ITA Quarterly Newsletter - November 2019

April 21, 2021

Greetings [FIRST]:

ITA President's Message

Our annual Iowa Trust Conference was well attended and we had strong support from vendors and sponsors.  The speakers provided insight into current industry topics and also provide continuing education credits for our industry.  Please say thank you to vendors and sponsors for their support when you visit with them. I thank you for completing the post conference survey as the information is helpful for planning the annual conference.

Our peer group meetings are well attended and the trust association board receives very good feedback from attendees. The board is working to provide value to its association members for the dues you annually pay. The ITA board is always looking for ideas to help our industry and we continue to discuss where we can allocate our resources and appreciate your input.

It has been in honor to serve on the board of the association and as the President in 2019. I welcome Craig Schrader into that position in 2020. I wish you continues success in the future.

ITA President Brad VanHeuvelen is presented a plaque for his service by incoming ITA President Craig Schrader from West Bank.

Brad VanHeuvelen
Sr. WMG Officer, Peoples Bank and President of the Iowa Trust Association

Thank you to ITA Fall Conference Sponsors and Exhibitors

A special thanks to the ITA Fall Conference sponsors and exhibitors.  

Broadridge Financial Solutions, Inc.
MainStreet Advisors
Principal Funds
Promontory Interfinancial Network, LLC
Steffes Group


Accutech Systems Corporation
Baird Equity Asset Management
Broadridge Financial Solutions, Inc.
BTC Capital Management
Christopher's Fine Jewelry and rare Coins
EPIC Retirement Plan Services
FCI Advisors
Federated Investors
Fifth Third Institutional Trust & Custody
Fintech Securities
Heartland Funds
ITM TwentyFirst
MainStreet Advisors
Northern Trust Asset Management
Peoples Company
Principal Funds
Promontory Interfinancial Network, LLC
Reich & Tang
Steffes Group, Inc.
Summit Ag Management, LLC
T. Rowe Price

Update: Adult Guardianships and Conservatorships Law

The IBA recently participated in a continuing education seminar on the comprehensive reform of Iowa’s adult guardianship and conservatorship law (HF 610) that takes effect on Jan. 1, 2020. The seminar was hosted by University of Iowa Law School and Drake Law School. Also participating in the seminar were Rep. Dustin Hite of Pella, Judge Craig Block, an associate probate judge for District 5C, as well as former Rep. Chip Baltimore.

Rep. Hite, an attorney practicing in this area, and Judge Block offered the following guidance on how to handle the implementation of the new law, specifically on when to file the newly required “initial financial management plan.” Their recommendations are:

  • If the conservatorship’s next annual report is due before Jan. 1, 2020, conservators should include in the report all information required to be in the new initial financial management plan.
  • If the next annual report is due after Jan. 1, 2020, conservators should seek a court order continuing their existing powers until the next annual report is due, at which time the conservator will file the initial financial management plan. Note: There is a model form to obtain this court order – Judge Block encourages practitioners to use this form and is already signing continuation orders. 

For banks holding conservatorship accounts as commercial deposits, most commentators believe banks can continue to transact business on these accounts as normal. Banks have traditionally relied on letters of appointment to evidence a conservator’s authority to transact business on an account, and such letters should be sufficient under the new law. Once the new report is filed, the bank may want to have a copy on file.

If you have further questions, please contact Bob Hartwig or Mike Rozenboom.

Land and equipment update
Tim Meyer, General Manager Iowa, Steffes Group, Inc.

Our Equipment Market

Through all this, in our auction world, we see the effects played out in the market conditions.  Just like we said in our Spring Letter most of it came true.  One thing that has been a little surprising is a lowering interest rate market as some compared it to perhaps a fear of a rising interest rate market.  Otherwise, as we speak today the machinery market can mostly be described as level and stable.  The land market overall in our markets has been “steady and firm”.  Right now the goal for Fall on Farm Machinery would be to hold the line.  We feel there is a good demand and an attentive audience who will look to farm auctions to fill their equipment needs.  The market will have quality selections and those sellers who stand by their equipment and have been good about the maintenance of their equipment will have a better chance at a successful auction.  Buyers will be rewarded with great value and there will be a good audience for that type of equipment.  On the other hand, if there’s a story, or perhaps a little age, or not quite the proper look, you’ll be seeing a much colder reception in regard to the buying crowds.  We continue to look for abnormal disparity in pricing based on condition.  

Our Real Estate Market
We believe there are still more buyers than sellers and the market seems to be impervious to any negativity in most of our areas.  It’s been a short story and not much to tell.  It’s steady to stronger in most markets other than North Central Iowa.  However, this area has remained steady from the Spring market prices.  One success story is we are seeing more successful investor buyers outbidding owner/operators as we progress through the year.  Whether this is because investors are being more aggressive, or farmers are being more cautious it is too hard to tell.  If we look at concerns, it would have to be sustaining prices on straight pasture ground without recreational value.  We also see a large disparity between highly productive ground vs medium-quality ground regarding specific CSR values.  

