Hello everyone. I am working witha marketing company that is pushing for the associates to REALLY offer the EIA as a soulution to clients who has investments with mutual funds. They have devloped the philosophy that Mutual have VERY negative features during this season, and the client would be better off with moving their investments into an EIA. However there is numerous financial experts and gurus who go against this exclusive philosophy. I know there is no way it can be a "One size fits all" product or vehicle. Can anyone help by giving the pros and cons about this, by offering some simulated circumstances?
Thease are the features that they till us to really zero in on when trying to help the client:
A. No loss of princpal
B. postive probate aspects
C. Heirs to don't have to liquidate as in a mutual fund
D. No expensive manger fees etc etc.
What is your thoughts? Is this a could philosophy to endorse during this economy???? Thanks
Re: Equity Index Annuity the best??????????Go to Top
Originally Posted by psrayburn
Annuities have their place.
1. EIA are Fixed and have guarantees not associated with Mutual funds
2. Annuities are good for the "Safe Money" part of their asset allocation.
3. Annuities are good almost only for Long Term commitments. (Retirement)
4. Annuities are usually not very liquid (10%free Withdrawl) and steep early surrender charges.
5. The EIA is awesom for Retirement Money with a long term horizon.
Hope this helps.
I respect your opinion, but I prefer Fixed Indexed Annuities over EIAs. Anyway, I am not arguing, but just discussing below.
Your point #3: Actually, there are excellent SPIAs that offer immediate income.
Your point #4: Saying FIAs are not very liquid is really a moot point if the agent is responsible. However, there are good and not-so-good Surrender charges for early withdrawal. Early withdrawal is never a deal-breaker for me, because clients usually commit for long-term and do not solely invest in annuities. Therefore they have other monies for living, emergencies, etc.
Lastly, why have an EIA when you can invest in a mutual fund with higher risk money and with lower fees? Clients invest in FIAs as a portion of their total investment portfolio. That portion or percentage would be the conservative portion.
Re: Equity Index Annuity the best??????????Go to Top
Originally Posted by JMO Fan
Hope y'all are ready for Rule 151A. Got your Series 6? Register early.
What is the status of this? I can't imagine that it will really happen, and that if it does, insurance companies will just introduce products that fall outside of 151A's definition.
I'll bet all of the people who shunned the ELIA's in the past couple years wish they hadn't left all that money in stocks now....we just had a client tell us he lost over half his retirement in the past couple months and that he wished he had done the ELIA sooner. October 2007 - Dow at 14k, October 2008 - Dow at 8k. Loss on ELIA from 10/07 - 10/08 - $0
I would never say that there is one product that's fits everyone but people that have been invested in the S&P 500 since 1998 would have negative returns right now, whereas in the EIA they would have step-upped gains that are locked in. They look pretty good right now.
Re: Equity Index Annuity the best??????????Go to Top
Originally Posted by Third Joker
What is the status of this? I can't imagine that it will really happen, and that if it does, insurance companies will just introduce products that fall outside of 151A's definition.
Thoughts?
I would not get a series 6 just to sell EIA's although I could get one easily having had a 7 before. A lot of the independent guys here think that it is just a matter of picking up a series 6. It is more than that, much more. The broker dealer assumes oversight responsibility for all of you products, even products they dont offer such as health insurance, final expense, med supp etc. They have to review and approve everything you do in those areas as well and it will cramp your style bigtime. If you dont have a stomach for CMS, then dont even think of getting a securities license, or you will get far more oversight and regulation than you ever dreamed of.
It can make sense if you are truly doing a fair amount of securities business but dont think of it as just getting appointed with another company for another product as in the insurance/annuity world. It is not like that at all.
------------------------------------ Spending Our Way to Prosperity
I went to the trouble to get a Series 65 mainly so I would not fall into the "giving financial advice" trap that was always in the tall grass there somewhere. I also wanted to do some investing work from an RIA institutional investor platform.
I can't see going back and doing much of the same work to get more licenses, especially if I have to go through a B/D. I didn't do it to sell variables, so I can't see doing it just to sell FIAs.
I have a feeling that most of the companies are going to have some good fixed products for us. We will then be able to pan FIAs just like we currently pan variables: "You don't want a variable annuity, you still have market risk."
