Unethical behavior and/or sales practices
After being in the industry for a couple years, just about all of us have come across a situation where we have seen unethical behavior and sales practices.<?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />
What is the worst thing you have seen when it comes to unethical behavior and/or sales practices?
Index funds with a wrap.
Kidding...that was for you Ice .Local guys taking elderly people’s “never money” and putting it into Equity indexed annuities without disclosing surrender fees/periods.
Then, they call them every year or so and recommend they take a portion of the money out of the annuity and 1035 it to another annuity to get a "better" rate. They also send out hand-typed statements showing only the account values and not the true surrender value. I don't know how they prevent the clients from receiving the statements directly from the insurance companies, but they do.[quote=snaggletooth]Index funds with a wrap.
Don't give them any ideas they might really try this!I have a client who showed me her statement and it had annuities inside a wrap account plus the broker charged her $500 per house visit! She got hooked up with this guy in 2003 and after meeting with me in 2007, told him she was concerned with her performance. He had the balls to say… “Your up $7,000 over the last 4 years… thats something to be happy about.” She had $180,000 with him.
A classic example of an unscrupulous broker taking advantage of the elderly.Wow. I didn't even know that you could charge for a house visit...
Wow. I didn’t even know that you could charge for a house visit…
If we could, Edward D. Jones would already be doing it. (Of course, the brokers wouldn't see a dime of it.)
[quote=Philo Kvetch] [quote=not_applicable]
Wow. I didn't even know that you could charge for a house visit...
[/quote]If we could, Edward D. Jones would already be doing it. (Of course, the brokers wouldn't see a dime of it.)[/quote]
I left to go independent Dec. 23, 1999. I had a client - divorced man in his early 60s on disability retirement. He had his pension and a small nest egg. He’d never invested in the market and had no desire to. I had him in some bond funds, a GNMA unit trust and a couple of fixed annuities. When I left, he was uncomfortable staying with me, so he was assigned to one of the more senior brokers in the office. Met with him in early Jan. 2000, told him that he had been losing money with my recommendations and that they were going to get him back on track. Sunk everything but a fixed annuity that was his IRA into quity UITs - telecom, internet, wireless, technology, one small position in a medical stock UIT and one that was Dow 20. This fellow came to me March 2002, and his portfolio (which was his entire life savings) was down 60% - and that included the fixed annuity!! I wanted to throw up it was so inappropriate for this client.
3 stories
1 - Retired cop turned FA convinced a customer to let him do discretionary investments. Portfolio lost money, so FA put through an address change to a PO Box he owned and tried to recoup by buying and selling options. Was found out while on vacation when customer called manager to find out how his IBM was doing and told he no longer owned IBM. Ex cop went on to sell used cars.
2 - FA used to sell closed end IPO’s to customer. If stock went up 10%, sold out and went to client with a check for profit. Convinced her a 20% tip was customary. Was found out when customer’s CPA called another FA in office and told about these transactions.
3 - FA convinced client to go fee based. Then proceeded to sell only IPO’s and collect IPO commission as well as fee. Left the firm when IPO’s were no longer allowed in fee based accounts. Still operating as an independent.
This last one is very funny though. It happened in the firm I was then working in, but not in my office. Trainee’s in this firm were usually required to do cold canvassing in their first month’s after receiving series 7 license. This trainee would go up to a home and knock on the door. If no answer, he would break in and then steal what he could. He did this for 5 months before he was caught.
-My favorite are 10-year fixed annuities that are sold at 7% first year and then drop to 3% the next year and 3-5 years later “need” to be 10-35’ed into a new contract because there is a better rate, hitting the client with a surrender and starting the process over.
Found an annuity this year out of CA that a client had bought in 1990. Had a perpetual 6% surrender penalty.....that's right, the surrender penalty never goes away, making 3.5% interest. How about a Merrill account I came across late last year....95% international, fortunately the client listened to me and we allocated it appropriately. Came across a MSDW account around 5 years ago, 2 million. Client was 90% PFE with the account margined 30% at the broker's request. Told the client to diversify, didn't listen, don't know what he is up to now, other than I am sure he had his a$$ handed to him._popupControl();
How about a Merrill account I came across late last year....95% international, fortunately the client listened to me and we allocated it appropriately. I don't know that that is necessarily inappropriate if the rest of the client's holdings in other places (401K and other brokers) balance out the portfolio. I often misallocate an account to do that if the client is overly invested in other asset classes elsewhere. You just have to substantiate that with your compliance dept and keep a careful eye to make sure the client isn't moving his stuff around to unbalance the entire portfolio. Unethical = most EIA sales. I saw a broker in one of the bank branches I was at transfer a client from mutual funds that she had owned for over 15 years into an annuity, because he could make a huge commission. Fortunately, she discussed this with her CPA who freaked out and had the trade cancelled. She would have had over 60K in unrealized LTCG to report and this was before the cap gains rates were lowered. It would have cost her a bundle in taxes plus this amount represented a rather large chunk of her investable assets and would have locked her money away for 10 years with a large CDSC. The broker never discussed or even inquired about how long she had owned the funds or whether there would be any tax consequences. All he could see was a big fat commission. If her CPA hadn't gotten involved this poor woman would have been royally screwed.[quote=marketguru69]
This last one is very funny though. It happened in the firm I was then working in, but not in my office. Trainee's in this firm were usually required to do cold canvassing in their first month's after receiving series 7 license. This trainee would go up to a home and knock on the door. If no answer, he would break in and then steal what he could. He did this for 5 months before he was caught.[/quote] And I would have gotten away with it too if it weren't for you meddlin' kids and that dog!
[quote=Spaceman Spiff][quote=marketguru69]
This last one is very funny though. It happened in the firm I was then working in, but not in my office. Trainee's in this firm were usually required to do cold canvassing in their first month's after receiving series 7 license. This trainee would go up to a home and knock on the door. If no answer, he would break in and then steal what he could. He did this for 5 months before he was caught.[/quote] And I would have gotten away with it too if it weren't for you meddlin' kids and that dog! [/quote] Wow, my kids watch Scooby too. I can't believe I recognized that line. Scary.
[quote=rankstocks]-My favorite are 10-year fixed annuities that are sold at 7% first year and then drop to 3% the next year and 3-5 years later “need” to be 10-35’ed into a new contract because there is a better rate, hitting the client with a surrender and starting the process over.
Found an annuity this year out of CA that a client had bought in 1990. Had a perpetual 6% surrender penalty.....that's right, the surrender penalty never goes away, making 3.5% interest. How about a Merrill account I came across late last year....95% international, fortunately the client listened to me and we allocated it appropriately. Came across a MSDW account around 5 years ago, 2 million. Client was 90% PFE with the account margined 30% at the broker's request. Told the client to diversify, didn't listen, don't know what he is up to now, other than I am sure he had his a$$ handed to him. [/quote] Well, needless to say, if he still holds all that PFE, it's like 50% of his portoflio and he's got a fat margin call. You can't save 'em all.Normally this can be a good strategy. I have a client with 700,000 shares of PFE. He is a retired chief chemist of the company. I see a lot of this, since we work with retirees, who were formally executives of public companies. I've even seen a retired store manager of PetSmart who has $2.5MM of shares.
My preference in these cases to use an exchange fund if client is eligible first. 2nd choice is to set up CRT account with highly appreciated stock, using charitable deduction to buy life insurance to recover charitable gift to estate. Client will have to pay CG tax eventually, but it will be paid out over many years, and may never be fully paid. Alternatively, give a gift of a portion of stock to charity. Under current CG rates, will be able to sell about 5 shares to every share gifted with deduction covering CG tax.
Others have used margin loans to buy diversification. Income and options collars, should be used to pay down the margin loan. Again CG taxes have to be paid, but properly done you can spread this out over several years.
A very nice old lady (late 70s) came in terribly confused about what had happened
with her AIG account (I’m an LPL rep helping service some old clients who still have AIG money).
She had wanted to put some money into the liquid,
fixed interest rate savings account, but somehow the original deposit
along with much of the
savings account principal was transferred to the 7-year lockup,
fixed annuity. Did I mention that there was no disclosure of the 7-year penalty and no receipt of contract?
The
lady was very thankful when I showed her the “free-out” on page 8.
It’s time to call AIG customer service about it:
“I’m sorry, that’s not possible, you will have to pay the full penalty.”
“But I’m looking right here in the contract, page 8, the last paragraph.”
“I’m sorry, we don’t have access to the contract.”
“You’re telling me you don’t even have records of sending the client a contract?”
“No sir, we don’t have any record.”
Time
goes on, a supervisor comes on the line, the same, memorized penalty
statements are uttered. The woman, becoming more distraught, finally
calls the agent who sold her the annuity:
“There’s this thing on page 8, that says I have a free-out.”
“Oh really? I didn’t even know about that.”
The
woman ended up getting the transaction rescinded, but not without the
effort that would keep most people over 50 from even wanting to bother.
