Annuity Client Found a Worse Deal and May Be Leaving

[bill3173]

Have an annuity client that I've had for years. The annuity is older and has a 2% floor and currently paying 4.5. She is only a couple of years away from surrender. A "friend" has convinced her to use an "annuity expert".

Sit down for this part: The annuity that she is going to has a first year surrender of 20% or $76,000 a 17 year surrender period and a floor of 1%. She doesn't know the agent that she is using for this annuity and neither does her friend who lives 1000 miles away. I asked her if she had to do what her friend told her, and she said that she did, but she wants me to talk to him. I agreed, but have no idea what sort of conversation that I will have with someone that can't read or comprehend the printed details of the annuity or transaction.

The agent gave her a figure including bonus that indicates a full withdrawal of funds not including current surrender, which of course is manipulation. It will pass suitability because she will have a small net gain on the annuity value, but will pay a heavy price for it with a new surrender period and certainly lower returns.

Anybody ever had something so ludicrous happen with an annuity?

 

[Newby]

Have an annuity client that I've had for years. The annuity is older and has a 2% floor and currently paying 4.5. She is only a couple of years away from surrender. A "friend" has convinced her to use an "annuity expert".

Sit down for this part: The annuity that she is going to has a first year surrender of 20% or $76,000 a 17 year surrender period and a floor of 1%. She doesn't know the agent that she is using for this annuity and neither does her friend who lives 1000 miles away. I asked her if she had to do what her friend told her, and she said that she did, but she wants me to talk to him. I agreed, but have no idea what sort of conversation that I will have with someone that can't read or comprehend the printed details of the annuity or transaction.

The agent gave her a figure including bonus that indicates a full withdrawal of funds not including current surrender, which of course is manipulation. It will pass suitability because she will have a small net gain on the annuity value, but will pay a heavy price for it with a new surrender period and certainly lower returns.

Anybody ever had something so ludicrous happen with an annuity?

What annuity even has a 17-year surrender? I'm not aware of any.

Why does her friend have so much influence over her? What's in it for the friend?

Where did the friend ever hear of this expert?

 

[Mattschmidt]

Have an annuity client that I've had for years. The annuity is older and has a 2% floor and currently paying 4.5. She is only a couple of years away from surrender. A "friend" has convinced her to use an "annuity expert".

Sit down for this part: The annuity that she is going to has a first year surrender of 20% or $76,000 a 17 year surrender period and a floor of 1%. She doesn't know the agent that she is using for this annuity and neither does her friend who lives 1000 miles away. I asked her if she had to do what her friend told her, and she said that she did, but she wants me to talk to him. I agreed, but have no idea what sort of conversation that I will have with someone that can't read or comprehend the printed details of the annuity or transaction.

The agent gave her a figure including bonus that indicates a full withdrawal of funds not including current surrender, which of course is manipulation. It will pass suitability because she will have a small net gain on the annuity value, but will pay a heavy price for it with a new surrender period and certainly lower returns.

Anybody ever had something so ludicrous happen with an annuity?

Just point out all the negatives that would be involved in this transaction. You need to make yourself look like the expert, and not this other guy...Bring up the fact that in an emergency situation, her money for the most part is tied up for 17 years...Most people have a hard time predicting the next 17 weeks, let alone the next 17 years...

 

[bill3173]

It's really a sad case. I can sum it up for you in two words "internet love".

Unfortunately, I will have to follow their lead or risk losing her other business. The new "boyfriend" is obviously trying to show off, and he found this other agent on the internet. The client doesn't want to lose her boyfriend, so I will have to proceed cautiously.

Without saying anymore, the annuity is the worst EIA I've seen, and would never sell it. That should narrow it down for people that are in the biz.

 

[Newby]

It's really a sad case. I can sum it up for you in two words "internet love".

Unfortunately, I will have to follow their lead or risk losing her other business. The new "boyfriend" is obviously trying to show off, and he found this other agent on the internet. The client doesn't want to lose her boyfriend, so I will have to proceed cautiously.

Without saying anymore, the annuity is the worst EIA I've seen, and would never sell it. That should narrow it down for people that are in the biz.

I think you need to do the three way call with the boyfriend. Be very polite and non-confrontational but be ready with a lot of the hard questions that he's not going to know any answers to. Then throw some anchors in the conversation. Well you'll definitely want to find that out because if x doesn't do x then that's certainly unacceptable.

Give him some homework and make it obvious that he doesn't have a clue.

 

[jacobtn]

Is this the bonus gold product from American Equity?

their 10% bonus is immediately fully vested, so in essence she would have a 10% penalty after the bonus, not 20. Not saying it's suitable for the lady as of course I don't know, but the agent sounds sleazy the way you described it.

Have an annuity client that I've had for years. The annuity is older and has a 2% floor and currently paying 4.5. She is only a couple of years away from surrender. A "friend" has convinced her to use an "annuity expert".

Sit down for this part: The annuity that she is going to has a first year surrender of 20% or $76,000 a 17 year surrender period and a floor of 1%. She doesn't know the agent that she is using for this annuity and neither does her friend who lives 1000 miles away. I asked her if she had to do what her friend told her, and she said that she did, but she wants me to talk to him. I agreed, but have no idea what sort of conversation that I will have with someone that can't read or comprehend the printed details of the annuity or transaction.

The agent gave her a figure including bonus that indicates a full withdrawal of funds not including current surrender, which of course is manipulation. It will pass suitability because she will have a small net gain on the annuity value, but will pay a heavy price for it with a new surrender period and certainly lower returns.

Anybody ever had something so ludicrous happen with an annuity?

 

[Tahoe Ray]

Is this the bonus gold product from American Equity?

their 10% bonus is immediately fully vested, so in essence she would have a 10% penalty after the bonus, not 20. Not saying it's suitable for the lady as of course I don't know, but the agent sounds sleazy the way you described it.

That has to be it...I don't know of any other product with that surrender schedule.

Is it possible that she is purchasing the product for one of their riders? AE has some pretty strong options, especially with their new launch a couple of days ago.

That being said, he/you could offer her traditions gold plus instead. 10 year surrender, 8% bonus that vests over the surrender period with the same riders and comparable caps (none of which are good)...with about a 25% haircut on the comp.

 

[0b1kanobee]

You could always throw this expert under the bus by letting her know how much he stands to make in commission of this deal.

 

[xrac]

You could always throw this expert under the bus by letting her know how much he stands to make in commission of this deal.

That is exactly my thought on this deal and the expert stands to make zero if she stands pat. What kind of advice should she expect to get?

 

[bill3173]

I appreciate the responses. The whole thing is rather creepy. A guy meets my client on the internet and assumes control of her life. I really hate it for her. It's just a matter of time before he starts asking for money, if he hasn't already. Next, a dipshit agent that obviously lacks scruples is going to get a $40K payday.