Insurance Agent Forum

[al3]

Originally Posted by GreenSky

Hey Al. Blow me.

Rick

I think you have me confused with Senior-Indiana.

Al

[sman]

Originally Posted by moonlightandmargaritas

Really? Please describe them for us, and why.

Moonlight,

You must not invest money for people. I am securities licensed (6, 63 and 65) and I think that there are occasions where an annuity (fixed or variable) is a fit for a PORTION of someone's portfolio. Especially in todays market where many annuities are now offering a guaranteed withdrawal benefit without tying up their money like a SPIA would.

The problem with the idiots they showed on this show was the fact they they glazed over the facts and they were selling an improper annuity to these people. There is no way they should have been selling a 16 year surrender charge product to someone in their 70's (at least not for their entire portfolio). I have never liked Allianz. Their annuities are so restrictive to the client it's pathetic. I'm not sure who the Bill Denny guy was selling. I have a sneaky suspicion it was American Equity. Another crap product in my opinion.

There are EIA's available with as little as a 4 year surrender charge. There is one that was great a few years ago. It had a 7 year surrender charge and guaranteed the worst that could happen is the person would get a 3% annual return over the 7 year period on 100% of their deposit.

As for your earlier statement about SPIA's, I believe this to be one of the worst times to sell a SPIA. With interest rates at historic lows, it's just not a good return for the annuitant. If you can prove otherwise, please enlighten us.

You've asked SAI to provide you with examples of when annuities are good, but you haven't provided why they aren't. Here's a couple of examples, let's say you have someone investing in a CD and now they're renewing at around 3%. Let's further say that this is IRA money. I know of an annuity that will pay 5.50% for one year for amounts $75k and above and has no surrender charge. They could get the money out the day after they invested if they wanted to. Would you say that's a bad deal for that person?

Let's use another example and say it's non-qualified money. This is a real life example. The client stated the $500k in CD's was for his wife when he died (he's 67 and in good health and they do not need the $500k for anything). Has income prior to interest earnings of $120,000. Married filing jointly, this puts him in a 25% tax bracket. Now we all know that doesn't mean he pays 25% on the entire $120,000 since we have a progressive tax in this country. However, when he was getting 5% on his CD's, he was getting an additional $25,000 in interest (which he wasn't taking as income) but he had to claim as income. In 2007, this moved him to the 28% tax bracket. About $8,000 of the interest earnings was taxed at 25% for 2007 and the remainder was taxed at 28%. Not to mention the state income tax. So between federal and state taxes, he is having to pay over $8,000 in taxes.

Now, let's put him in a fixed annuity with maybe a 4.50% to 5.50% interest rate guarantee for 5 years and he has no additional taxes to pay each year unless he takes a distribution. And since the money is for his wife when he dies, she gets more money. And believe it or not, some people like to avoid paying taxes on income they aren't actually receiving.

Another example would be the person that's worried about a stream of income without giving up access to their money. There are several annuity products that can provide this for people. Both in the EIA and variable annuity world. When this is a concern for someone, I will usually use a variable annuity (it gives them a greater opportunity to increase their income over the years) and the one I use has a whopping 3 year surrender charge. Occasionally I use one with no surrender charge when there is a possibility that they would need more than 10% of the investment in the near term. It just has a higher M&E and I'd prefer to keep that as low as possible.

I assure you, there are times when there is a proper place for an annuity as a part of one's portfolio. Not everyone. With that said, I do a ton more equity investments than annuity investments for my clients. In looking over the last 10 years of investing money for clients, I have invested about 85% in mutual funds and 15% in annuities.

Now, how about you give us the reasons why no one should invest in an annuity?

[bobson]

Originally Posted by senior-advisor-indiana

Here you go M&M. YOu could have easily looked this before opening your ignorance.

I believe what you meant was life with the period certain.
Period Certain

What is the saying? Better to let people believe you are a fool then to start typing on a message board and prove it.

[senior-advisor-indiana]

Originally Posted by al3

I think you have me confused with Senior-Indiana.

Al

Hey Al, ...nevermind. I don't want you to get your hopes up.

[healthagent]

For me I'd like to to know one simple thing:

If an insurance agent is going to sit down with a senior and compare an annuity to a CD, where did their formal training on CDs come from?

[ajadaca]

Originally Posted by senior-advisor-indiana

I run into situations all the time where a deferred annuity is good for seniors.

I run into these situations also, anyone would know the right and wrong and should be ethical about it....I have a situation where a gentleman walked into the bank, just sold some land, asked for something safe, (approx 6 mos.), to put a large sum of $$$ into until he could figure out the best way to situate his $$$. The Woman in the bank referred him to the securities side and they stuck him into a variable annuity, without a principle guarantee, for 10+ yrs. The gentleman is 81!!!!

NOW, Where's DATELINE when you need them?????

[senior-advisor-indiana]

I can't wait to hear why no one should buy an annuity. I have not had a reply back to the period certain either.

[senior-advisor-indiana]

CD's are not rocket science, John.