Overall, we don’t look for any significant changes in the real estate market through the end of the year.  Check out our website for current auctions as well as auctions completed.  We should have a good handle on the market by the end of the year as we are setting out to sell over 7,000 acres before year-end.  Thank you for reading, we look forward to seeing and talking with you in the future.  
Life Settlement Market is healthy and TOLI Trustees Should Take Notice
John Barkhurst, ITM TwentyFirst

Over the years, the life settlement industry has had its ups and downs. During its heyday in 2007 and 2008, consumers sold $12 billion in life insurance death benefits to investors in the secondary market. But the economic downturn dried up investor money, and as late as 2015, just $1.7 billion in death benefits changed hands.(1)

For many years, life insurance provided just two benefits to a policyholder: a death benefit paid at the death of the insured, and cash value, which could only be accessed through a loan, a withdrawal, or a policy surrender. Today, an unwanted policy can fetch an amount much higher than its cash value, providing another alternative to a policy lapse or a surrender for policy owners, including TOLI trustees. The consumer is beginning to understand this viable alternative exists, with “organic growth” of the industry being driven by “the education of consumers and their professional advisors,” according to one industry leader, who also points out the “demographic trends” are tilted toward increased sales with “10,000 Americans turning 65 every day and struggling to fund their retirement income needs.”(2)

For investors in this asset class, 2018 was a good year, as life settlements outperformed traditional investments, like stocks and bonds, as well as most alternative investments.

Tax laws have grown more favorable for consumers selling their policies. The Tax Cuts and Jobs Act made consumer tax reporting simpler and lowered the tax consequences of life settlements to the seller. Just a few months ago, pending legislation was announced that would make the sale of a life insurance policy a tax-free transaction for the seller if the proceeds were used to fund future long-term care needs of the insured and/or spouse.

The life settlement industry was once considered the “wild west” of financial transactions, but that has changed, and today, it is one of the most regulated financial markets. Consumers are becoming much more aware of the options with a life insurance policy, and if they are not aware, their beneficiaries are, which is why more than ever, TOLI trustees must educate themselves to the opportunities available for their clients. Failing to maximize the value of a policy by looking to the life settlement option before a policy lapses or is surrendered will be a future area of litigation for disgruntled beneficiaries, and the TOLI trustee who does not have a life settlement review as part of the trust file for any lapsing or surrendered policy will be fair game.

1. Information supplied by The Life Settlement Association (LISA) and reported in The TOLI Handbook
2. Speakers at 9th Annual Life Settlement Institutional Investor Conference Point to Significant “Organic Growth” of U.S. Life Settlement Market, Business Wire, January 28, 2019

The Small Long

Bill Nasgovitz, Heartland Advisors

Michael Burry, who rose to fame by betting against mortgage backed securities before the financial crisis of 2008, made headlines recently with comments that the mania for passive index products is creating a bubble and that small-cap value stocks may be the big winner when it eventually pops.

With all due respect to Burry, it is a case we have been making for some time. A look at the chart below highlights the performance gap between small and large companies. Not surprisingly, the difference also shows up in valuations. The S&P 500 is trading at nearly a 50% premium to earnings vs. our custom-tailored small cap accounts.

Who knows, if Burry’s latest call plays out as well as his last one, maybe they’ll make a sequel to the movie The Big Short, which made him a household name. They can call it The Small Long.  In the meantime, we’ll be here crafting portfolios for those looking to capitalize on the opportunity in small caps.

Investing involves risk, including the potential loss of principal. There is no guarantee that a particular investment strategy will be successful. Value investments are subject to the risk that their intrinsic value may not be recognized by the broad market.

The statements and opinions expressed in this article are those of the presenter. Any discussion of investments and investment strategies represents the presenter’s views as of the date created and are subject to change without notice. The opinions expressed are for general information only and are not intended to provide specific advice or recommendations for any individual. Any forecasts may not prove to be true. Economic predictions are based on estimates and are subject to change.

Small-cap and large-cap investment strategies each have their own unique risks and potential for rewards and may not be suitable for all investors. Small-cap investment strategies emphasize the significant growth potential of small companies, however, small-cap securities, are generally more volatile and less liquid than those of larger companies. Large-cap investment strategies emphasize the stability of large companies, however, large-cap securities are more susceptible to momentum investments and may quickly become overpriced or suffer losses.

Passive Management is a style of management associated with mutual and exchange-traded funds (ETF) where a fund's portfolio mirrors a market index. Russell 2000® Value Index measures the performance of those Russell 2000® companies with lower price/book ratios and lower forecasted growth characteristics. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indices. Russell® is a trademark of the Russell Investment Group. S&P 500 Index is an index of 500 U.S. stocks chosen for market size, liquidity and industry group representation and is a widely used U.S. equity benchmark. All indices are unmanaged. It is not possible to invest directly in an index. Disclosure: Past performance does not guarantee future results.
Legislative Tool Helps you connect with Legislators

The Iowa Bankers Association's Legislative Action Center allows bankers to easily contact legislators electronically. Letters on key pending legislation and regulations are posted on the site and can be easily edited and/or personalized for bankers to send to their respective elected officials and regulators at  the state and federal level. The Legislative Action Center is available at the IBA website.

Contribute to the Iowa Trust Association
As a reminder, the Iowa Trust Association (ITA) welcomes contributors to their quarterly newsletter. If you would like to comment on recent activities in the industry or let us know about an upcoming event that would be of interest to our readers, please feel free to contact Darcy Burnett, at (800) 987-7365. Thank you for your interest in our publication and we look forward to hearing from you.

ITA Newsletter Subscription

If this message was forwarded to you and you would like to receive the ITA Newsletter, e-mail Darcy Burnett to subscribe.


Iowa Trust Association

If you have any questions, please contact the Iowa Trust Association at 800-987-7365

Darcy Burnett, CMP
Senior Education Coordinator

  Iowa Trust Association
8800 NW 62nd Avenue |  Johnston, Iowa | 50131-6200
(800) 987-7365 |

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