Guaranteed Returns

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Jan 30, 2006 4:57 pm

Is there any way a brokerage can guarantee returns for high net worth clients. I was told by a potential client that he was guaranteed 4.25% by TIAA-Cref and I am having trouble figuring out how this could be done outside of a annuity. This I don't want to think about. Would it ever be acceptable to put someone into a 3million dollar annuity? The mind boggles.

Jan 30, 2006 4:59 pm

[quote=SonnyClips]was guaranteed 4.25% by TIAA-Cref QUOTE]


There ya go.

Jan 30, 2006 6:05 pm

The amount of the annuity isn't the issue.  It's all relative...if they are risk adverse, like the guarantees, have 5-6 million liquid, why not do 3 million into an annuity if they like the product.


Change those millions into hundred thousands, and you wouldn't have thought twice.


Don't get hung up on big numbers...I like big numbers.

Jan 30, 2006 7:32 pm

YOUR MISSION SHOULD YOU CHOOSE TO ACCEPT IT IS:



find a fixed annuity with guarantee greater than 4.25%.

Jan 30, 2006 8:02 pm

I run into TIAA Cref all the time. Right now they are paying 4.25 on the TIAA (fixed portion). Most of their accounts only allow 10% withdrawals every year from the TIAA portion, or annuitization. Something to inform the client about. I have moved good money over the years out of TIAA by setting up the automatic 10% withdrawals. Granted, you have to wait 10 years for the entire account to come over, but when those deposits come in it s nice..... Also, the Cref portion can be rolled out immediately with no surrenders fees...

Jan 30, 2006 8:05 pm
blarmston:

I run into TIAA Cref all the time. Right now they are paying 4.25 on the TIAA (fixed portion). Most of their accounts only allow 10% withdrawals every year from the TIAA portion, or annuitization. Something to inform the client about. I have moved good money over the years out of TIAA by setting up the automatic 10% withdrawals. Granted, you have to wait 10 years for the entire account to come over, but when those deposits come in it s nice..... Also, the Cref portion can be rolled out immediately with no surrenders fees...



Many people pour $$ into the TIAA side without having any idea as to the 10% restriction, too....

Jan 31, 2006 2:23 am
SonnyClips:

Would it ever be acceptable to put someone into a

3million dollar annuity? The mind boggles.





It depends on the clients net worth and individual situation, the biggest

VA ticket I've seen was 40 million. The clients net worth was in the 9

figures.

Jan 31, 2006 5:34 am

Good ol' Ken Lay dropped about  a 4 million  dollar annuity
with a Paine Webber broker  before the sh*te  hit the fan a
few years ago.

Jan 31, 2006 1:22 pm
SonnyClips:

Well the annuity I suspect is close to 95% of the clients assets. My mind boggled at putting what ammounted to all of your assets into an annuity and the FA letting you do it. I am new and naive but Jesus. 


I'm trying to imagine the compliance department that allowed 95% of a client's net worth go into an annuity without a disclaimer, signed by the client, that's as thick as Barron's.....

Jan 31, 2006 10:09 pm
mikebutler222:
SonnyClips:

Well the annuity I suspect is close to 95% of the clients assets. My mind boggled at putting what ammounted to all of your assets into an annuity and the FA letting you do it. I am new and naive but Jesus. 


I'm trying to imagine the compliance department that allowed 95% of a client's net worth go into an annuity without a disclaimer, signed by the client, that's as thick as Barron's.....



I am trying to imagine the vacation I would have with a $3million annuity, taking about 5% upfront!

Feb 1, 2006 2:18 pm

Let's see...would I take 4% upfront with a 1 trail in the 13th month


3,000,000(0.04) = 120,000 (net 48,000) plus a trail of 30,000 (net 10,000) every year


or


3,000,000(0.07) = 210,000 all at once (net 84,000)


I might take the $84,000...36,000 extra at 10% throws off an extra 3,600 per year.


Based on that, it would take you a long time to "get ahead" of the fee based comp (when you take time value of money into consideration).


Feb 1, 2006 2:28 pm

I meant to say...it would take a long time to get ahead USING the fee based comp...