Banged out a $100,000 EIA, 9% commish

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Jul 19, 2006 2:07 pm

By banged out I mean mailed a letter from a client exercising our free look and dumping the piece of s***.  Some idiot broker sold my client an EIA and told her to lie to me when I asked what she was doing with the money.


New product:


17 year surrender period, 1st year surrender penalty of 20%.  The client is 79, she'll be 96 before she can get her $$ out.  Only 1/2 can be accessed before that.  The "advisor" put her in the fixed account earning 3.5%, if she really was worried about account fluctuation how about a CD paying 5% with a 3 month interest penalty surrender?


Also, she had paid A share mutual fund commission 6 months ago on the same money. 


The "advisor" is lucky he lives several states away from the client's daughter, from the way she talked this morning I think she would inflict bodily harm if she could.


I am not the die hard "EIA's are always EVIL" person I once was, but this was a piece of crap, sold inapproriately, and the reason why those of us with ethics are put through the ringer when we really are doing the right thing.

Jul 19, 2006 2:11 pm

EXACTLY!


Having been 'born' into this business through EDJ, I never did nor will I EVER warm up to EIA's. Even now that I can sell, them I won't.


Again, I will ask, why there isn't more done to go after these crooks?


Congrats- you did a good job!

Jul 19, 2006 4:22 pm

I wish there was a good one...it's a nice concept, but from what I've seen they all suck

Jul 19, 2006 5:24 pm

Had a couple we tried to just become b/d on the other day. Guy in insurance marketing says to me..."Yeah -- we researched this one, and after we found xyz negatives, we stopped researching and put it on the list of 'never gonna happen'"

Jul 19, 2006 9:37 pm
EDJ4now:

By banged out I mean mailed a letter from a client exercising our free look and dumping the piece of s***.  Some idiot broker sold my client an EIA and told her to lie to me when I asked what she was doing with the money.


New product:


17 year surrender period, 1st year surrender penalty of 20%.  The client is 79, she'll be 96 before she can get her $$ out.  Only 1/2 can be accessed before that.  The "advisor" put her in the fixed account earning 3.5%, if she really was worried about account fluctuation how about a CD paying 5% with a 3 month interest penalty surrender?


Also, she had paid A share mutual fund commission 6 months ago on the same money. 


The "advisor" is lucky he lives several states away from the client's daughter, from the way she talked this morning I think she would inflict bodily harm if she could.


I am not the die hard "EIA's are always EVIL" person I once was, but this was a piece of crap, sold inapproriately, and the reason why those of us with ethics are put through the ringer when we really are doing the right thing.



You're a liar. There is no such thing as a 17 year surrender that only pays 9%.

Jul 20, 2006 8:41 am
BankFC:

I wish there was a good one...it's a nice concept, but from what I've seen they all suck


I've only found one decent one.  The ING Secure Index 5.   Only a 5yr surrender, and one moving part (I like the monthly avg. crediting method which only charges a spread, currently at 0.25% for $75k+).  It doesn't pay well, less than most VA's, but it's good for ultra conservative clients.


BTW, a 17yr surrender that only paid 9% commission?  I'm not buying that.  That should be paying 20% 

Jul 20, 2006 10:37 am

You're probably right on the 9%, that's the highest I have ever seen presented to me.  Admittedly I am not familiar with the commissions they pay, because I can't see many situations when it would be in a client's best interest so I haven't spent much time researching products.  I am pretty sure that anything paying me 10%+ is helping me more than it is helping the client.


The best part of this deal is that the broker had gotten away with it, but then he got greedy.  He had her put in $50k that I didn't know about.  When he delivered the contract, he then got her to sell another $50k to add to the contract.  I didn't catch the first 50 leave, but I caught the second, and since he didn't deliver the contract for a couple of weeks, we are still in the free look period.


Damn, there goes the backyard pool for this loser.  

Jul 20, 2006 11:04 am
EDJ4now:

You're probably right on the 9%, that's the highest I have ever seen presented to me.  Admittedly I am not familiar with the commissions they pay, because I can't see many situations when it would be in a client's best interest so I haven't spent much time researching products.  I am pretty sure that anything paying me 10%+ is helping me more than it is helping the client.


The best part of this deal is that the broker had gotten away with it, but then he got greedy.  He had her put in $50k that I didn't know about.  When he delivered the contract, he then got her to sell another $50k to add to the contract.  I didn't catch the first 50 leave, but I caught the second, and since he didn't deliver the contract for a couple of weeks, we are still in the free look period.


Damn, there goes the backyard pool for this loser.  



