In our prior post we discussed two factors to preneed shortfalls: investment returns and the operator’s performance cost increases. The Funeral Consumer Alliance of Greater Kansas City conducts an annual survey of the region’s funeral homes to track the price increases on their General Price Lists. A couple days after our post, the Kansas City
non-guaranteed
The Factors Contributing to Preneed Shortfalls: Investment Return and Operator’s Performance Costs
When the Federal Reserve recently announced the end of the quantitative easing program, it did so with a hint that any increase in interest rates could be a considerable time off. Several global factors may now cause interest rates to remain at unprecedented lows for longer than what the Fed had suggested last December. As…
Consumers Payment Options: Administrative Hurdles and Preneed Trusts
By Bill Stalter on
There are three scenarios for administration of preneed installment payments: the funeral operator collects payments, the trustee collects payments or a third party administrator collects payments. The entity collecting installment payments must be able to apply each payment to the correct preneed account, and provide the other party (or parties) current payment balances. If the…
Consumer Options and Administrative Hurdles: Market Value Allocations
By Bill Stalter on
The conventional guaranteed preneed transaction is premised upon investment returns offsetting performance cost increases to the funeral home. Many funeral homes restrict consumers to single payment preneed contracts to limit their exposure to funding short falls. If the funeral home allows the consumer to pay the preneed purchase price over 60 months, the preneed trust…
Preneed Contract Holders: the lonely 5%
By Bill Stalter on
The Memorial Business Journal recently reported on findings from the NFDA’s 2014 Consumer Awareness and Preferences Study. Some of the findings may not come as much of a surprise to funeral directors, such as consumer demands are changing. But, findings regarding how many respondents have made efforts to prearrange, and prepay, for funerals were…
My Preneed Account: Interest Alone Won’t Cut It
By Bill Stalter on
Since President Obama unveiled the new MyRA as his plan to revive Americans’ saving habits, we have been making comparisons between funding for retirements and preneed. Like the MyRA, the non-guaranteed preneed contract could represent more of an introduction to preplanning funding than the final preneed product. As the AARP acknowledged a few years ago,…
MyPA: No Free Passes
By Bill Stalter on
Our recent post on similarities of the MyRA and non-guaranteed preneed concluded with references to how criticisms of President Obama’s new retirement account were applicable to preneed. One such criticism relates to the lack of investment performance, but we will save that issue for a future date. For this post we want to address the…
Master Trusts: Finding the Rails
By Bill Stalter on
Posted in Fiduciary, Guaranteed, IFDA, Master Trusts, Missouri - SB1, Non-guaranteed, Preneed, Trust Funded
Both the Memorial Business Journal and the Funeral Service Insider commented last week on the Milwaukee Journal Sentinel’s February 7th article regarding the former executive director of the Wisconsin Funeral Directors Association. Several issues were raised that should be included in future industry debate, and in particular, I would agree with Mr. Isard’s questions whether…
Recession and Preneed
By Bill Stalter on
The “R” word is back again. We’re only three years removed from the housing bubble burst, but a sense of normalcy seemed to be returning to the death care industry. It wasn’t necessarily a return to the old ways, not with the increase in cremations and regulations. But, many operators were coming to grips with…
Non-guaranteed preneed: time to review the duties
By Bill Stalter on
The financial fallout from the failures of NPS and IFDA regarding compliance with state and federal laws has accelerated the decision of many funeral directors to switch to the non-guaranteed preneed contract. That non-guaranteed contract represents a fundamental change in the relationship that is established between the consumer, the funeral home and the preneed fiduciary.
The…