And from my experience, this is exactly what AIG/Valic wants. They also want
their workforce to be incompetent.
No offense to any Valic/AIG reps out there, but lately I’ve been hearing some terrible management stories, along with 20 year veteran reps getting weekly “beatings” and having their pay cut 50% if they can’t generate another +$3 million in VALIC monies before the end of the year.
I’m currently having a problem with them. We sent some transfer paperwork to them and they aren’t transferring the money because they are claiming that it’s not the original paperwork. It is.
That must be the exclusive to the VALIC side of AIG. I use AIG/SunAmerica annuities all the time and my clients love them. They’re easy to work with and very responsive when I have an issue, which is hardly ever.
Spiff, I think you’re right. I have had to grapple with Valic, and they are nothing like the AIG/Sun America side (are they even he same company??).
I find Valic mostly with teachers/former teachers. Reminds me of dealing with AXA/Equitable also.I came across two Index life insurance policies.
Same client had a rep put 100% of an IRA rollover $137,000 into a hotel being built in a foreign country. How do these reps get away with this stuff? These reps give all of us a bad name.AIG Valic is completely different from AIG/Sun America and all the other step children of AIG. The problem is that VALIC was once a low cost, competitive provider, but when AIG bought them up (back in the late 90s if I remember), they didn’t like the direction they were going (full service financial products, dual b/ds with LPL, etc…); this costs too much money for AIG. So here’s what they did:
Right after Hank Greenberg stepped down at AIG, there was a big national conference with all the VALIC reps to do some cheerleading and to try to bring some cohesiveness to the new AIG/VALIC merger. Sullivan came in and, in front of nearly 800 of the top producers, told them all to “lock up you clients”, “get them into the fixed annuities,” “net flows”. Everyone in the room was completely shocked; this is not why people become financial advisors. This was around 1999-2000. Since then it’s been a tragic downward spiral for VALIC.
AIG/VALIC is in defense mode (sort of like HAL-9000). They are turning off the life support of all their reps, cutting their pay if they can’t produce, screwing their clients, hiring anyone with a pulse in back-office, and pissing off just about everyone in the industry. My guess is that they will sell the whole part of VALIC in the next year or two. You can find plenty of ex-managers, ex-reps who are plenty fed up (and involved in plenty of class actions, private settlements against them). There are a few big names here in CA who have fought Valic, done the non-compete lawsuit, and won back their clients and $100s of millions in assets. There are plenty of reps who are not going to watch this company make a complete mockery of the profession.
So if you’ve got clients with “AIG retirement” please don’t give up! Get them the hell out of there.
iceco1d, thanks for your response. It is the AIG paperwork that we sent to them and it was the original. My client was with me and we filled out the paperwork together with an AIG rep on the phone so that we could be sure that we were doing it correctly.
I had a 77 yr old client in here yesterday that showed me her 122m IRA all in a fixed annuity with a 10 yr surrender sold in 2000 from a Physicians Mutual agent. The agent from Physician's now works for some podunk insurance firm and asked her to move her IRA into a new annuity at his new firm for "No cost!" He didn't mention the 4% surrender to her on the old contract or the new 10 yr surrender chart. Thank God she came to show it to me before she bought it. I think Physician's Mutual is probably the worst outfit I've seen so far and thats saying a lot after seeing stuff from AXA, Ameriprise, and Thrivent/AAL
Advisor wanted to allocate 20% to “alternative” investments. He bought some hybrid funds, absolute return funds, and Mega Millions Lottery tickets to round out the portfolio. All lottery winnings would be spread out over all accounts based on the percentage of tickets they bought.
Wow these are some nightmares!
Maybe I should ask this question on another thread but here it goes. What would clean up this profession?Ways to clean up the profession:
(1) require the sellers of EIA's to get securities licensed (2) Put a limit on what the maximum cdsc charge can beThe problem is the bad eggs and not the products. I've never sold an EIA, but I don't have a problem with them.
An EIA is no more of a security than any other fixed annuity or a CD.
Commissions should not have to be disclosed. They have no relevance. If a client buys XYZ product from me and I earn a commission of 3% and you earn a commission of 1% on the same product, how does this effect the client? It doesn't.
Index annuities make sense for people who want no investment risk and would like the opportunity to earn more money than they can in other fixed investments. Reducing the surrender period, reduces the guarantees that can be given. It can hurt clients. Bottom line: Go after the bad eggs and not products. EIA's are not good or bad products. They are either appropriate or inappropriate based upon the situation.[quote=rankstocks]
For annuities, this is what I would suggest: 1. Disclose, in bold font, commission paid to brokers on annuities that a client must sing off on. If you are going to be consistent, then you better let your client know that you made a $20,000 commission on that life insurance policy you 1035 over, and they need to know about the $50 you make every time they sign up for the credit card. You also should probably let them know that you are short $10,000 in the taxable income catagory but have made your tax free income catagory for your diversification trip, and that you need an additional $5,000 in GDC this week to keep yourself at exceeding expectations. Or we could agree that all of these things are kind of but not really relevant. If I disclose all the costs (which I do), how does it affect the client if I make $50 or $50,000? 2. Disclose, in bold font, all expenses added together for M&E, administration, all riders, and average internal expenses for funds in variable annuities that a client must sign off on. I do this on a separate form that the client has to sign. 3. Disclose, in bold font, the probability that a fixed annuity bought from a bank or insurance agent with a great rate the first year will drop near the floor the next year and have the client sign off on it. I would love to see this. 4. Ban all index annuities. Overstated, but overall on the right track. If you make change #6, then much of my objection to EIA's goes away. The real problem is the 80 year old who still has 12 years left on their surrender schedule. A 5 year surrender schedule also eliminates the 10%+ commissions. 5. Discose, in bold font, that a GMIB or GMWB is not a guaranteed rate of return on the principal each year, but simply a rider, and have the client sign off on it. I would love to see this added to my form. 6. Reduce the surrender period on all annuities to 5 years or less and reduce the CDSC. I would make an exception for fixed annuities with a firm fixed rate. Otherwise, I agree. 7. Outlaw all "Senior Designations" as well as "scare tactic" seminars. I don't know how to outlaw "scare tactic" seminars, but if you know please do it immediately. These seven ideas would be a good start to clean up the annuity business.[/quote] For whatever it's worth, my $0.02. I would also add: 8. ANYTHING that has ANY ties on rate/surrender/etc. to the stock market (read EIA's) is a security. 9. Prohibit 100% upfront commission on annuities. It doesn't have to be like a C share mutual fund, but if one of the payout options is 8% upfront and then no trail, guess who gets no service? Give the broker some incentive for providing continuing advice. I see these people all the time, their broker sold them a $200,000 annuity, and now won't return their call. Even the $200 provided by a .1 trail would help, I would be ok with a .25 trail like on mutual funds.You guys are aware that all of this information is in the prospectus and that the client is free to read it. And don’t try the “they don’t read it, anyway” defense. If they don’t read it, THEY chose not to know what it says.
I’m sorry that rankstocks doesn’t think that he can be honest without MORE regulation. That doesn’t mean that the rest of us are just like him. Only pikers sit around, fretting over what other people are doing. Did you come into this business to clean up the industry or to make a great living and help a lot of people?
[quote=henryhill]
Ways to clean up the profession:
(1) require the sellers of EIA's to get securities licensed (2) Put a limit on what the maximum cdsc charge can be [/quote] 1) EIAs are not an investment. Why would you force producers to have a securities license? 2) So, why would liquidity for a spendthrift would be a good thing?[quote=rankstocks]
For annuities, this is what I would suggest: 1. Disclose, in bold font, commission paid to brokers on annuities that a client must sing off on. Does your supermarket tell you their mark up and profit on the stuff they sell? 2. Disclose, in bold font, all expenses added together for M&E, administration, all riders, and average internal expenses for funds in variable annuities that a client must sign off on. I don't have a problem with this 3. Disclose, in bold font, the probability that a fixed annuity bought from a bank or insurance agent with a great rate the first year will drop near the floor the next year and have the client sign off on it. So, you are suggesting insurance companies predict what future interest rates will be? Are you retarded? 4. Ban all index annuities. What is your reasoning for this? Do you want to ban all fixed annuities as well? 5. Discose, in bold font, that a GMIB or GMWB is not a guaranteed rate of return on the principal each year, but simply a rider, and have the client sign off on it. I agree with this one. Most producers really don't understand how these work. Maybe better education by the product vendors would help. Actually, I know it would. 6. Reduce the surrender period on all annuities to 5 years or less and reduce the CDSC. Why is liquidity a good thing for everybody? You give more liquidity, you lose guarantees. Simple as that. 7. Outlaw all "Senior Designations" as well as "scare tactic" seminars. Emotion gets a client to act. Logic does not. As far as designations go, there is no guarantee a CFP will be any more or less honest than one who has, say, a CSA. Nice try. These seven ideas would be a good start to clean up the annuity business.[/quote] For someone who seems to have been in the business for a while, you have no clue how it really works. Not that I'm shocked at all about it, but this boilerplate complaining has no real basis for discussion.BIGGEST problem with all annuities (specifically EIA’s and income riders) are that almost every client/prospect/friend, etc that I talk to that has one says the same thing…“Oh I just get 7% guaranteed. Doesn’t matetr whether the market goes up or down, I always get 7%. That’s MUCH better than what the market is doing now!”
