Looking for Opinions...

[RunnerDude]

I have a client with an Allianz ABC FIA. It just started last month. The company has already offered a 3.5 percentage point lock for the first year- which would avoid a potential 0%. While no one knows what the market will do in 2023, the fear of a recession looms big. It may be a smart move- but if the market recovers late in the year, he will miss out on a higher percentage gain. Just interested in opinions from others. Thanks.

 

[Life Hawk]

I have a client with an Allianz ABC FIA. It just started last month. The company has already offered a 3.5 percentage point lock for the first year- which would avoid a potential 0%. While no one knows what the market will do in 2023, the fear of a recession looms big. It may be a smart move- but if the market recovers late in the year, he will miss out on a higher percentage gain. Just interested in opinions from others. Thanks.

I don't offer annuities because of their potential performance, I offer them because of their tax deferral and safety. Too far outside of those two items and your throwing chicken bones to see what the future is like.

Future growth potential... but guaranteed tax deferral and principled guaranteed. I'm not a stock broker nor do I play one in the field.

Just me.

 

[Tahoe Ray]

I have a client with an Allianz ABC FIA. It just started last month. The company has already offered a 3.5 percentage point lock for the first year- which would avoid a potential 0%. While no one knows what the market will do in 2023, the fear of a recession looms big. It may be a smart move- but if the market recovers late in the year, he will miss out on a higher percentage gain. Just interested in opinions from others. Thanks.

No reason to allocate to fixed accounts unless you have a crazy client that just never wants to see a negative in their account (offset rider costs). Just buy a MYGA.

Recession is a lagging indicator for equities.

We don't know what the market is going to do but if I buy an FIA for a client, they want market upside. If they don't get it, it's not a pleasant conversation.

 

[Allen Trent]

I don't offer annuities because of their potential performance, I offer them because of their tax deferral and safety. Too far outside of those two items and your throwing chicken bones to see what the future is like.

Future growth potential... but guaranteed tax deferral and principled guaranteed. I'm not a stock broker nor do I play one in the field.

Just me.

Honest question, do you only sell NQ Annuities to high income clients? The reason I ask is considering IRS data shows 80% of seniors over age 70 are in the 0% tax bracket, tax deferral can actually be a negative for average & lower seniors. Deferring taxes when you are in the 0% or 10% merely to leave much larger taxable gains to heirs in higher tax brackets when they receive a lump sum can be worse than having a taxable CD. At a minimum, many seniors can benefit from receiving the annuity interest annually if they are in 0% or low brackets. Tax deferral can be a ticking tax bomb for most & are best for higher income tax bracket clients

Single Premium life or hybrid life/LTC can be a better tax deferral while alive & tax free at death tool if the money isn't needed to cover current income/budget needs

 

[RunnerDude]

My client is not in the 0% or 10% tax bracket. He rolled a qualified 403b over the Allianz ABC FIA for the purpose of creating an income that increases over time, can’t lose money, guarantees you can’t run out of money and is based on market performance. So locking in on the best interest rate for the market each year is ultra important. I just wonder if he should wait for the market to take an upturn later this year (if it happens) or take the 3.5 now (rather than a 0% if the market tanks).

 

[Tahoe Ray]

My client is not in the 0% or 10% tax bracket. He rolled a qualified 403b over the Allianz ABC FIA for the purpose of creating an income that increases over time, can’t lose money, guarantees you can’t run out of money and is based on market performance. So locking in on the best interest rate for the market each year is ultra important. I just wonder if he should wait for the market to take an upturn later this year (if it happens) or take the 3.5 now (rather than a 0% if the market tanks).

His income being predicated on performance would make me even less likely to allocate to a fixed account. His income will still go up as he gets older (assuming he's not taking immediate w/ds) due to the age banding, even with a zero percent return. 3.5% is not worth gambling with what the market can do in my option.

Ultimately your call but I would stay indexed, especially since the first few years normally have the most favorable terms.

 

[scagnt83]

I have a client with an Allianz ABC FIA. It just started last month. The company has already offered a 3.5 percentage point lock for the first year- which would avoid a potential 0%. While no one knows what the market will do in 2023, the fear of a recession looms big. It may be a smart move- but if the market recovers late in the year, he will miss out on a higher percentage gain. Just interested in opinions from others. Thanks.

Ditto to everything Ray said.

Last month?? You do realize the S&P is up 7% over the past 30 days right??

Even if we get a zero year, or your client gets a zero year, its very doubtful they will see more than 2 in a row max.

 

[RunnerDude]

His income being predicated on performance would make me even less likely to allocate to a fixed account. His income will still go up as he gets older (assuming he's not taking immediate w/ds) due to the age banding, even with a zero percent return. 3.5% is not worth gambling with what the market can do in my option.

Ultimately your call but I would stay indexed, especially since the first few years normally have the most favorable terms.

 

[RunnerDude]

He is taking immediate withdrawals due to income issues. He went with this product with hopes of beating inflation. I’m not happy with 3.5 for him - but don’t want a 0% either. My gut says the market will do better than that. I’m just searching for insight and opinions. It’s not my policy, but I want to at least give him an educated guess that makes sense.

 

[DonP]

No reason to allocate to fixed accounts unless you have a crazy client that just never wants to see a negative in their account (offset rider costs). Just buy a MYGA.

Recession is a lagging indicator for equities.

We don't know what the market is going to do but if I buy an FIA for a client, they want market upside. If they don't get it, it's not a pleasant conversation.

Ray your correct a recession is a lagging indicator. But no mkt has ever bottomed before a recession has even started . No recession has started yet . #2 10 yr bonds rose 10 fold off the bottom yet equity valuations never contracted . Stocks have massive competition with 5% cd’s . This time something feels funny . Stocks never capitulated ( after an 11 yr bull mkt we never even gave back 1 years of gains . We never even took out 2020’s all time highs . Japan is down 40% from 1989 highs because of massive debt loads . We got massive debt loads too which impedes future growth . I’m leaning toward yrs of stagnation ahead after 43 yrs of 90% up . Time will tell .