Here's some reality...She did this because you're lacking in some area. If she were happy with you, it never would've happened. You don't know what she told him that drove the recommendation. It could've made all the sense in the world.


You don't know about the commissions because your little firm won't LET you do outside business. They don't get paid on it and they don't want to lose assets that they can paid on. EIA's are very appropriate for a lot of people. I get paid 10% on 10 year products. I HAVE to be paid a lot of money to remove assets from my book, as I can no longer make money off of them.


One more thing little boy...did you know that those high commissions don't go to the grid? That's right! $100,000 in premium earns me $10,000. Enjoy yourself at EDJ!

Jul 20, 2006 11:19 am

I hHaven't taken the time to change my screen name, but am no longer EDJ4now.  I suppose I should change the name to avoid stupid comments from people like the appropriately named cranky.


When I talked to the client, she agreed with me that she didn't want the EIA.  The problem is that she is reaching the point in life where she is lonely and very easily persuaded.   If you talked to her about her grandkids she would probably invest all of her money in magic beans with you.  And no, Cranky, I am not going to give her your number.


Believe me, I believe in adequate compensation for my work, which is one of the reasons why I left EDJ.  However, getting it by tying up most of a widow's liquid funds at 3.5% until she turns 97 is unethical.  Period.  If you disagree, then you have sold your soul, and I hope the regulators push your sorry a** out of this business.


Jul 20, 2006 11:37 am
cranky sob:

One more thing little boy...did you know that those high commissions don't go to the grid? That's right! $100,000 in premium earns me $10,000. Enjoy yourself at EDJ!



For the younger people.   This is an example of what you do not want to become--they're called sociopaths, and essentially they have no sense of what is right or wrong.


They actually believe things like "Somebody was going to screw them, it might as well have been me."


I once met one who said, "Yeah, I felt bad about how I was screwing my clients but when I get into my $50,000 car and drive to my $750,000 house on the water I feel a whole lot better."


Don't let that be you.

Jul 20, 2006 11:54 am
EDJ4now:

I hHaven't taken the time to change my screen name, but am no longer EDJ4now.  I suppose I should change the name to avoid stupid comments from people like the appropriately named cranky.


When I talked to the client, she agreed with me that she didn't want the EIA.  The problem is that she is reaching the point in life where she is lonely and very easily persuaded.   If you talked to her about her grandkids she would probably invest all of her money in magic beans with you.  And no, Cranky, I am not going to give her your number.


Believe me, I believe in adequate compensation for my work, which is one of the reasons why I left EDJ.  However, getting it by tying up most of a widow's liquid funds at 3.5% until she turns 97 is unethical.  Period.  If you disagree, then you have sold your soul, and I hope the regulators push your sorry a** out of this business.




I've been at it for 7 years and have made about $3,000,000. Never had a customer complaint.


I don't need your client's phone number. She's not even close to my minimum. I'm not bragging...that's just the way I choose to do business.

Jul 20, 2006 12:36 pm

Cranky - which products do you sell? The one we tried to become b/d on the other day but couldn't... had something I didn't quite understand on the statement. It's an Allianz Master Dex 10....


Said...Beginning Annuitization Value $xxxx + Index Adjustment $xxxx = Ending Annuitization Value $xxxxx


Ok ..I understand what index adjustment is, I don't understand why they are calling it "annuitization value" -- what's that ALL about?

Jul 20, 2006 12:59 pm

Although I've never sold one I've been facinated by indexed annuities for years now.  Here's a couple of answers:


Devoted:  The Masterdex10 REQUIRES the client to annuitize the contract for the full account value.  They could hold it for 50 years and if they try and walk away with their money Allianz will still apply a surrender charge and take back all the index gains.  It's ONLY appropriate for clients who are 100% sure (and who's 100% sure of anything) that they're going to annutize the contract for 10+ years.


I forget who asked aboutt he 17 yr contract w/ a 9% comp.  I THINK it's an American Equity Indexed annuity.  10% bonus to the client up front ($100K = $110K day 1) and penalties decline over the 17 years.  I could think of one reason to sell it to a 79 year old woman (other than the commission):  She might have told the insurance agent that she only wanted to pass this money onto her heirs.  All AE's products waive surrender upon the death of the client and pass the full account value to the beneficiaries.


EIA's seem like they could be a good place for a small portion of a clients long-term "safe-money" assets.  The biggest problem is that you'll always find the Rep who says "the right client is the one sitting in front of me and the right product is the one with the highest commisson".  And that's all you'll ever read about in the paper.

Jul 20, 2006 1:24 pm
Devoted SA:

Cranky - which products do you sell? The one we tried to become b/d on the other day but couldn't... had something I didn't quite understand on the statement. It's an Allianz Master Dex 10....


