Dealing with Let Downs

[JFBAgent]

All of our dinner appointments are booked 2 weeks out.

I will take any business that comes my way. I am too new to be picky. If for nothing else, I want to learn how to do things and practice. This one just happened to fall in my lap.

1.7% M&E
0.95% for 6% annual bonus
Where are you getting 5%? Not arguing, just curious.
This particular annuity only has a 4 year surrender period. That is more flexible than a 5 year FA, no?

2 weeks out is what I have done for seminars...but try to book the "in office" appointment right away. I was taught to always come out of a client meeting with a) an application b) a set appointment for a maximum of one week out or c) copies of actual statements.

What is your firm's focus? One guy here mentioned Med Supps...it can be a great way to get in the house, build relationship, and grab those smaller rollovers. Practice, practice!!

Also, most VA's with income riders are a lifelong proposition, regardless as to the surrender charge period. When I was new I remember how my manager explained them to clients...two years later I understood how they are priced to work.

Income riders help folks do what they don't have the money for. Your lady doesn't have that problem.

Here's a thought...interest rates will get better. Products will continue to evolve. All you have to do is protect her money and get her more interest than the bank until that time!

Good luck and enjoy your weekend!

 

[funeraldirector]

You're dealing with a more affluent prospect than I do. Two hundred dollar dinner? I work low income FE and sit on a lot of pissy sofas...However, the principle is the same: is the prospect trying to get off the bus or get on the bus? If they're to get off the bus, find a new prospect...

 

[scagnt83]

Yes included administration charge in the 1.7%. 6% bonus or step up which is greater is on the protected the balance, the income base, for 0.95% annual.

Annual fund operating expense of 0.57-2.30%

Ok. I hesitate to get into another VA debate on here... but I feel compelled to add to Peter's already excellent commentary on the VA.


The short surrender charge does not necessarily guarantee flexibility with a VA.

Also, the fact she wants retirement income and the rider is Suitable to take care of that, does not make the underlying product (the VA) suitable.
(I am in no way accusing you of attempting an unsuitable sale, all of this is merely academic)



What I dont like about VAs are the fees.

What happens if the client needs access to the money through withdrawals and not the Rider?
Sure the plan is to use the Rider. But plans change can change when life changes. And life changes all the time.
A good plan plans for the unknown.

What I am getting at is the effect of the fees on the CV.

Lets just say the total expense against the account is 3.5%. (should be agreeable with what you posted last)

We will compare a FA at 3%; IA w/ 2% cap; S&P 500 w/ a cost of 3.5%; all on a 4 year timeline.

Using 200 4 year historical samples, here are the results (first means highest gain):

S&P- 1st: 59% 2nd: 8% Last: 33%

IA- 1st: 0% 2nd: 33% Last: 67%

FA- 1st: 41% 2nd: 59% Last: 0%


The S&P finished negative 28% of the time.

So 28% of the time over a 4 year period you can expect a loss.

33% of the time you will be below 0.5%...


That means 28% of the time it is not flexible (unless you want to take a loss)

The S&P had higher returns than the FA only 19% of the time.
59% of the time the FA was greater than the S&P.

37% of the time the S&P was under 2.5%.

That my friend, is what a 3.5% fee does to money in the market.

If you had an investment expense above 1% the S&Ps numbers would be even more bleak.


So after all of these numbers, let me ask you a question:

If you were unemployed, and desperately needed a job, and had a choice of two jobs:

- Job #1 pays you a steady $60k per year.

-Job #2 is not steady.
You will most likely (judging from past employees experiences) make around $70k-$80k per year... but... some years you will make $100k.... but.... some years you will make nothing... but... some years you actually have to give your company money back.. sometimes the amount you have to pay back might be more than what you earned the year before... or the years before...

Which job do you take? Better yet... which job does your wife (or your grandmother) tell you to take?

Retirement is a job. Your job is managing your assets and making them last your lifetime.


Do you see the analogy?



Granted the Rider takes care of that. But the underlying product that would be surrendered cant be discounted.



My 2 cents is that there are better Income Rider options in the IA market.
I can get a higher rollup and higher payout with an IA.

If you need the guarantee of the Income Rider, why would you not need a guarantee on the actual assets that would be surrendered??

Even if the Rider %s are the same; do you want a guaranteed lifetime income with a 28% chance of loss on the liquid cash value? Or do you want a guaranteed lifetime income with a guaranteed gain on the liquid cash value?

jmo

 

[DHK]

1.7% M&E
0.95% for 6% annual bonus
Where are you getting 5%? Not arguing, just curious.
This particular annuity only has a 4 year surrender period. That is more flexible than a 5 year FA, no?

Flexible for what purpose?

If you're looking to transfer the funds from a VA to a new VA after the surrender charge expires... how do you know that the actual cash values will be higher than the guaranteed income base?

If you have a GMIB that ratchets up 6%/year each year that there is no withdrawal (I'm thinking of a Metlife product back in the day)... then unless the underlying investments are doing MORE than 6% each year, you can't move that annuity.

When I was selling VAs, I never sold anything less than a 6-year surrender period. It kept the fees lower and less erosion on the cash values.

I think the only reason to sell L-shares (4-year) VAs was to collect a higher trail in the 2nd year and 'annuitize' your business. The only thing wrong with that, is that the client is paying more for you to earn that fee every year... and there is no guarantee that their cash will be higher than their living benefit guarantees.

BTW, add up all your fund expenses, M&E and your rider charge... and it'll be around 4-4.5% costs - particularly with a 4-year product. I know you said the fund expenses ranged from like .59 to 2.05. The lower end funds are either index funds or money market. If you are choosing a portfolio model (as most VAs require to use the living benefit riders), assume that the portfolio charges will be on the higher side of that range.