Uhhhh, no. You try to explain the riders, the income base guarantee (versus the account value), the floors and ceilings on return, the fees, etc. It just goes in one ear and out the other. They INSIST that there are no commissions or fees, and that the value jsut goes up 7% in perpetuity every year, guaranteed. If that was the case, I would have ALL of my money in 7% guaranteed, tax deferred investments. Annuities are not bad if you know EXACTLY what you are getting (which is rare).[quote=B24]BIGGEST problem with all annuities (specifically EIA’s and income riders) are that almost every client/prospect/friend, etc that I talk to that has one says the same thing…“Oh I just get 7% guaranteed. Doesn’t matetr whether the market goes up or down, I always get 7%. That’s MUCH better than what the market is doing now!”
Uhhhh, no. You try to explain the riders, the income base guarantee (versus the account value), the floors and ceilings on return, the fees, etc. It just goes in one ear and out the other. They INSIST that there are no commissions or fees, and that the value jsut goes up 7% in perpetuity every year, guaranteed. If that was the case, I would have ALL of my money in 7% guaranteed, tax deferred investments. Annuities are not bad if you know EXACTLY what you are getting (which is rare).[/quote] B24, I agree that some advisors don't explain the rider correctly. BUT, for as difficult as it is for some advisors to understand this, it's 10x harder for their clients. I feel I do a great job explaining the differences between contract value and the rider, but it is extremely difficult for clients to understand. Some get it, some don't. The sad thing is when you see someone you know that needs and annuity and they don't understand it well enough to do it.8. ANYTHING that has ANY ties on rate/surrender/etc. to the stock market (read EIA's) is a security.
By this definition, is a bond no longer a security? I assume that you don't mean that. In reality, based upon this definition, virtually everything is a security. What determines the rates on fixed insurance products? The general account of the insurance company. This general account invests in securities. Where does money that get invested in fixed annuities go? Primarily the general account of the insurance company. Where does the money for an EIA go? Primarily the general account of the insurance company. The same can be said for CD's, etc. An EIA is a fixed annuity. It simply has a different crediting method than other fixed products. If an EIA is a security, all fixed products are securities. 9. Prohibit 100% upfront commission on annuities. It doesn't have to be like a C share mutual fund, but if one of the payout options is 8% upfront and then no trail, guess who gets no service? Give the broker some incentive for providing continuing advice. I see these people all the time, their broker sold them a $200,000 annuity, and now won't return their call. Even the $200 provided by a .1 trail would help, I would be ok with a .25 trail like on mutual funds. What kind of incentive does the broker have to give continuing advice if there is a trail? He gets paid regardless. The commissions are for selling the product. The broker doesn't get paid to give advice. The last thing that we need is more rules. Rules don't stop crooks. They just hurt the honest people. BIGGEST problem with all annuities (specifically EIA's and income riders) are that almost every client/prospect/friend, etc that I talk to ... The last time that I checked, annuities don't speak. The problem isn't with the product. The problem is with those who are selling them and those who are buying them without understanding what they are buying.[quote=anonymous]
BIGGEST problem with all annuities (specifically EIA's and income riders) are that almost every client/prospect/friend, etc that I talk to ...
The last time that I checked, annuities don't speak. The problem isn't with the product. The problem is with those who are selling them and those who are buying them without understanding what they are buying. [/quote] Agreed Anon, 100%. I was talking to my sister-in-law last night, a dental hygenist. I was blown away by the amount of specific course work and cost to become a dental hygenist. You have at least 2 years of tough coursework on top of basic underground courses. The dental hygene program costs about $25,000-$30,000 and has a tough selection process. All to work on your teeth. I'm talking to her and thinking, you don't even have to graduate college to be a rep. You just have to cram for a test for 3 months. Maybe some of the bad apples selling the good products would be taken care of if ALL financial products paid the same commissions/fees. I am not an advocate of this by any means as it's not fair to those of us that do things the right way. But from a consumer's standpoint, it might be one solution.i love the insurance agents who drop a 300,000 ticket into a VA one year and then take the 10% each year after that and go to another VA or A share funds, all under the guise of diversification.
also love the ROTH VA's i see with monthly auto contributions by a 28 year old single guy. or the 150,000 VUL being funded at $50-$75/month. when i joined my prior b/d i inherited roughly 50-100 annuity contracts all sold by the previous agent. slowly but surely i saw most of these contracts being moved away, all usually taking 3-8% cdsc's. most were invested in af subaccounts, but were being moved due to "poor performance" according to current policyholders. always killed me how policyholders would accept a cdsc after being promised greener pastures elsewhere.So far there has been some good points made.
Some that are missing yet. Meeting sales quota's & goals Sales people that can only sell propritary products. My preferance is fee based for all products including insurance even car and P&C. But that is my opinion.I’ll add one more thing. All firms should accept other firms paperwork for withdrawl or if they insist on “their forms”, those withdrawl/surrender forms be available on the internet.
[quote=theironhorse]i love the insurance agents who drop a 300,000 ticket into a VA one year and then take the 10% each year after that and go to another VA or A share funds, all under the guise of diversification.
also love the ROTH VA's i see with monthly auto contributions by a 28 year old single guy. or the 150,000 VUL being funded at $50-$75/month. when i joined my prior b/d i inherited roughly 50-100 annuity contracts all sold by the previous agent. slowly but surely i saw most of these contracts being moved away, all usually taking 3-8% cdsc's. most were invested in af subaccounts, but were being moved due to "poor performance" according to current policyholders. always killed me how policyholders would accept a cdsc after being promised greener pastures elsewhere.[/quote]You've just proven yourself to be a liar. We don't "see these contracts being moved away." They are in our book of business one day and gone the next. We can't see whether or not it was surrendered or if the client only did an agent change.
[quote=anonymous]
8. ANYTHING that has ANY ties on rate/surrender/etc. to the stock market (read EIA's) is a security.
By this definition, is a bond no longer a security? I assume that you don't mean that. In reality, based upon this definition, virtually everything is a security. What determines the rates on fixed insurance products? The general account of the insurance company. This general account invests in securities. Where does money that get invested in fixed annuities go? Primarily the general account of the insurance company. Where does the money for an EIA go? Primarily the general account of the insurance company. The same can be said for CD's, etc. An EIA is a fixed annuity. It simply has a different crediting method than other fixed products. If an EIA is a security, all fixed products are securities. Maybe I am slightly overstating it, but if you product goes up or down based on whether the stock market goes up or down, it should be regulated as a security. EIA's came into existence in order to allow know-nothing insurance agents to sell something to their victims -err clients, without proper license or regulation. They are getting by on a technical loophole, and it should be closed. 9. Prohibit 100% upfront commission on annuities. It doesn't have to be like a C share mutual fund, but if one of the payout options is 8% upfront and then no trail, guess who gets no service? Give the broker some incentive for providing continuing advice. I see these people all the time, their broker sold them a $200,000 annuity, and now won't return their call. Even the $200 provided by a .1 trail would help, I would be ok with a .25 trail like on mutual funds. What kind of incentive does the broker have to give continuing advice if there is a trail? He gets paid regardless. The commissions are for selling the product. The broker doesn't get paid to give advice. The last thing that we need is more rules. Rules don't stop crooks. They just hurt the honest people. The incentive to service is that if I don't service the account, someone else will take it over and get paid to do so. I guess this leads to #10, commissions must be transferrable on insurance products to the servicing agent, as they are on security products. BIGGEST problem with all annuities (specifically EIA's and income riders) are that almost every client/prospect/friend, etc that I talk to ... The last time that I checked, annuities don't speak. The problem isn't with the product. The problem is with those who are selling them and those who are buying them without understanding what they are buying. Many of the worst examples are EIA slingers who don't even have a securities license. This wouldn't solve all problems, but it would certainly help. [/quote][quote=EDJ4now][quote=anonymous]
8. ANYTHING that has ANY ties on rate/surrender/etc. to the stock market (read EIA's) is a security.
By this definition, is a bond no longer a security? I assume that you don't mean that. In reality, based upon this definition, virtually everything is a security. What determines the rates on fixed insurance products? The general account of the insurance company. This general account invests in securities. Where does money that get invested in fixed annuities go? Primarily the general account of the insurance company. Where does the money for an EIA go? Primarily the general account of the insurance company. The same can be said for CD's, etc. An EIA is a fixed annuity. It simply has a different crediting method than other fixed products. If an EIA is a security, all fixed products are securities. Maybe I am slightly overstating it, but if you product goes up or down based on whether the stock market goes up or down, it should be regulated as a security. EIA's came into existence in order to allow know-nothing insurance agents to sell something to their victims -err clients, without proper license or regulation. They are getting by on a technical loophole, and it should be closed. 9. Prohibit 100% upfront commission on annuities. It doesn't have to be like a C share mutual fund, but if one of the payout options is 8% upfront and then no trail, guess who gets no service? Give the broker some incentive for providing continuing advice. I see these people all the time, their broker sold them a $200,000 annuity, and now won't return their call. Even the $200 provided by a .1 trail would help, I would be ok with a .25 trail like on mutual funds. What kind of incentive does the broker have to give continuing advice if there is a trail? He gets paid regardless. The commissions are for selling the product. The broker doesn't get paid to give advice. The last thing that we need is more rules. Rules don't stop crooks. They just hurt the honest people. The incentive to service is that if I don't service the account, someone else will take it over and get paid to do so. I guess this leads to #10, commissions must be transferrable on insurance products to the servicing agent, as they are on security products. BIGGEST problem with all annuities (specifically EIA's and income riders) are that almost every client/prospect/friend, etc that I talk to ... The last time that I checked, annuities don't speak. The problem isn't with the product. The problem is with those who are selling them and those who are buying them without understanding what they are buying. Many of the worst examples are EIA slingers who don't even have a securities license. This wouldn't solve all problems, but it would certainly help. [/quote] [/quote]Whoever wrote the blue part is dumb.
