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Well that's why you should allocate a little to the fixed bucket.
If the market is flat and you are in the market, what is it costing me?
Well that's why you should allocate a little to the fixed bucket.
If the market is flat and you are in the market, what is it costing me?
- Thread starter
- #43
- 15,041
2010? How was 2010 flat??
S&P gained 141.08 points through the close on Dec 31, 2010, or 12.6% over its open on Jan 4, 2010. If 12% is flat, I can't wait to see up. But thank you for proving the point of all this.
No one is saying to put people who can tolerate market risk into annuities. But they offer a great alternative to people who "thought" 2009 was a down year, and 2010 was a flat year.
Maybe someone can find the study, but one of the large investment firms polled the average person. Over half thought the stock market was down for 2009. Most of the rest thought it was flat.
While I'm a fan of the market, I realize not everyone can tolerate the ups and downs of the market. That is why there is a place for annuities and why I offer them in those situations. I'm just not a fan of those who try and make them fit everyone's situation.
As for those who thought the market was down in 2009, I believe that's just the hangover effect of 2008. In reality, very few people should have lost money in the market in 2009. We heard the same kind of statements after the 2000-2002 market downturn. Even as late as 2006 and 2007 I was hearing these statements that people were losing money in the market.
For that reason, many annuities have been sold over the last decade. For those people who can't tolerate the losses, that's perfectly fine. Remember though, this thread began with the topic of 20-somethings not investing in the market and the suggestion that annuities were a perfect fit. I happen to disagree that an annuity is appropriate for the majority of 20-somethings in the accumulation phase of life.
- Thread starter
- #45
- 15,041
Who said they were perfect for everyone? I never did, nor did I try to imply they were. I like the market too. The article was about many 20 and 30 year olds being afraid of the market. If we don't help them and show them alternatives for their retirement, the money is going to end up under the mattress or in a bank CD.
Both of you are making excellent points. The firm I founded works with insurance companies and FMO's, etc. trying to recruit brokers.
They for profit reasons keep ramming out Equity Indexed Annuities. That is not the sad part.
It is that good salespeople can sell what they present to the client.
For commission reasons far too many greedy agents sell risky annuities to those not wanting to be a 7 to 10 risk, or way too old.
Neither does it help when insurance agencies hire new agents and call then financial reps and with quick extra licensing, give them EQIA 's to sell all.
They for profit reasons keep ramming out Equity Indexed Annuities. That is not the sad part.
It is that good salespeople can sell what they present to the client.
For commission reasons far too many greedy agents sell risky annuities to those not wanting to be a 7 to 10 risk, or way too old.
Neither does it help when insurance agencies hire new agents and call then financial reps and with quick extra licensing, give them EQIA 's to sell all.
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SrFinAdvisor
New Member
- 19
All of us here, even if we've been at this for 25 years have a warped view of the market. For the past quarter century, except for a few brief corrections, we have experienced a market that grew exponentially. Compare this to the market's return during the previous 25 year period and you see a market that is mainly flat. I'm sure Investment Reps in the 60's and 70's weren't so bullish.
Point is that regardless of what we are trained to know and required to disclose (past performance vs future results) our experience is subconsciously guiding our expectations and that can get us into big trouble.
Somebody earlier used the elevator analogy. I couldn't agree more. If you are advising people with a "time in the market vs timing the market" speech what do you say to the investor who experiences a big correction at the wrong time. This is what has happened to a bunch of 60 year old's recently. Too many of them were way too heavily invested in equities because they had only known a growing market their entire investing experience. Even fixed income investors lost money in bond funds because they were on a buy and hold strategy.
My main point is that even though many of us are experienced advisors, we are not going to be able to continue the strategies we've always used and expect the same overall good results. I believe that, going forward, FIA's are going to play a much bigger role in all investor's portfolios, regardless of age. Secondly, I believe much of the balance of money will be going into actively managed, fee-based accounts. What will vary will be the mix.
Some believe the demographics in this country are signaling a long, downward period ahead. Who really knows? That's why guarantees are going to become more important to people.
Point is that regardless of what we are trained to know and required to disclose (past performance vs future results) our experience is subconsciously guiding our expectations and that can get us into big trouble.
Somebody earlier used the elevator analogy. I couldn't agree more. If you are advising people with a "time in the market vs timing the market" speech what do you say to the investor who experiences a big correction at the wrong time. This is what has happened to a bunch of 60 year old's recently. Too many of them were way too heavily invested in equities because they had only known a growing market their entire investing experience. Even fixed income investors lost money in bond funds because they were on a buy and hold strategy.
My main point is that even though many of us are experienced advisors, we are not going to be able to continue the strategies we've always used and expect the same overall good results. I believe that, going forward, FIA's are going to play a much bigger role in all investor's portfolios, regardless of age. Secondly, I believe much of the balance of money will be going into actively managed, fee-based accounts. What will vary will be the mix.
Some believe the demographics in this country are signaling a long, downward period ahead. Who really knows? That's why guarantees are going to become more important to people.
- 1,271
Precisely!
I didn't say you did Vol. I simply said I wasn't a fan of those who did. Generally they do this because that's what they've been taught and/or they don't have a securities license.
My previous post was in agreement to what you stated, not disagreeing. The only thing I would disagree with is the suitability of an annuity for most 20-somethings who are trying to accumulate assets for retirement. If I can't convince them otherwise, I probably wouldn't sell them annuity. They could go elsewhere.
Take a 50-60 something who has accumulated their assets, and I have zero problem using an annuity to protect those assets if that's their desire.
My previous post was in agreement to what you stated, not disagreeing. The only thing I would disagree with is the suitability of an annuity for most 20-somethings who are trying to accumulate assets for retirement. If I can't convince them otherwise, I probably wouldn't sell them annuity. They could go elsewhere.
Take a 50-60 something who has accumulated their assets, and I have zero problem using an annuity to protect those assets if that's their desire.
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Please define your risky annuities...Are they risky because of surrender charges for 7 to 10 years or risky because of lose of principal in which case we would be speaking of Variable Annuities requiring a minimum of a series 6 registration as well as the life license. FIA I have never seen anyone in the industry use the abbreviation EQIA I have certainly seen EIA and that abbreviation has mainly fallen out of favor.
Lets speak on greed for a moment when meeting with people that put money into annuities I would say many do it because they are being offered a higher interest rate than the bank in the case of regular fixed annuities or the possibility of more without loss of principal in the case of FIAs. At point of sale every consumer is aware of an agree to the surrender charge schedule and period have you seen the disclosure these people must sign these days?
Its when these people find a better deal that they regret the lack of liquidity of their existing annuity or their situation changes. These people are adults, I make recommendations about emergency funds, I ladder products I do many things but I do not have perfect foresight and the client is willing to take this risk because of their GREED lay off the agents for a moment. Each of these "Greedy" transactions your supposedly speaking of have passed through the agents hands, the carriers suitability review heck and in a short while a seperate FINRA like review and we will still see people saying agents are greedy without putting any responsibility in the hands of the clients.
