Amen, Brother Scrim!  If there are no costs, how are we paid commissions?!!

[quote=doberman]

Joe probably has the theme song from “American Gigalo” playing in the background of his office. His filing cabinet is stocked with scented oils and body lotions. His hot tub has a built-in flat screen tv tuned to CNBC. His office attire is a satin bathrobe and silk pajamas (think Playboy mansion attire). A typical business day for Joe starts at around 7-ish PM and ends when he “completes the transaction”.

I see you have been talking about me while I’ve been away making $$…

Indy

You are paid a commission, there are no internal fees.  Read that again.  The insurance company makes a substantial profit on the spread between their investments and what your client gets and pays you a commission.  I would hardly call that a fee.  The common person can't invest in 20 year corporates, it's not in their best interests 99% of the time.

Fixed annuitties with MYG rates are becoming more and more attractive. I imagine in 6 -12 months they will be a great place to place money.  I like the liquidty, the mass mutual annuity offers 20% liquidity per year.  5 year surrender, guarntees no loss of principal, bonds cannot do that.

BR, I’m not defending bonds, and especially 20-year bonds.  We’re splitting hairs here on the fee question, but I’ll maintain that there is a cost for every product we sell…some are just more transparent than others.

"Mr. Customer.  You say you want to buy a bank CD?  Let me ask you this.  When you give the bank your money what to you think they do with it? 

They invest it or loan it out. 

When they do this do you think they loan it out at the higher rate or a lower rate than what they pay you?  A higher rate, of course. 

So, if you could invest in the loans that the bank makes that would be a good think...right?  Exactly. 

I have just the thing for you.  They are called senior loan notes or floating rate funds.  You can invest in the loans that large financial institutions make. 

However, these aren't loans to guys like me and you.  These are short term commercial loans to large companies.  As such, these are variable rate loans that reset their interest rates every couple of months when the fed changes interest rates.  That way they keep pace with inflation.  You are not investing in a specific company per se.  You are investing in the loans made to these companies.  Sign here."

[quote=Indyone]BR, I'm not defending bonds, and especially 20-year bonds.  We're splitting hairs here on the fee question, but I'll maintain that there is a cost for every product we sell...some are just more transparent than others.[/quote]

I'm not defending any particular investment either, but bonds are hardly transparent when it comes to fees.  You quote a yield thats been marked up or has sales credit, which the client never sees.  Not really different than a fixed annuity at all. 

Yeah

Floating rate funds are a safe bet....Keep watching

I'm not defending any particular investment either, but bonds are hardly transparent when it comes to fees.  You quote a yield thats been marked up or has sales credit, which the client never sees.  Not really different than a fixed annuity at all.

Actually quite different. You can't sell an annuity to make a profit or take a loss on a fixed annuity unless you surrender early. 

I don't know about you, but when I sell a bond the client clearly understands the mark up, yield to maturity, yield to calla and the difference between par, premium and discounted bonds.

However, it is true that there are internal "costs", if you want to call them that, in an annuity in that you could have purchased the bonds separately from the annuity to get a better yield. The guarantees in exchange for the lowered yield are what the client is "paying" for. No loss of principal, no market fluxuation, and guaranteed income with tax deferred growth.

[quote=babbling looney]

I'm not defending any particular investment either, but bonds are hardly transparent when it comes to fees.  You quote a yield thats been marked up or has sales credit, which the client never sees.  Not really different than a fixed annuity at all.

Actually quite different. You can't sell an annuity to make a profit or take a loss on a fixed annuity unless you surrender early. 

I don't know about you, but when I sell a bond the client clearly understands the mark up, yield to maturity, yield to calla and the difference between par, premium and discounted bonds.

However, it is true that there are internal "costs", if you want to call them that, in an annuity in that you could have purchased the bonds separately from the annuity to get a better yield. The guarantees in exchange for the lowered yield are what the client is "paying" for. No loss of principal, no market fluxuation, and guaranteed income with tax deferred growth.

[/quote]

BL,

I do the same thing.  The point is, you can beat to death any investment on fees....you could make a checking account look like a bad deal.

I'm more of a bottom line guy, and I guess I attract customers who are the same.

It only takes a few minutes to cover Bonds 101 with the client.  Believe me, they will be much easier to deal with when the bond fluctuates on the statement if you took a few minutes in the beginning.

I agree we don't need to beat the investor to death with minor details otherwise their eyes glaze over and they won't make any decisions. But they do need to have the basics at least explained in the beginning.  Document yourself and CYA.

Yeah I am sure they are real happy they bought the GM bond for the extra 1% right now.  That fixed annuity is looking mighty good!