Maybe I am slightly overstating it, but if you product goes up or down based on whether the stock market goes up or down, it should be regulated as a security.
I'd agree with this. What you are writing doesn't describe an EIA or any fixed product. Fixed products go up in value. Securities go up and down in value. There is not investment risk in fixed products. There is not investment risk in EIA's. EIA's came into existence in order to allow know-nothing insurance agents to sell something to their victims -err clients, without proper license or regulation. They are getting by on a technical loophole, and it should be closed. There is nothing technical about this. The client's money is not in the market. It's not an investment. The incentive to service is that if I don't service the account, someone else will take it over and get paid to do so. I guess this leads to #10, commissions must be transferrable on insurance products to the servicing agent, as they are on security products. I'm a free market kind of guy. We don't need regulation that says how people should be paid. Many of the worst examples are EIA slingers who don't even have a securities license. This wouldn't solve all problems, but it would certainly help. So, the answer is to punish honest people who sell these products?[quote=Philo Kvetch] [quote=not_applicable]
Wow. I didn't even know that you could charge for a house visit...
[/quote]If we could, Edward D. Jones would already be doing it. (Of course, the brokers wouldn't see a dime of it.)[/quote] How much per door knock??? What if I knock more than three times??? YESS!!!
deekay posted:
1. Disclose, in bold font, commission paid to brokers on annuities that a client must sing off on. Does your supermarket tell you their mark up and profit on the stuff they sell? No, supermarkets don't. But you also don't hold an ear of corn for 7 years with CDSC's if you don't. There is a direct correlation of the level of commissions to returns on investment long term. The client should know what the commission is when agents say, "You don't pay me anything Mr and Mrs client, the insurance company pays me for finding them business." 3. Disclose, in bold font, the probability that a fixed annuity bought from a bank or insurance agent with a great rate the first year will drop near the floor the next year and have the client sign off on it. So, you are suggesting insurance companies predict what future interest rates will be? Are you retarded? Please name an annuity that has not dropped substantially from the initial teaser rate? I would love to know of one, because I have seen a hundred that dropped, and NONE that have stayed the same or were raised. 6. Reduce the surrender period on all annuities to 5 years or less and reduce the CDSC. Why is liquidity a good thing for everybody? You give more liquidity, you lose guarantees. Simple as that. Your client already pays for these riders by tacking on BIP's to the overall contract cost. How would guarantees be effected if the client is already paying for them? If you are concerned with a client switching out of this annuity short term, maybe it isn't the best investment for them at the time you sell it to them? 7. Outlaw all "Senior Designations" as well as "scare tactic" seminars. Emotion gets a client to act. Logic does not. As far as designations go, there is no guarantee a CFP will be any more or less honest than one who has, say, a CSA. Nice try. Wow, if this is how you sell these products, maybe you need an ethics refresher course. If you are using emotion to get a client to purchase an investment, you will have even more success using information about the investment that is objective, show the client how it fits in their overall portfolio, and describe the benefits of the investment while pointing out there are a some weaknesses. Managing a clients expectations will always provide you with a much better long term client. Taking a weekend course to get a Senior designation so you can put it on a business card is very dishonest. Even though there is no guarantee of honesty, at least with the CFP there is substantial coursework, a 2-day supervised test, a background check, and CE. For someone who seems to have been in the business for a while, you have no clue how it really works. Not that I'm shocked at all about it, but this boilerplate complaining has no real basis for discussion. If you still think I have no clue, read a few of my previous posts. It's obvious to me, as well as most of the participants on this forum that annuity slinging is your primary occupation. Just a suggestion, get your series 7 and study up on some different sales tactics.Rankstocks, are you messing with us? Noone can be as stupid as you present yourself to be.
One nice thing I am seeing with these teaser rate annuities at least in Wisconsin anyway, is that if the insurance co decides to lower the fixed rate, the client has a 30 day window to get rid of the contract free of surrender. The only problem with this is the client and most brokers don’t know about this because its usually buried in the back of the prospectus.
[quote=Hobby Bull] [quote=theironhorse]i love the insurance agents who drop a 300,000 ticket into a VA one year and then take the 10% each year after that and go to another VA or A share funds, all under the guise of diversification.
also love the ROTH VA's i see with monthly auto contributions by a 28 year old single guy. or the 150,000 VUL being funded at $50-$75/month. when i joined my prior b/d i inherited roughly 50-100 annuity contracts all sold by the previous agent. slowly but surely i saw most of these contracts being moved away, all usually taking 3-8% cdsc's. most were invested in af subaccounts, but were being moved due to "poor performance" according to current policyholders. always killed me how policyholders would accept a cdsc after being promised greener pastures elsewhere.[/quote]You've just proven yourself to be a liar. We don't "see these contracts being moved away." They are in our book of business one day and gone the next. We can't see whether or not it was surrendered or if the client only did an agent change.
[/quote] you are a complete idiot or jackass, whichever you prefer. if someone was replacing a variable annuity on my books, i was notified via email, asked whether I wanted to try to "save" it by taking the allowed time frame to process, which was 30 days I believe, and I knew well in advance if an annuity was leaving. But nice try. It might work differently for annuities sold via wirehouse, where a change of agent (as you call it, but is actually a change of b/d) can be done, but when sold through an agency, such as met, ny life, nml, etc you cannot do an agent change, so someone gets notification. Try to change agent on an NML VA (which you cannot do anyway), or simply replace it, and see if your client gets a call from the NML agent trying to keep it on the books. Maybe you've just proven yourself to have no experience and willing to speak out his/her ass on topics they don't understand.
And seriously, if someone moved an annuity away from you, taking a surrender charge in the process, you never received a final statement showing this? The CDSC shows up right on the statement.
Well so much for this thread!
It was going ok untill people started putting others down!Sorry greenbacks, never had words with anyone on this board, but figured when someone comes right out and calls me a liar and has no idea what they are talking about I need to clarify. I do apologize for carrying on.
[quote=theironhorse][quote=Hobby Bull] [quote=theironhorse]i love the insurance agents who drop a 300,000 ticket into a VA one year and then take the 10% each year after that and go to another VA or A share funds, all under the guise of diversification.
also love the ROTH VA's i see with monthly auto contributions by a 28 year old single guy. or the 150,000 VUL being funded at $50-$75/month. when i joined my prior b/d i inherited roughly 50-100 annuity contracts all sold by the previous agent. slowly but surely i saw most of these contracts being moved away, all usually taking 3-8% cdsc's. most were invested in af subaccounts, but were being moved due to "poor performance" according to current policyholders. always killed me how policyholders would accept a cdsc after being promised greener pastures elsewhere.[/quote]You've just proven yourself to be a liar. We don't "see these contracts being moved away." They are in our book of business one day and gone the next. We can't see whether or not it was surrendered or if the client only did an agent change.
[/quote] you are a complete idiot or jackass, whichever you prefer. if someone was replacing a variable annuity on my books, i was notified via email, asked whether I wanted to try to "save" it by taking the allowed time frame to process, which was 30 days I believe, and I knew well in advance if an annuity was leaving. But nice try. It might work differently for annuities sold via wirehouse, where a change of agent (as you call it, but is actually a change of b/d) can be done, but when sold through an agency, such as met, ny life, nml, etc you cannot do an agent change, so someone gets notification. Try to change agent on an NML VA (which you cannot do anyway), or simply replace it, and see if your client gets a call from the NML agent trying to keep it on the books. Maybe you've just proven yourself to have no experience and willing to speak out his/her ass on topics they don't understand.[/quote]
You are a liar. You don't have an insurance license. People who don't have the license don't inherit annuity clients.
Jackass will be fine.