Said...Beginning Annuitization Value $xxxx + Index Adjustment $xxxx = Ending Annuitization Value $xxxxx


Ok ..I understand what index adjustment is, I don't understand why they are calling it "annuitization value" -- what's that ALL about?



STay clear of that one. It HAS to be annuitized. No lump sum - ever! It gives the client a 10% bonus to get them to buy it, but at the end of 10 years, everyone will be in trouble.

Jul 20, 2006 2:36 pm
NASD Newbie:
cranky sob:

One more thing little boy...did you know that those high commissions
don't go to the grid? That's right! $100,000 in premium earns me
$10,000. Enjoy yourself at EDJ!


For the younger people.   This is an example of what you
do not want to become--they're called sociopaths, and essentially they
have no sense of what is right or wrong.


They actually believe things like "Somebody was going to screw them, it might as well have been me."


I once met one who said, "Yeah, I felt bad about how I was screwing
my clients but when I get into my $50,000 car and drive to my $750,000
house on the water I feel a whole lot better."


Don't let that be you.





I know I should not encourage you NASD, but... gulp.... GREAT POST!

You hit it right between the eyes.


Jul 20, 2006 3:57 pm
cranky sob:

STay clear of that one. It HAS to be annuitized. No lump sum - ever! It gives the client a 10% bonus to get them to buy it, but at the end of 10 years, everyone will be in trouble.



   I'm making my best "I Love Lucy" noise and face right now...eeuhhhhh. These people are teachers, in their late 50's, both withdrew funds from their Roth-TSAs @ Metlife and incurred $10-$15k surrender to buy Masterdex 10.


So they just have to keep it? What happens when they WANT to start taking funds?

Jul 20, 2006 4:09 pm

Devoted:


The bonus on the product probably (hopefully) evened out their surrender charges.  Hopefully.


Anytime after the 5th policy year they can annuitize the contract for a stream of income.  The annuitization must be a minimum of a 10-year period certain or as long as life (or life w/ a period certain).


They didn't necessarily get screwed (from anything I've read in your posts) but they've seriously reduced any liquidity they might have needed on this batch of money.  If they're planning on using this....


wait a minute.  Did you say ROTH?  Then yes, they definitely got screwed.

Jul 20, 2006 7:23 pm
Ready2Jump:
NASD Newbie:
cranky sob:

One more thing little boy...did you know that those high commissions don't go to the grid? That's right! $100,000 in premium earns me $10,000. Enjoy yourself at EDJ!



For the younger people.   This is an example of what you do not want to become--they're called sociopaths, and essentially they have no sense of what is right or wrong.


They actually believe things like "Somebody was going to screw them, it might as well have been me."


I once met one who said, "Yeah, I felt bad about how I was screwing my clients but when I get into my $50,000 car and drive to my $750,000 house on the water I feel a whole lot better."


Don't let that be you.




I know I should not encourage you NASD, but... gulp.... GREAT POST!
You hit it right between the eyes.



I agree also. This is what I was kvetching about in "Con Artists exposed.." the NASD is 'cracking down' on firms who do legitimate, ethical business, while allowing these cons who offer free dinner and screw your retirement tonight seminars to go completely unchecked.


In my town, there's even an ESTATE ATTORNEY who 'waives' the $1500 trust fee if you give him your entire life savings in an EIA- 20 YEAR surrender, so you KNOW he's sucking 20% commission. I have heard they (local attorneys) are trying to get him dis-barred, but meanwhile, he hosts these seminars twice a month.

Jul 20, 2006 10:30 pm
Devoted SA:
cranky sob:

STay clear of that one. It HAS to be annuitized. No lump sum - ever! It gives the client a 10% bonus to get them to buy it, but at the end of 10 years, everyone will be in trouble.



   I'm making my best "I Love Lucy" noise and face right now...eeuhhhhh. These people are teachers, in their late 50's, both withdrew funds from their Roth-TSAs @ Metlife and incurred $10-$15k surrender to buy Masterdex 10.


So they just have to keep it? What happens when they WANT to start taking funds?



Just because I don't like it doesn't mean that it's not right for some people. The broker may have been perfectly clear about the product and the clients loved it. It's been a long time since I looked at it and I can't answer specific questions about it.

Jul 21, 2006 8:42 am

The MasterDex 10 is complete garbage, as are most of Allianz's fixed annuities (thanks to their crediting methods).


If you want to get serious about EIA sales, get something like MCP Premium which does monte carlo sim's of pretty much every EIA on the market and gives monthly updated ratings on what the current best (for the customer) EIA's are.