 

[StoneRiver]

Bacon,

I don't know her suitability or her risk tolerance, I only know what you have said and even that leaves a lot out..You specifically mentioned cash accounts ie savings and checking and I assumer since you mentioned them the client carries a significant balance in them. You mentioned IRA but once again that can be real estate, gold coins, a savings account, Stocks Bonds, Mutual funds etc.

When I hear secure, maybe its just me I think safety and I don't think VA with a living benefits rider and you are coming to find out the clients get confused by the sizzle and the strings.

You think I'm anti annuity I don't know where you got that, I readily admit I've had my own come to jesus moment a almost 2 years ago and my FINRA registration is inactive and will go bye bye in Decemeber or this year (can't wait), but I've sold Tens of Millions of dollars in Mutual Funds, Fixed and Variable Annuities with and without the living benefit riders and at one point I was right where you are.

I was speaking with another agent just the other day about one of my clients, we went VA w/Living benefit rider and have seen my client each and every year pull out more than the 5% limit on her VA w/rider she knows exactly what its doing to her account but its still someplace she goes for the money.

I sit here years later and realize there where other solutions, but enough about that. Did you ever wonder why she was talking to you and not her current advisor, did you build a wedge between her and the other advisor this happens more than you know, I can't tell you how many times the client has told how unhappy they are with performanc etc etc and I design a solution and they take it back to the current advisor and they say I can do that and they want to stick with them even though he got them where they are now...I've said before to more than one prospect just what exactly do you like about X the way he ignored you for the last 3 years or the money he has lost you?

Norway,

I appreciate you insights on this board. I don't want to change the topic, but I must ask you about your FINA registration lapsing--why is that good for you? Thank you.

 

[Norwayguy]

Norway,

I appreciate you insights on this board. I don't want to change the topic, but I must ask you about your FINA registration lapsing--why is that good for you? Thank you.

I happily walked away from securities almost 2 years ago...FINRA allows you to hold your registration as inactive for 2 years. So to your question, if you sell fixed and securities they work against each other and here is what I mean. Securities is all about blue sky and with insurance its all about guarantees.

 

[Baconfat]

Everyone that has contributed to this thread so far is awesome. Thank you for taking the time. I hope to one day pay if forward.

 

[GeminiGroup]

Don't be a dick and reread all of my posts. She seemed genuinely serious.
It is posts like yours that make forums useless. (Wow)

To everyone else I really do appreciate your thoughts and advice.
- - - - - - - - - - - - - - - - - -
Norway I had a vibe the whole time that she wasn't underdstanding what I was saying to her.

(Are seriously...asking WHAT WENT WRONG.....when you are clearly suggesting that the client DIDN'T understand. what you were saying!!!!)

For example I mentioned .....she couldn't understand.....
She couldnt wrap her head around this.
- - - - - - - - - - - - - - - - - -

I am sitting around dwelling on a lost prospect.

.

__________________________________________________

1) I'm shocked that this post got this long.
2) I suggest you reread my prior post about 'recognizing' whom your dealing with...which requires LISTENING and observation.
That can NOT be accomplished if you continue with clients that YOU clearly see "couldn't understand" wtf is going on.

Seriously. dude it sounds pretty bad to say well "She seemed genuinely serious. " at the SAME time saying
" I had a vibe the whole time that she wasn't underdstanding what I was saying to her."

(Sounds like a 'date rape'...Did she know what was going on and consent or did you 'Kobe' her?)

It isn't my goal to be mean or anything but I "tried" to help you with "kid gloves" earlier and it didn't seem to stick...so after reading this post I'm now just saying it like it is.

Once a 'rookie' has displayed an unwillingness to 'hear' constructive feedback w/o 'unwarranted' comments like "It is posts like yours that make forums useless." .....I'm done offering any legitimate, experienced based FREE help
____________________________________________________

I'm always AMAZED at the 'bite-back' displayed by f-n 'interns' when a 'Vet' offers to GIVE 'em ADVICE that would cut their learning curve and save their dumbazzes time. money and headaches.

But if the 'rookie' says screw-you 'old man'...
I say let his azz, head down the alley with the BIG DOGS and FIND OUT on his own.....

You made it, let him sink or swim on his own....(No hard feelings)
____________________________________________________

* To be clear I'm only speaking of this thread regarding this poster,
I'll continue to write responses for those that actually want and appreciate the insight of those that have been there and done that.

 

[timamr]

What does everyone do to get out of a low point? Do you aggressively prospect or what? I want to call this woman back and find out the real reason why she canceled, I can't accept the I'm too busy excuse. At least i can learn from it

I am learning that it is best to just keep chugging along. Get a no show, use that time u would have spent calling on new clients. I am no expert, but common sense is telling me to keep on adding to my pipeline so that the no-shows wont even matter IF I have enough backups

 

[Baconfat]

Gemini,
She seemed serious. She brought her statements and said this is what i want. I have heard about this. I've had a good job and just got a divorce so I have this in my checking and savings but I do not know how this stuff works. I spent lots of time trying to explain different things to her. She seemed to be a serious investor that needed guidance. My schedule isn't exactly jammed so i spent some time trying to explain to her while adding to my face time experience. My post was asking for how to deal with the lows when a potentially good client backs out.

I'm not sure why you are being hostile to me since A.) what you are calling advice from an expert was just a cheap jab at calling me a commission chaser when I come here for help. That is why this site is here right?
B.) you are not even the person who i directed my only unappreciative post. I certainly read your previous posts many times and thought your advice was one of the most direct response i needed to see. Do you want me to send you flowers and a card. I said thank you many times in this thread. Why are you under the impression that your advice didn't stick? It has only been 24 hours. I even said a page or two later that the date analogy helped put things in perspective.

So either have a drink and go to bed or put your kid gloves back on.