[quote=theironhorse]Sorry greenbacks, never had words with anyone on this board, but figured when someone comes right out and calls me a liar and has no idea what they are talking about I need to clarify. I do apologize for carrying on.[/quote]
I accept your apology.
[quote=rankstocks]deekay posted:
1. Disclose, in bold font, commission paid to brokers on annuities that a client must sing off on. Does your supermarket tell you their mark up and profit on the stuff they sell? No, supermarkets don't. But you also don't hold an ear of corn for 7 years with CDSC's if you don't. There is a direct correlation of the level of commissions to returns on investment long term. The client should know what the commission is when agents say, "You don't pay me anything Mr and Mrs client, the insurance company pays me for finding them business." If the client doesn't see it, and the vehicle is appropriate and has all the pros and cons disclosed, what does it matter? In fact, I have had my fair share of clients say to me, "Are you sure you're making money on this deal? I want to make sure you're well-compensated." Why? Because I do that good of a job for them. 3. Disclose, in bold font, the probability that a fixed annuity bought from a bank or insurance agent with a great rate the first year will drop near the floor the next year and have the client sign off on it. So, you are suggesting insurance companies predict what future interest rates will be? Are you retarded? Please name an annuity that has not dropped substantially from the initial teaser rate? I would love to know of one, because I have seen a hundred that dropped, and NONE that have stayed the same or were raised. Current Yield Annuities. NEXT! 6. Reduce the surrender period on all annuities to 5 years or less and reduce the CDSC. Why is liquidity a good thing for everybody? You give more liquidity, you lose guarantees. Simple as that. Your client already pays for these riders by tacking on BIP's to the overall contract cost. How would guarantees be effected if the client is already paying for them? If you are concerned with a client switching out of this annuity short term, maybe it isn't the best investment for them at the time you sell it to them? The longer the surrender period, the more certainty the insurance company has. As a result, they can offer stronger guarantees to a policy holder. How hard a concept is that? 7. Outlaw all "Senior Designations" as well as "scare tactic" seminars. Emotion gets a client to act. Logic does not. As far as designations go, there is no guarantee a CFP will be any more or less honest than one who has, say, a CSA. Nice try. Wow, if this is how you sell these products, maybe you need an ethics refresher course. If you are using emotion to get a client to purchase an investment, you will have even more success using information about the investment that is objective, show the client how it fits in their overall portfolio, and describe the benefits of the investment while pointing out there are a some weaknesses. Managing a clients expectations will always provide you with a much better long term client. Taking a weekend course to get a Senior designation so you can put it on a business card is very dishonest. Even though there is no guarantee of honesty, at least with the CFP there is substantial coursework, a 2-day supervised test, a background check, and CE. FTR, I am not a CSA. Nor a CFP. I don't have alpabet soup after my name. That is by choice. I stand by my body of work, not some initials on my business card. I get my clients to take action on ideas and concepts that make sense for them and me. I don't take "Let me think about it" from my clients. And I don't need some 50-page report that most CFP's use for me to convince a client to take action. For someone who seems to have been in the business for a while, you have no clue how it really works. Not that I'm shocked at all about it, but this boilerplate complaining has no real basis for discussion. If you still think I have no clue, read a few of my previous posts. It's obvious to me, as well as most of the participants on this forum that annuity slinging is your primary occupation. Just a suggestion, get your series 7 and study up on some different sales tactics. Oh really? I just looked at my book of business. Guess what? 5% of my book is annuity (mostly VA). And I have my Series 7. And 66. And life/health/variable annuity license. Strike three, buck-o. My sales tactics are ethical in every way. Just because you can't sell yourself out of a wet paper bag doesn't give you the right to point accusatory fingers at those of us who can sell. By the way, since when is having the 7 the end-all be-all in this business? The 7 is a joke. [/quote]Nice work D, nice work.
OK, what is (beyond the obvious) a currient yield annuity. I thought I'd heard just about every term imaginable with annuities, but that's a new one.
Sounds like rate for term like the Hartford CRC.
[quote=Spaceman Spiff]
OK, what is (beyond the obvious) a currient yield annuity. I thought I'd heard just about every term imaginable with annuities, but that's a new one.
[/quote] It's a fixed annuity who's rates are tied to overall interest rates.Rankstocks, I’m going to respond to your post to deekay because I think that you are holding some commonly held beliefs that simply aren’t true or make no logical sense.
1. Disclose, in bold font, commission paid to brokers on annuities that a client must sing off on. Does your supermarket tell you their mark up and profit on the stuff they sell? No, supermarkets don't. But you also don't hold an ear of corn for 7 years with CDSC's if you don't. There is a direct correlation of the level of commissions to returns on investment long term. The client should know what the commission is when agents say, "You don't pay me anything Mr and Mrs client, the insurance company pays me for finding them business." I can't think of any benefit to the client knowing the commission. It's useless information. If it's a fixed product, what matters is how interest is going to be credited. If it is a variable product, the expenses matter. Can you name one product in any field where the commission of the person selling the product is disclosed? I can't. Tell me about this direct correlation between commission paid and performance. If I sell a fixed product to someone, my commission will be 3-4 times as high as a wirehouse rep who has to put it through the grid. How will this change the results to the client? It won't. Insurance products often pay commissions exceeding 100%. Why do the products that pay no commissions underperform? Commissions are irrelevant. What matters is the expenses. The good products that pay bigger commissions have lower total expenses. Clients need to know the expenses that effect the performance of their products. How much of these expenses end up in my pocket doesn't matter. Not only doesn't it matter, but in selling thousands of products, I've never had a client ask me how much I made. They don't ask because they don't care. They just want to know what the expenses are. They would prefer that as much as these expenses end up in my pocket instead of somewhere else. 3. Disclose, in bold font, the probability that a fixed annuity bought from a bank or insurance agent with a great rate the first year will drop near the floor the next year and have the client sign off on it. So, you are suggesting insurance companies predict what future interest rates will be? Are you retarded? Please name an annuity that has not dropped substantially from the initial teaser rate? I would love to know of one, because I have seen a hundred that dropped, and NONE that have stayed the same or were raised. If it is a teaser rate, it usually will drop. The insurance company can't put odds on this. The fact that it is a teaser rate does need to be disclosed and it is disclosed. 6. Reduce the surrender period on all annuities to 5 years or less and reduce the CDSC. Why is liquidity a good thing for everybody? You give more liquidity, you lose guarantees. Simple as that. Your client already pays for these riders by tacking on BIP's to the overall contract cost. How would guarantees be effected if the client is already paying for them? If you are concerned with a client switching out of this annuity short term, maybe it isn't the best investment for them at the time you sell it to them? The client isn't paying for a guarantee in a fixed annuity any more than they are paying for a guarantee in a CD. What would pay a higher rate...a 1 day CD or a 10 year CD? It's the same thing with a fixed annuity. The longer the surrender charges, the higher the rate that the insurance company can guarantee. Let's look at this in the extreme. Company A sells annuities with no surrender charges. Company B sells annuities with a 20 year surrender charge. Who can offer a higher guaranteed rate? Obviously Company B. Why? The longer time horizon allows them to invest their money in a more aggressive way. Shorter surrender periods= lower guarantees. 7. Outlaw all "Senior Designations" as well as "scare tactic" seminars. Emotion gets a client to act. Logic does not. As far as designations go, there is no guarantee a CFP will be any more or less honest than one who has, say, a CSA. Nice try. Wow, if this is how you sell these products, maybe you need an ethics refresher course. If you are using emotion to get a client to purchase an investment, you will have even more success using information about the investment that is objective, show the client how it fits in their overall portfolio, and describe the benefits of the investment while pointing out there are a some weaknesses. Managing a clients expectations will always provide you with a much better long term client. Taking a weekend course to get a Senior designation so you can put it on a business card is very dishonest. Even though there is no guarantee of honesty, at least with the CFP there is substantial coursework, a 2-day supervised test, a background check, and CE. Designations don't buy integrity or take it away. Emotion sells. We're salespeople and we need to do everything in our power to get people to take action. The key is that the salesperson has integrity so that we are getting the clients to take the action that they should be taking. You spend all day, everyday, becoming an expert on financial matters. Do you really think that the client has a complete understanding of how it fits into their plans? Even to the extent that they do, they have no clue if it is the best for them. They buy because they trust you. For someone who seems to have been in the business for a while, you have no clue how it really works. Not that I'm shocked at all about it, but this boilerplate complaining has no real basis for discussion. If you still think I have no clue, read a few of my previous posts. It's obvious to me, as well as most of the participants on this forum that annuity slinging is your primary occupation. Just a suggestion, get your series 7 and study up on some different sales tactics. If it is obvious to you that deekay is an "annuity slinger", you need to re-read his posts. I doubt that you are going to get much agreement from anyone. It would not surprise me if deekay, like myself, has never sold an EIA, but he can recognize the B.S. in the anti-annuity crowd.This is my favorite crowd. They don't realize this is what clients want and sometimes need. The wirehouse guys especially miss the mark on this stuff. No worries, I'll take care of it.the anti-annuity crowd.