[Mr. Bill]

Ultimately John hit the nail on the proverbial head on this topic, and there were others who chimed in. The basic problem that I see with all of this is that understanding annuities is relatively easy, understanding their application is ONLY one element of financial planning.

Someone like Bill Denny is applying the same product solution (the annuity) to mirror-fogging prospects. That's the real problem.

FINRA can harp all they want about this but the "know your customer" rule isn't even practiced by many licensed reps.

If Chris Hansen and Dateline were REALLY interested in producing a great segment, they would have done a lot more research on it before, and spoken with people in the industry who are doing right by their clients, instead of what they apparently did, which was assume any agent who delivers a free meal with a seminar is running a scam.

Which brings me to my earlier (many months ago post) - the insurance license is easy and cheap to get, and the licensing schools are FULL of former realtors and mortgage brokers these days. And as we all can agree, annuities can be very high commission products. There will continue to be an onslaught against seniors by salespeople who simply do not understand the complexities of the issues.

Hearing the reverse mortgage commercials on the radio just makes me cringe...

AND, I don't buy that first senior's "I had to sell my home because I lost $6,000 in the annuity" crap either. He sounded like a potential candidate for a reverse mortgage!

[ajadaca]

Originally Posted by ajadaca

I run into these situations also, anyone would know the right and wrong and should be ethical about it....I have a situation where a gentleman walked into the bank, just sold some land, asked for something safe, (approx 6 mos.), to put a large sum of $$$ into until he could figure out the best way to situate his $$$. The Woman in the bank referred him to the securities side and they stuck him into a variable annuity, without a principle guarantee, for 10+ yrs. The gentleman is 81!!!!

NOW, Where's DATELINE when you need them?????

Sorry forgot to ad...with the down turn of the market over the last yr...this gentleman has lost 18% of his principle...he's 81...hopefully he'll live long enough to at least brake even!!! This gentleman is very upset, stress has overcome him on this!!!!

[sman]

Originally Posted by healthagent

Mainly these fees:

Mortality and Expense Charges
Management fees including fund management
Tax on Beneficiaries
The margin or spread fee

John,

There are no M&E fees on a FIA. There are no management fees or funds in which to manage (hence the name FIXED annuity). Most FIA's do have some type of participation rate, margin or spread.

[Charpress]

What I took away from the program:

1) The Atty Gen. from Minnesota and the financial regulator from Ala. are both politicians and voters are voters. There are more voters in TV land then are in the insurance industry.

2) The financial regulator dude from Ala. should invest in a better hairpiece.

3) Dateline did a good job finding real scumbags who do things like pay to have their pictures on the cover of fake magazines. Unfortunately, that kind of scam makes us all look bad.

4) Like all journalism, there is about 10% fact and 90% distortion to fit a story. They did not disclose that penalties as high as they were talking about typically involve a return of bonus. They gave the impression that the liquidity claim was totally false when, in fact, typically 10% a year can be taken out and 100% can be available for long-term care. They cut the guy off just before he got to his explanation of liquidity.

[healthagent]

Originally Posted by senior-advisor-indiana

CD's are not rocket science, John.

As a model, agents are recruited into selling annuities and their training on other financial instruments starts and ends with what their "manager" tells them.

They make blanket statements regarding the stock market, blanket statements regarding CDs and blanket statements regarding other "risky" or "low-returning" investments in an effort to gain a commission under the false cloak of "helping the senior."

The dangerous part is they bite down hard on their annuity training and actually believe what they're told about other financial tools. The problem is now they conduct a presentation with conviction and easily convince the senior that annuities are the best move.

Most of the annuity "salesmen" think a DRIP is a leaky faucet.

[Mr. Bill]

and I was at a friend's house yesterday and others were impressed by her "cover story/photo" on "Broker's Agent" - a real estate magazine. Again, it's one that you pay to have the picture/article, the whole thing. I know, because I know people who have done it. She didn't even tell her own daughter, who thought she had been asked to be on the cover because she's such an industry legend (or something)....I didn't want to burst that bubble.

[senior-advisor-indiana]

Originally Posted by healthagent

As a model, agents are recruited into selling annuities and their training on other financial instruments starts and ends with what their "manager" tells them.

They make blanket statements regarding the stock market, blanket statements regarding CDs and blanket statements regarding other "risky" or "low-returning" investments in an effort to gain a commission under the false cloak of "helping the senior."

The dangerous part is they bite down hard on their annuity training and actually believe what they're told about other financial tools. The problem is now they conduct a presentation with conviction and easily convince the senior that annuities are the best move.

Most of the annuity "salesmen" think a DRIP is a leaky faucet.

Sort of like you are making blanket statements about annuities and the agents that sell them?

[healthagent]

I'm going with the rule - you're clearly the exception. I'll include my own industry of captive health insurance agents run around terrorizing the country. This industry in general needs a lot of clean up.

However, the FACT stands that annuity agents receive no formal training on other investment tools.

SIA - if you ran annuity training agents would be far better off. But not everyone has your knowledge nor wants it.