Bring On The Annuities

[Guest]

Mutual funds and stocks are a terrible place to put your money in. Many investors have lost their fortunes. Do you want to be next? Playing with stocks is like playing with fire. It is a form of gambling that will eventually get you burned. Stocks only yield an average of .77_1.87% interest in the long run. Fixed annuities average 3% with no risk. Which one would you rather have?

 

[sman]

You can't be serious. First, stocks don't pay interest. Second, care to document your statement that they only average .77-1.87%? I"ll be happy to provide you with the REAL rates of return of the market over many historical periods if you'd like to know the FACTS.

Investing is not "playing" with stocks nor is it gambling. I know many people who have created a ton of wealth investing in the market. I was just looking at annual returns of many of my clients today. One I can recall off the top of my head was 27.67% for 2010. He started the year with right at $300k. His year end balance was right at $383k. He made $83k in 2010 "playing" with the market.

Investing in the market is not like playing with fire nor is it gambling. If you believe differently then keep earning 3% and lose money to inflation.

Mutual funds and stocks are a terrible place to put your money in. Many investors have lost their fortunes. Do you want to be next? Playing with stocks is like playing with fire. It is a form of gambling that will eventually get you burned. Stocks only yield an average of .77_1.87% interest in the long run. Fixed annuities average 3% with no risk. Which one would you rather have?

 

[Franz Kafka]

That's hillarious. If you could earn 10% average from the market you wouldn't be selling insurance. And since you're selling insurance what gives you the right to advice your clients on investments?

 

[0b1kanobee]

I use approved charts and approved materials.

 

[DHK]

You're ALL wrong.

#1 - It's not about what the MARKET does... but what the INVESTOR does. It's about managing investor BEHAVIOR and educating on investment RISKS and proper EXPECTATIONS.

Your charts are MEANINGLESS with this definition.

#2 - Annuity sales aren't about solving people's problems. Huh? It's about what people WANT for their money. Annuities and life insurance are WANT sales.
- If they WANT to protect their family, they'll buy life insurance.
- If they WANT the living benefits of permanent protection, they'll buy permanent life insurance.
- If they WANT principal protection and a good portion of market upside, they'll buy an annuity.

I've sold plenty of annuities because people want the promises, protection and guarantees that they offer. I've personally found that most people are more risk-adverse than they think they are.

Offer your clients what they WANT and you'll have happier clients - whether it's mutual funds OR insurance products.

In my opinion: everything about mutual fund charts are purely "blue sky". They're not worth the paper they're printed on. There are NO GUARANTEES with it. Yes, the market has trended upward for the past 80+ years. So what? You cannot predict how much money you'll have in the end of 1 year or more. What happens when you lose 25%? How much would you have to earn to make it back to zero the next year? 50%! Is that likely? Probably not. How long would you like to be "negative" in your losses before making up for lost time? Wouldn't a principal guaranteed-type account make more sense?

I may no longer be a registered rep... but I can "talk the talk" and combat it very well. I can lead a horse to water, but I can't make him drink. But I can salt their oats to get them to WANT to drink!

And I'll never lose my clients any money!

 

[sman]

Who said anything about 10%? And how could someone make a living off of 10% unless they have accumulated a substantial amount of money? One must first have money to invest to accumulate a nest egg. That usually requires an income. Thus the reason I sell insurance in addition to advising my clients on their investments.

As for what gives me the right to advise my clients on their investments (not advice my clients) is that I have a Series 6, 63 & 65 securities license. With the 65, a person can either register with the state as a Registered Investment Adviser or through a Broker Dealer as an Investment Adviser Affiliate.

With that said, I also have an insurance license seeing that proper financial planning includes risk management which generally requires one or more insurance products.

That's hillarious. If you could earn 10% average from the market you wouldn't be selling insurance. And since you're selling insurance what gives you the right to advice your clients on investments?

- - - - - - - - - - - - - - - - - -

You're ALL wrong.