This is my favorite crowd. They don't realize this is what clients want and sometimes need. The wirehouse guys especially miss the mark on this stuff. No worries, I'll take care of it.[/quote][quote=anonymous]the anti-annuity crowd.
Let's not be fooled...If the non-independent brokers were paid 90% commish with NO haircut, they'd love annuities. They are pressured to charge people, based on a percentage of assets. They eventually make WAY more money by NOT doing the right thing and putting their clients into annuities. I think they should be forced to disclose THIS fact.
Thanks for the great response, anon. For the record, you are correct. I have never sold an EIA. I do not have a problem with them at all. The problem lies with those producers who use them inappropriately.
I've said it before, and I'll say it again. 99% of the arguments against EIAs and VAs have zero thought behind it. If they bothered to peel back some layers, they would find that annuities have their place, just like other products.The real problem is that too many people sit around, bemoaning what others are doing, and using that as an excuse for why they can’t compete in the marketplace.
You hate EIA’s? Great. How many people have EVER lost money in an EIA? None.
How many people are happy making 5-7% tax deferred? LOT AND LOTS. I’ll take the big EIA ticket and let you have the small brokerage account all day long.
Here’s the facts. With rare exception, fixed annuities with teaser rates, index annuities, and Variable annuities with exotic riders are nothing more than smoke an mirrors. Here’s a few reasons: 7-15 year CDSC’s, bait and switch rates, 80 BPs cost on a rider a client has no chance of using or coming out ahead on, limited investment choices in a Variable, floors of 3% on fixed rates that earn 3% from year 2 to 10, ticking tax time bombs to heirs, ordinary income rates on distributions instead of capital gains and dividend tax rates, penalties if you withdraw prior to 59 1/2, limited participation rates on index annuities, insurance company keeps the dividends on index annuities, overall returns capped on index annuities, high surrender penalties, 3% annual total cost in a variable, and so on.
If you really want to debate this issue, start a new thread and we'll see who comes out ahead.[quote=rankstocks]Here’s the facts. With rare exception, fixed annuities with teaser rates, index annuities, and Variable annuities with exotic riders are nothing more than smoke an mirrors. Here’s a few reasons: 7-15 year CDSC’s, bait and switch rates, 80 BPs cost on a rider a client has no chance of using or coming out ahead on, limited investment choices in a Variable, floors of 3% on fixed rates that earn 3% from year 2 to 10, ticking tax time bombs to heirs, ordinary income rates on distributions instead of capital gains and dividend tax rates, penalties if you withdraw prior to 59 1/2, limited participation rates on index annuities, insurance company keeps the dividends on index annuities, overall returns capped on index annuities, high surrender penalties, 3% annual total cost in a variable, and so on.
If you really want to debate this issue, start a new thread and we'll see who comes out ahead.[/quote]Do you have homeowners insurance? The reason you're losing accounts to annuities is that people WANT them and they aren't buying that "were on the same side of the table" crap that you're pushing.
Are you insane? Yeah and no one ever lost money in a bond right? Liquidity problems have caused many to take losses on these products. Don't be such an idiotThe real problem is that too many people sit around, bemoaning what others are doing, and using that as an excuse for why they can’t compete in the marketplace.
You hate EIA’s? Great. How many people have EVER lost money in an EIA? None.
How many people are happy making 5-7% tax deferred? LOT AND LOTS. I’ll take the big EIA ticket and let you have the small brokerage account all day long.
Some annuities work very well for some clients, and a portion of their investable assets. What’s amusing is the EIA salesmen masquerading as advisors, who pretend that everybody should have one. Frankly, were the commissions not outrageously high, they wouldn’t be sold at all. I’ve yet to hear of a single example where the EIA was the best investment.
But when all you sell is hammers, then every problem looks like a nail. And isn’t it funny how so many of these seminars all point the attendees in the same direction?
EIA’s are junk.
Back on topic, I believe that every dime of commission a broker will receive should be divulged to the client, both orally and in writing. I’m almost all fee-based, and my fees are stamped on the front page of every client statement, every quarter. It drives me absolutely nuts when I ask a prospect why he owns this mutual fund or that one, and I hear that since it’s a B- or a C-share, there were no sales charges or commissions involved. That should be a prosecutable offense, IMO.
I had a prospect last year who was considering rolling his entire $500k retirement plan into an EIA, because of the guarantees, and the bonus he would receive up front. I showed him the commission schedule on the annuity and asked him, “How is it possible for the insurance company to make money? After all, with the 10% commission, and the 12% upfront bonus, they’re already out 22%, and the markets haven’t even opened yet.” I answered my question by saying that this particular company was one of the richest in the world, and is profitable by locking up clients’ money for years and years.
Well, he did it anyhow. A fool and his money are lucky to get together in the first place, and EIAs is yet another instrument designed to remedy that.
EIA salesmen operate the financial services equivalent of a shoe store that only sells brown shoes.
Guess who's about to look good in brown...EVERYBODY!!Are you insane? Yeah and no one ever lost money in a bond right? Liquidity problems have caused many to take losses on these products. Don't be such an idiot[/quote][quote=Hobby Bull]The real problem is that too many people sit around, bemoaning what others are doing, and using that as an excuse for why they can’t compete in the marketplace.
You hate EIA’s? Great. How many people have EVER lost money in an EIA? None.
How many people are happy making 5-7% tax deferred? LOT AND LOTS. I’ll take the big EIA ticket and let you have the small brokerage account all day long.
WHo triggered the loss? The product or the client?
[quote=Bodysurf]Some annuities work very well for some clients, and a portion of their investable assets. What’s amusing is the EIA salesmen masquerading as advisors, who pretend that everybody should have one. Frankly, were the commissions not outrageously high, they wouldn’t be sold at all. I’ve yet to hear of a single example where the EIA was the best investment.
But when all you sell is hammers, then every problem looks like a nail. And isn’t it funny how so many of these seminars all point the attendees in the same direction?
EIA’s are junk.
[/quote]
Would it help you to know that the EIA that I use has a 5 year surrender and a 5% commission? By the way…EIA’s are terrible investments, but they are great alternatives to CD’s and money market. That’s why the tickets are so big.
[quote=Bodysurf]Back on topic, I believe that every dime of commission a broker will receive should be divulged to the client, both orally and in writing. I’m almost all fee-based, and my fees are stamped on the front page of every client statement, every quarter. It drives me absolutely nuts when I ask a prospect why he owns this mutual fund or that one, and I hear that since it’s a B- or a C-share, there were no sales charges or commissions involved. That should be a prosecutable offense, IMO.
I had a prospect last year who was considering rolling his entire $500k retirement plan into an EIA, because of the guarantees, and the bonus he would receive up front. I showed him the commission schedule on the annuity and asked him, “How is it possible for the insurance company to make money? After all, with the 10% commission, and the 12% upfront bonus, they’re already out 22%, and the markets haven’t even opened yet.” I answered my question by saying that this particular company was one of the richest in the world, and is profitable by locking up clients’ money for years and years.
Well, he did it anyhow. A fool and his money are lucky to get together in the first place, and EIAs is yet another instrument designed to remedy that.
[/quote]
You lied to the client about having to PAY the bonus? Sounds unethical to me. If the agent gets paid an average of 1%/year, how is he making an outrageous amount of money compared to what you will charge him?
My point was that the agent was getting paid 10%, and the client was getting a “bonus” of 12%. Both of those came from the insurance company. So how could it be a profitable transaction to the insurer, if they (the insurance company) is already down 22% on the day the contract is signed?
By locking up the money is how. Which is why there is such a big difference between surrender value and the so-called “contract value”–which takes forever to get. And the money I charge the client is to manage their money on a day-to-day basis. Pray tell–just what does an EIA salesman do, besides get a big commission from the insurance company to lock up clients’ funds for years?
[quote=Bodysurf]My point was that the agent was getting paid 10%, and the client was getting a “bonus” of 12%. Both of those came from the insurance company. So how could it be a profitable transaction to the insurer, if they (the insurance company) is already down 22% on the day the contract is signed?
By locking up the money is how. Which is why there is such a big difference between surrender value and the so-called “contract value”–which takes forever to get. And the money I charge the client is to manage their money on a day-to-day basis. Pray tell–just what does an EIA salesman do, besides get a big commission from the insurance company to lock up clients’ funds for years?
[/quote]
I can’t speak for everyone, but when you’re spending your time managing money, I’m either looking for more people who are tired of having their money “managed” to sell annuities to or I’m busting caps at the gun range.
Well, maybe that’s the difference. Obviously you see yourself as a salesman. No harm in that, probably.
[quote=Bodysurf]Well, maybe that’s the difference. Obviously you see yourself as a salesman. No harm in that, probably.
[/quote]
Do you have a problem with salesmen?
I like your style. I like your moves.
I can’t speak for everyone, but when you’re spending your time managing money, I’m either looking for more people who are tired of having their money “managed” to sell annuities to or I’m busting caps at the gun range.
