Insurance Agent Forum

[smithgroup82]

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

[Obamamama]

Gotta hate those Manger fees!

[JMO Fan]

Originally Posted by Obamamama

Gotta hate those Manger fees!

creche inflation?

[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.

[BrokersAllianceAnnuities]

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.

[bluemarlin08]

A. No loss of princpal
Unless you surrender early

B. postive probate aspects
But negative IRD tax

C. Heirs to don't have to liquidate as in a mutual fund
Heirs don't have to liquidate mutual funds

D. No expensive manger fees etc etc.
Just unpredictable cap rates and participation limits

In addition, all gains taxed as ordinary income versus cap gains

No step up in basis at death

Not something I would put friends or family in!

[JMO Fan]

Hope y'all are ready for Rule 151A. Got your Series 6? Register early.

[Third Joker]

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.

Thoughts?

[padthaiforlunch]

Eh, you probably got a year before 151 takes place.

Certain fia's have no surrender charge, or have a withdrawal of premium rider.

Key is whther client is more concerned with return of premium or return on premium. How conservative are they?

No risk, some gain. Would def. use for my mother.

[dgoldenz]

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

[patch36]

Safe, guaranteed and boring sounds pretty good right now

[tkirk97]

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.

[Paradigm]

The first thing we must begin to understand is this

In investing You must time the market.

EIA allow you to do that in a fashion

By locking in gains during good times and the totally avoiding the bad times and losing nothing.

Its the best of both worlds

[Winter]

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.

[Charpress]

Winter is right.

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."

[patch36]

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.

[dannysdad]

Originally Posted by patch36

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