RIB generally may only increase and not decrease unless you take certain actions.² This feature allows investors to build a larger RIB over time which can equate to a larger income stream provided by the Guarantee and a larger fee. The account is reduced as a result of investment performance and/or withdrawals from your account under the terms of the Guarantee.

Think of retirement as the reward for your success. Now that you’ve managed to meet your goals or are close to meeting them, you want to help secure that objective. Talk to your advisor today to learn how Investor Protector^{S M} could be the key to helping you meet your retirement goals.

¹ Guarantees subject to claims-paying ability of the PHL Variable Insurance Company.

² Taking withdrawals of more than 5% from your account or withdrawals before age 65 can reduce your RIB. Please see the prospectus for more information.

Who Should Consider the Investor Protector^SM solution?

• Individuals in the “bridge phase” who are still accumulating assets but are nearing their target retirement date. Although your account may lose value, establishing a RIB locks in a floor from which an income stream is calculated.

• Individuals currently in retirement will benefit from the protection offered by an income guarantee. For those 65 and older taking income, a 5% income stream is guaranteed for life – regardless of market conditions.³

Investor Protector^SM at a Glance

• Investors Capital has created four fully diversified separate account portfolios that are sold with a 5% guaranteed income benefit.⁴ The Investor Protector^SM series features what we believe to be an optimal combination of both actively managed and passive investments and has been constructed to offer a unique standalone guaranteed income solution.

• When an investor elects to purchase the Investor Protector^SM offering, a Retirement Income Base (RIB) is established based on the account value at the time the certificate is issued. A 5% income stream is calculated from the RIB and the investor can begin taking income immediately (assuming he/she is 65 or older).

• Every year on the certificate anniversary date, the client has the option of locking in a higher Retirement Income Base if the account is greater than the RIB on the anniversary. In general, the RIB may only increase and not decrease (please see the prospectus for investor activities such as excessive withdrawals that could reduce the RIB). A larger RIB equates to a larger income stream for the investor and will also equate to a larger fee for the Guarantee.⁵

• The Investor Protector^SM is designed to provide an answer to the otherwise unavoidable market risk as well as the risk of outliving one’s assets.

A retirement solution to help you prepare for retirement.

The Investor Protector^SM allows investors to add an

income guarantee to their managed account portfolio.

³ Guarantees are based upon the claims-paying ability of PHL Variable Insurance Company and subject to the terms of the insurance certificate. Please see the prospectus for further information.

⁴ Provided by an insurance certificate issued by PHL Variable Insurance Company. A separate application and approval by PHL Variable Insurance Company is required.

⁵ PHL Variable Insurance Company sets the percentage for the Guarantee fee. If the Annual Optional Increase (step-up) increases your RIB, the Guarantee fee percentage may be higher or lower depending on market conditions.