Nope. Ultimately I’m a salesman myself. In my case, the product and service is me.
The insurance company makes a good deal of money from the spreads in the bonds they buy. Who cares how they make their money though, when the product is fulfillling its purpose when used correctly? Bodysurf, it seems like you are very close-minded about EIA's. I'm not saying they're great, but your reasoning doesn't factor how people feel about their investments. It's too important to overlook. Some people don't want to get market returns and take market risk and your managed money platform can't save them all.My point was that the agent was getting paid 10%, and the client was getting a “bonus” of 12%. Both of those came from the insurance company. So how could it be a profitable transaction to the insurer, if they (the insurance company) is already down 22% on the day the contract is signed?
You’re right. I am very closed-minded when it comes to EIA’s, whose main purpose is to generate enormous reserves for insurance companies, and huge commissions to those who sell them.
You’re also right about the fact that managed money isn’t for everyone. I only deal with people who are serious about making money, and who know that the best way to do so is to divorce your feelings about temporary market swings. Over time, the risk of a diversified portfolio of stocks goes to zero; for everything that’s “fixed”–let alone those instruments that lock up principal for 10 years or more–it’s slow-motion suicide. How anyone can lock in their money at 3% in a world of $3.50 gasoline and skyrocketing medical and nursing home costs and feel good about it is beyond me, so I don’t bother. Plenty of hungry CD and annuity salesmen out there to pick off those people, and I suppose they have to make a living too.
A doctor isn’t concerned about a patient’s feelings about his prognosis–if they don’t take their medicine, they’re going to die. Invested in CD’s or most EIA’s, the client is losing money, every single day, against inflation and taxes. That’s the reality, and I would be doing a disservice to the client to sell them a product that is bad for them, just because they feel good about it today.
[quote=Bodysurf]You’re right. I am very closed-minded when it comes to EIA’s, whose main purpose is to generate enormous reserves for insurance companies, and huge commissions to those who sell them.
You’re also right about the fact that managed money isn’t for everyone. I only deal with people who are serious about making money, and who know that the best way to do so is to divorce your feelings about temporary market swings. Over time, the risk of a diversified portfolio of stocks goes to zero; for everything that’s “fixed”–let alone those instruments that lock up principal for 10 years or more–it’s slow-motion suicide. How anyone can lock in their money at 3% in a world of $3.50 gasoline and skyrocketing medical and nursing home costs and feel good about it is beyond me, so I don’t bother. Plenty of hungry CD and annuity salesmen out there to pick off those people, and I suppose they have to make a living too.
A doctor isn’t concerned about a patient’s feelings about his prognosis–if they don’t take their medicine, they’re going to die. Invested in CD’s or most EIA’s, the client is losing money, every single day, against inflation and taxes. That’s the reality, and I would be doing a disservice to the client to sell them a product that is bad for them, just because they feel good about it today.
[/quote]
Your ignorance is not one of your best kept secrets.
Uh huh. For the record, I use VA’s a lot. But EIA’s are one of the scourges of this industry, as are the people who sell them.
Don’t pay any attention to me, though. Don’t you have an “elderly issues” seminar to put on? Or is today your day at the gun range?
[quote=Bodysurf]Uh huh. For the record, I use VA’s a lot. But EIA’s are one of the scourges of this industry, as are the people who sell them.
Don’t pay any attention to me, though. Don’t you have an “elderly issues” seminar to put on? Or is today your day at the gun range?
[/quote]
It’s tempting, but I’m not going to the range today. I’ve only got two guns and I carry both of them. Since I just cleaned them yesterday and won’t have time to clean them again, I’m gonna do something else today.
What are you doing today? Figuring out a new explanation for why people should continue to pay you to lose money for them? Does that “we’re on the same side of the table” line still work?
I’m playing in a tennis tournament today.
YTD I’m down in only two accounts. I do all equities with covered call writes, with fairly high minimums. Not for everyone, I know.
I do like VA’s. When doing the optimum asset allocations, I determine what the client’s exposure to fixed income should be, and invest those proceeds into Variable Annuities. They work like bonds–which I’m not a fan of either–with far better returns and guarantees. I did about $5mm worth last year, primarily with ING and Met. I reserve almost all my harsh criticism for EIA’s, and guys who see every sale as a 10% commission opportunity.
[quote=Bodysurf]Over time, the risk of a diversified portfolio of stocks goes to zero
I don't think you can say any equity portfolio ever bears zero risk, even if it's diversified. There is always some risk. Plenty of hungry CD and annuity salesmen out there to pick off those people, and I suppose they have to make a living too. There are no CD salesmen here. There are people here who try to get CD investors out of CD's and sometimes the only thing to get them out of a CD is a fixed annuity or EIA.[/quote]
I'm interested to know how you explain this to the client. Because I know of people that look at VA's like bonds, and they misrepresent the product extensively. How do you explain it?
I do like VA’s. When doing the optimum asset allocations, I determine what the client’s exposure to fixed income should be, and invest those proceeds into Variable Annuities. They work like bonds–which I’m not a fan of either–with far better returns and guarantees.
[quote=Bodysurf] I do like VA’s. When doing the optimum asset allocations, I determine what the client’s exposure to fixed income should be, and invest those proceeds into Variable Annuities. They work like bonds–which I’m not a fan of either–with far better returns and guarantees. [/quote]
Optimum? How exactly do you determine one’s “optimum” asset allocation?
Well, it’s the very core of my belief system that only equities can deliver the long-term performance, price appreciation, diversification, and dividend growth that today’s investor needs to ensure that inflation doesn’t demolish his retirement portfolio. So I begin with a long-term horizon and outlook. For such people, EIA’s, CD’s, munis–are a guaranteed money loser after inflation and taxes. (And yes, I’m aware that annuities defer taxes.)
I demonstrate to the client, however, that it’s always wise to keep a percentage of their post-retirement income guaranteed. One way to do this is show how their Social Security, their pensions, and some money invested in VA’s will guarantee–to the best extent possible, anyhow–a given level of income. Every dime above that needs to be invested in instruments that historically outperform. The real “risk” you need to concern yourself with, is outliving your money.
Most prospects disagree. Most like the temporary security and comfort that fixed-income investments provide. It’s only later, when they run out of money courtesy of a 25-year retirement and soaring costs, that they wish they’d done something–anything–differently. Not my problem. It’s always baffled me how anyone hears the term “fixed income” and doesn’t run in the opposite direction. There are no expenses I know of that are fixed, but we pretend we’re doing people a favor by helping them down a slope from which many will never recover. Our job is not to tell people what they want to hear, or to modify our investment advice based on their “feelings”–it’s to deliver cold, hard doses of the truth. And the truth is that there are NO investors who bought into a diversified portfolio of stocks years ago, and would’ve been better off in bonds, or CD’s, or these abominations called EIA’s.
[quote=Bodysurf]Well, it’s the very core of my belief system that only equities can deliver the long-term performance, price appreciation, diversification, and dividend growth that today’s investor needs to ensure that inflation doesn’t demolish his retirement portfolio. So I begin with a long-term horizon and outlook. For such people, EIA’s, CD’s, munis–are a guaranteed money loser after inflation and taxes. (And yes, I’m aware that annuities defer taxes.)
I demonstrate to the client, however, that it’s always wise to keep a percentage of their post-retirement income guaranteed. One way to do this is show how their Social Security, their pensions, and some money invested in VA’s will guarantee–to the best extent possible, anyhow–a given level of income. Every dime above that needs to be invested in instruments that historically outperform. The real “risk” you need to concern yourself with, is outliving your money.
Most prospects disagree. Most like the temporary security and comfort that fixed-income investments provide. It’s only later, when they run out of money courtesy of a 25-year retirement and soaring costs, that they wish they’d done something–anything–differently. Not my problem. It’s always baffled me how anyone hears the term “fixed income” and doesn’t run in the opposite direction. There are no expenses I know of that are fixed, but we pretend we’re doing people a favor by helping them down a slope from which many will never recover. Our job is not to tell people what they want to hear, or to modify our investment advice based on their “feelings”–it’s to deliver cold, hard doses of the truth. And the truth is that there are NO investors who bought into a diversified portfolio of stocks years ago, and would’ve been better off in bonds, or CD’s, or these abominations called EIA’s.
[/quote]
How do you explain to people why they should continue to pay you to lose money for them?
Are the reps at your b/d even allowed to sell EIA’s? Tell the truth.
How do you explain to people why they should continue to pay you to lose money for them?
