I Really Want to Get into the Annuity Market, but Have Reservations...

[sman]

Immediate annuities don't pay an interest rate.

They may not specify the rate, but they do pay interest. That's the reason a portion of the income paid with an immediate annuity is taxable (assuming a NQ immediate annuity).

 

[marcusupton]

great thoughts and guidance on this topic

KUDOs

 

[RyanCO]

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I'm 7/65 and insurance licensed, and the problem I have with FIA's is the way they're marketed. I hear local radio ads all the time that infer that you'll get stock market gains with no risk, and that just isn't true. Right now the caps on FIA's are what, 4.5%, 5%? If the market goes up 35% you may make 5%, and the client needs to know that.

I will use FIA's now and then, but only as a fixed-income play or if it has a specific rider (such as an income multiplier for long term care, I think that's Aviva). But to attach an FIA's performance to the stock market is either intellectually dishonest or uneducated.

If I want to combine real stock market performance to the benefits of an annuity, variable annuities are the easy choice.

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[Newby]

. I'm 7/65 and insurance licensed, and the problem I have with FIA's is the way they're marketed. I hear local radio ads all the time that infer that you'll get stock market gains with no risk, and that just isn't true. Right now the caps on FIA's are what, 4.5%, 5%? If the market goes up 35% you may make 5%, and the client needs to know that. I will use FIA's now and then, but only as a fixed-income play or if it has a specific rider (such as an income multiplier for long term care, I think that's Aviva). But to attach an FIA's performance to the stock market is either intellectually dishonest or uneducated. If I want to combine real stock market performance to the benefits of an annuity, variable annuities are the easy choice. .

That's like saying you won't sell life insurance because Select quote advertises they can get a million dollar policy for $18 a month.

The wrong ads aren't your ads so who cares. If you explain them correctly, people want them.

 

[RyanCO]

That's like saying you won't sell life insurance because Select quote advertises they can get a million dollar policy for $18 a month.

The wrong ads aren't your ads so who cares. If you explain them correctly, people want them.

As I said, I do use them now and then.

"Who cares"? I'm thinking about what is best for the client (whether the client is mine or not), and sales based on dishonest advertising is not. If it's all about commissions, then we don't have to care, I guess. And that's the problem.

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[Newby]

As I said, I do use them now and then. "Who cares"? I'm thinking about what is best for the client (whether the client is mine or not), and sales based on dishonest advertising is not. If it's all about commissions, then we don't have to care, I guess. And that's the problem. .

My point is that people don't call you based on other people's deceptive ads. When you present annuities or any product you are usually educating from ground zero. Someone else's ads are a non-issue.

In my opinion people are pitched more fairy dust to get them in the market than anything else. A lot of people are in the market that don't belong there.

What ever product you sell, if you do it by educating rather than sales hype then you don't need to worry.

 

[KRobby]

In my opinion people are pitched more fairy dust to get them in the market than anything else. A lot of people are in the market that don't belong there.

Agreed. Broker dealer's, and especially the wires, love to spin it the other way and in attempt to keep their annual broker meter ticking.

 

[scagnt83]

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I'm 7/65 and insurance licensed, and the problem I have with FIA's is the way they're marketed. I hear local radio ads all the time that infer that you'll get stock market gains with no risk, and that just isn't true. Right now the caps on FIA's are what, 4.5%, 5%? If the market goes up 35% you may make 5%, and the client needs to know that.

I will use FIA's now and then, but only as a fixed-income play or if it has a specific rider (such as an income multiplier for long term care, I think that's Aviva). But to attach an FIA's performance to the stock market is either intellectually dishonest or uneducated.

If I want to combine real stock market performance to the benefits of an annuity, variable annuities are the easy choice.

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I would become more familiar on what IAs offer. There are 95% PRs out there that will do much more than 5% if the market does 35%.

But that being said, even with a 95% PR I would not assume more than a 5% or 6% RoR.

IAs are not meant to compete with the market. They are meant to compete with CDs & Bonds.

There is false advertising in almost every industry. But I will admit that annuity advertising is not as regulated as it should be.

However, I have seen some very shady ads for equities too...

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If I want to combine real stock market performance to the benefits of an annuity, variable annuities are the easy choice.

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Oh yeah, paying an extra 1%-2% for M&E... plus any charges for Riders.... plus the normal ER..... what a way to grow your money.

If someone wants the benefits of an Annuity (assuming you mean the guarantees) then the market in general is not right for that bucket of money. (generally speaking)

IAs offer much stronger Income Riders vs. VAs.
So if that is what a client wants then they should go with the IA.
A VA just waters down every benefit involved.

jmo

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Also, those shady IA ads are not carrier approved. So it would be the equivalent of a securities broker producing ads that were not BD or FINRA approved.

If the carrier that those agents work for found out about the ads, they would send the agent a Cease & Desist letter. If they did not comply they would drop their contract.



But I also once saw a presentation by a ML broker and it stated more than once that the client would be guaranteed a 7% return no matter what.... I guarantee you that presentation was not approved by ML.

 

[jmhalvo]

. I'm 7/65 and insurance licensed, and the problem I have with FIA's is the way they're marketed. I hear local radio ads all the time that infer that you'll get stock market gains with no risk, and that just isn't true. Right now the caps on FIA's are what, 4.5%, 5%? If the market goes up 35% you may make 5%, and the client needs to know that. I will use FIA's now and then, but only as a fixed-income play or if it has a specific rider (such as an income multiplier for long term care, I think that's Aviva). But to attach an FIA's performance to the stock market is either intellectually dishonest or uneducated. If I want to combine real stock market performance to the benefits of an annuity, variable annuities are the easy choice. .

I guess that is true, but in my 10 years Series 7 I have FAR more damage done by "spinning" how the prospect just must have equities, even though CDs/MYGA/FIA is much more in line with risk tolerance. Why does it happen? Simple : equities pay the advisor more. Broker Dealers want managed money ! So - you might want to consider that high horse your on....

 

[RyanCO]

I guess that is true, but in my 10 years Series 7 I have FAR more damage done by "spinning" how the prospect just must have equities, even though CDs/MYGA/FIA is much more in line with risk tolerance. Why does it happen? Simple : equities pay the advisor more. Broker Dealers want managed money ! So - you might want to consider that high horse your on....

There are unethical people throughout the financial services industry, no doubt it, and I'd guess we've all seen examples first hand.

I was specifically discussing FIA's. Does your deflection mean that you agree with my point, or not?

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