#1 - It's not about what the MARKET does... but what the INVESTOR does. It's about managing investor BEHAVIOR and educating on investment RISKS and proper EXPECTATIONS.

I agree with that statement 100%. I tell people I don't manage money, I manage behavior and expectations. I let my clients know that part of my job is to help prevent them from making irrational decisions. In August 2007 I had a large percentage of my clients move the majority of their assets to money market. We hit the trigger that warranted such a move. Most listened, but some didn't.

I also recall 09/11/2001. I had some clients who wanted to jump out of the market immediately after it reopened. I advised against it, but had one client who was adamant. So he cashed out and lost out on a great upswing. I couldn't prevent his irrational behavior.

Offer your clients what they WANT and you'll have happier clients - whether it's mutual funds OR insurance products.

Nobody WANTS an annuity. However, as you described, they WANT what it can do. Still not likely appropriate for most 20-somethings in the accumulation phase (that's what the topic of this thread is about).

In my opinion: everything about mutual fund charts are purely "blue sky". They're not worth the paper they're printed on. There are NO GUARANTEES with it. Yes, the market has trended upward for the past 80+ years. So what? You cannot predict how much money you'll have in the end of 1 year or more. What happens when you lose 25%? How much would you have to earn to make it back to zero the next year? 50%! Is that likely? Probably not. How long would you like to be "negative" in your losses before making up for lost time?

Mutual fund charts are just as good as the hypotheticals of an index annuity (actually better in my opinion). At least with a mutual fund hypothetical you can show ACTUAL historical returns based on specific parameters. You can't say that for the index annuity hypothetical because the moving parts within an index annuity can change from year to year. And no, the mutual fund hypothetical is no guarantee of future returns.

Wouldn't a principal guaranteed-type account make more sense?

That really depends on what your goals are.

I may no longer be a registered rep... but I can "talk the talk" and combat it very well. I can lead a horse to water, but I can't make him drink. But I can salt their oats to get them to WANT to drink!

And I'll never lose my clients any money!

I'm not saying you do it this way, but fear sells. It's real easy to point to recent market events and tell that 60+ year old that an investment in XYZ's index annuity would have prevented them from losing any money when the market was down. But again, the topic of this thread is the 20-something investing.

As I said before, I have no problem with annuities in the proper place. I just don't think it's proper for most 20-somethings. YMMV.

 

[DHK]

Age does not equal risk tolerance. To assume so, is naive.

Knowing your clients and your products is the best way to serve them.

It also depends on your approach to planning.

I find most investment advisors use a "top down" approach.
- For example: You want $x by x year.

I'd rather do a "bottom up" approach.
- You have $x dollars. We can put them here and guarantee your principal and a minimum amount of growth... or we can put them here and see what happens?

It just depends on the approach you use.

 

[Franz Kafka]

Buying and selling securities in any form is a gamble. To think otherwise is out of touch with reality. Call it what you want - it's all about return on their money and if you can't consistently provide that return, you're gambling with their money (Nothing wrong with it if they want to gamble).

 

[VolAgent]

Buying and selling securities in any form is a gamble. To think otherwise is out of touch with reality. Call it what you want - it's all about return on their money and if you can't consistently provide that return, you're gambling with their money (Nothing wrong with it if they want to gamble).

Thank you for stating my point more eloquently. For someone comfortable with market risk, give them securities. For someone who isn't, don't. Pretty simple.

 

[djs]

Getting out of bed in the morning is a gamble as well, but, we tend to do it anyway. Unless of course, you are on welfare, then you get out of bed in the afternoon (less of a gamble).

I understand what you are saying with the 'gamble' mentality, but keep in mind that locking money up in an annuity is a gamble as well. What if something happens and you need that money next year? There is a risk there, hence, by the same definition, a gamble.

My only point is annuities are a great product if you really have money that can sit on the sidelines for a while. I've seen people talked into annuities before they had a decent savings account, which seems wrong to me. Of course, I'll say the same about investments in general, you have to have a day to day savings account first.

Dan