"You don't want an indexed annuity, you have complicated formulas for cap and spreads that are all skewed in the company's favor."
I sell FIA's, but for the Bonus component, not the Indexes. 90pct of my FIA clients start in the fixed interest account and stay there year after year. I meet with them every year and explain the Index strategies, and they stay in the fixed side, even with the boring rates. If Indexed products go to the BD's, I don't know that I care as long as the companies keep a Bonus product with a fixed account.
BTW, I have my 6, 63 & 65, and don't use them. I have about 18 months to place them with a BD or I lose them. I hope it doesn't matter, but if it does I am sure the insurance company will find one to put me with if they want my business.
...I agree with your perspective Charpress. For my particular niche, the index is not a big deal and would be easy to sell against. Give me a 10% bonus to work with and a decent interest rate, and I will be happy.
------------------------------------
Chuck
If you think your boss is stupid, remember: you wouldn't have a job if he was any smarter.”
I sell FIA's, but for the Bonus component, not the Indexes. 90pct of my clients start in the fixed interest account and stay there year after year. I meet with them every year and explain the Index strategies, and they stay in the fixed side, even with the boring rates. If Indexed products go to the BD's, I don't know that I care as long as the companies keep a Bonus product with a fixed account.
BTW, I have my 6, 63 & 65, and don't use them. I have about 18 months to place them with a BD or I lose them. I hope it doesn't matter, but if it does I am sure the insurance company will find one to put me with if they want my business.
...I agree with your perspective Charpress. For my particular niche, the index is not a big deal and would be easy to sell against. Give me a 10% bonus to work with and a decent interest rate, and I will be happy.
Using this strategy, are people better off in the FIA or would a fixed annuity with the same surrender period work better? Can you give an example? Thanks.
It is the Bonus. When you compound it, it can beat a straight fixed annuity in many cases, especially for the first several years of a contract period. It also helps recover some of the principal they may have lost in the market, ect. The bonus is also payable to a beneficiary even if the annuitant does not live the full length of the contract. My clients generally want to stay clear of the markets, so losing the Index option would not be as big a deal to me as to someone dealing with Boomers.
Not sure if I answered your question or interpreted it correctly?
Are there good Fixed only products out there with a 10pct or better bonus? I don't know for sure, but not to my knowledge. There will be in the future, if 151a passes, which btw has just had the comment period reopened and extended. It looks like the securities industry is questioning its ability to regulate and monitor what is already on their plate.
It is the Bonus. When you compound it, it can beat a straight fixed annuity in many cases, especially for the first several years of a contract period. It also helps recover some of the principal they may have lost in the market, ect. The bonus is also payable to a beneficiary even if the annuitant does not live the full length of the contract. My clients generally want to stay clear of the markets, so losing the Index option would not be as big a deal to me as to someone dealing with Boomers.
Not sure if I answered your question or interpreted it correctly?
Are there good Fixed only products out there with a 10pct or better bonus? I don't know for sure, but not to my knowledge. There will be in the future, if 151a passes, which btw has just had the comment period reopened and extended. It looks like the securities industry is questioning its ability to regulate and monitor what is already on their plate.
I'm asking, more specifically, what size of bonus are you using and what is the guaranteed minimum interest? Say the bonus is 10% and the min. is 3%, on a 10 year product. The avg. would be 4%. This is much worse than a 10 year fixed annuity.
With most products (nearly all, as a matter of fact), if you leave before the contract period the bonus is lost. So, a bonus is fine if you stay for the long haul.
There are also products that take this even a step further: you have to take an income stream for some period, usually 10 years, or you lose the bonus.
I know a lot of you don't like Allianz, but at least with their latest product the 10% bonus vests at 1% per year. Since it is a 10 year product and the penalty is around 6% in the sixth year, I'm looking at this as having a 6 year walkaway if someone really hated it. The vested bonus and the penalty would be about the same in year 6.
So, in the past I haven't made a big deal about the bonuses because I always looked at bonuses as being icing on the cake.
That whole world is different because of the economy and because there are some decent products now with genuine bonuses.
Equity Index Annuity the best ?
manger scene, seen, seine
Linear Mode