[quote=Primo]
Edit: sorry I didn't answer your question. I run a hypo of the competing annuity in the same equity/fixed income mix for the same time frame as they have had an account with me and compare. Guess who wins. If the appicable time frame is not available, as it often is not, I run the longest historical time frame I can and then compare. Guess who wins. Then I point out that the returns the annuity salesperson showed them are not historical as I have just done, the are hypothetical, as the disclosure states cleary. What? He did not give you a disclosure. I wonder why?[/quote] I think it's funny how we always come down to this "slight of hand" sales tactic. For the non-VA guys, you might play the hypothetical vs. historical card, or say their money is locked up, or the fees are excessive.Then for the non-managed money guys, someone could say, "Well your advisor told you it would be 1.25% per year, but let's look at fund expenses and the unknown trading fees". Either way, it's all sales, and with any given situation, we can always bring out another "factoid" to put one way down or prop up our own plan. The fact of the matter is that if you sit down and present your plan to a prospect, and they go to another guy and hear their plan, the first guy will probably lose if it is known what his plan was.
It is not slight of hand, it is comparing actual returns to actual returns. Nothing tricky about it. What is slight (shouldn’t there be an “e” in there?) of hand sales is showing a hypothetical “this is the way it could work” illustration as opposed to a historical “this is the way it would have worked” illustration. Ever ask yourself why that is? As far as fees are concerned, my fees are disclosed in bold type upfront, and then the client gets a quarterly reminder. VA fees are buried in a prospectus. At the end of the day, I charge less all in than a VA. Quick question, how do you know about “unknown trading fees” if they are unknown?
[quote=Primo]It is not slight of hand, it is comparing actual returns to actual returns. Nothing tricky about it. What is slight (shouldn’t there be an “e” in there?) of hand sales is showing a hypothetical “this is the way it could work” illustration as opposed to a historical “this is the way it would have worked” illustration. Ever ask yourself why that is? As far as fees are concerned, my fees are disclosed in bold type upfront, and then the client gets a quarterly reminder. VA fees are buried in a prospectus. At the end of the day, I charge less all in than a VA. Quick question, how do you know about “unknown trading fees” if they are unknown?[/quote]
One thing you rookies don’t understand is that we know that the more we disclose, the easier it is to close the sale. Unfortunately for you, one of the words that we can use is “guarantee.”
Investors should concern themselves with "historical" past performance to an extent. But how often do you think funds like the Magellan fund are shown to an investor, but the investor never knows that Peter Lynch doesn't run it anymore? I would be willing to bet that more often than people realize, the "historical" track record doesn't truly represent the fund they are buying today. Quick question, how do you know about "unknown trading fees" if they are unknown? What is unknown is how much they are (hidden). What is known is that they exist. This fact can be found buried in the prospectus.It is not slight of hand, it is comparing actual returns to actual returns. Nothing tricky about it. What is slight (shouldn’t there be an “e” in there?) of hand sales is showing a hypothetical “this is the way it could work” illustration as opposed to a historical “this is the way it would have worked” illustration. Ever ask yourself why that is? As far as fees are concerned, my fees are disclosed in bold type upfront, and then the client gets a quarterly reminder. VA fees are buried in a prospectus. At the end of the day, I charge less all in than a VA. Quick question, how do you know about “unknown trading fees” if they are unknown?
That's exactly right.One thing you rookies don’t understand is that we know that the more we disclose, the easier it is to close the sale. Unfortunately for you, one of the words that we can use is “guarantee.”
I have no idea how much or little you disclose Tom. Being that we live in different parts of the country, we most likely will never see the same prospect. IF (and that is a big if) you pitch annuities like you post here, you are the poster child for the scorn given to annuities. I base my opinions of annuities on what I see in my market. EIA's are pitched as no downside equity products instead of fixed annuities with a different crediting method. I would be willing to bet EIA sales will drop tremendously when they are regulated as equity products (if it happens). I'm not a big fan of regulation, but I would welcome this particular piece.
As far as VA's, if a VA is needed to change client behaviour, i.e. client needs equity type returns but has no tolerance for volatility, then absolutely sell them a VA. Every prospect I speak to is asked if they need a gaurantee. The problem with the gaurantee is that it is very expensive and (using a very broad general definition) is unlikely to be needed. I give the client the choice. I use an investment outside the annuity and the like subaccount in an annuity to show the cost of the vehicle. The investment I use to illustrate isn't cherry picked, in fact the returns have been very pedestrian. The majority of the time, clients chose the non-gauranteed investment. The two emotions that drive people when investing is fear and greed. I will take the greedy ones any day of the week and send the fearful ones elsewhere.[quote=Primo]
I have no idea how much or little you disclose Tom. Being that we live in different parts of the country, we most likely will never see the same prospect. IF (and that is a big if) you pitch annuities like you post here, you are the poster child for the scorn given to annuities. I base my opinions of annuities on what I see in my market. EIA’s are pitched as no downside equity products instead of fixed annuities with a different crediting method. I would be willing to bet EIA sales will drop tremendously when they are regulated as equity products (if it happens). I’m not a big fan of regulation, but I would welcome this particular piece.
As far as VA's, if a VA is needed to change client behaviour, i.e. client needs equity type returns but has no tolerance for volatility, then absolutely sell them a VA. Every prospect I speak to is asked if they need a gaurantee. The problem with the gaurantee is that it is very expensive and (using a very broad general definition) is unlikely to be needed. I give the client the choice. I use an investment outside the annuity and the like subaccount in an annuity to show the cost of the vehicle. The investment I use to illustrate isn't cherry picked, in fact the returns have been very pedestrian. The majority of the time, clients chose the non-gauranteed investment. The two emotions that drive people when investing is fear and greed. I will take the greedy ones any day of the week and send the fearful ones elsewhere. [/quote]Fear is stronger than greed. I'll take that side of the equation any day.
Nice to finally come to an understanding.
[quote=VA Salesman]
[quote=Primo]
I have no idea how much or little you disclose Tom. Being that we live in different parts of the country, we most likely will never see the same prospect. IF (and that is a big if) you pitch annuities like you post here, you are the poster child for the scorn given to annuities. I base my opinions of annuities on what I see in my market. EIA’s are pitched as no downside equity products instead of fixed annuities with a different crediting method. I would be willing to bet EIA sales will drop tremendously when they are regulated as equity products (if it happens). I’m not a big fan of regulation, but I would welcome this particular piece.
As far as VA's, if a VA is needed to change client behaviour, i.e. client needs equity type returns but has no tolerance for volatility, then absolutely sell them a VA. Every prospect I speak to is asked if they need a gaurantee. The problem with the gaurantee is that it is very expensive and (using a very broad general definition) is unlikely to be needed. I give the client the choice. I use an investment outside the annuity and the like subaccount in an annuity to show the cost of the vehicle. The investment I use to illustrate isn't cherry picked, in fact the returns have been very pedestrian. The majority of the time, clients chose the non-gauranteed investment. The two emotions that drive people when investing is fear and greed. I will take the greedy ones any day of the week and send the fearful ones elsewhere. [/quote]Either you're lying about selling annuities to people who don't like volatility or you're lying about sending them elsewhere. Which one is the lie?
Fear is stronger than greed. I'll take that side of the equation any day.
[/quote]
I only take about 80% of prospects, I don’t take prospects that I can’t help. So that is not a lie. If a prospect has reasonable expectations, the assets to accomplish their goals, and choose the gaurantee, then I sell them a VA. Neither statement was a lie. What lies do you tell?
[quote=Primo]I only take about 80% of prospects, I don’t take prospects that I can’t help. So that is not a lie. If a prospect has reasonable expectations, the assets to accomplish their goals, and choose the gaurantee, then I sell them a VA. Neither statement was a lie. What lies do you tell?[/quote]
I don’t lie. The truth closes more deals than a lie. I don’t take people that don’t want/need annuities. Especially people who are too ignorant to know that “inexpensive” doesn’t usually mean “worth owning.”
I’ve got a question, how much of your own money goes into annuities?
[quote=Primo]I’ve got a question, how much of your own money goes into annuities?[/quote]
What does it matter? How much chemotherapy do oncologists give to themselves?
I knew you would duck the question. More proof. Thanks.
[quote=Primo]I knew you would duck the question. More proof. Thanks.[/quote]
You’re welcome. You may want to print it out and show it to your clients when you see that their annuity transfer paperwork has hit and your assets are flying out the door.
Primo, I've got to defend Bobby on this one.
He's an annuity salesman. He doesn't claim that everyone should own an annuity. He doesn't claim that all of someone's money should be in an annuity. He only sells annuities. His claim is that he sells annuities when they are appropriate and if they aren't appropriate he doesn't work with the client. That sounds to me like the way that an annuity salesman who wants to specialize should work.
Whether he owns one or not is irrelevant. We don't know if they are appropriate for his situation. I sell a fair amount of annuities, yet I wouldn't buy one based upon my current financial situation.
[quote=joedabrkr]
[quote=VA Salesman]
[quote=Bodysurf]Well, it’s the very core of my belief system that only equities can deliver the long-term performance, price appreciation, diversification, and dividend growth that today’s investor needs to ensure that inflation doesn’t demolish his retirement portfolio. So I begin with a long-term horizon and outlook. For such people, EIA’s, CD’s, munis–are a guaranteed money loser after inflation and taxes. (And yes, I’m aware that annuities defer taxes.)
I demonstrate to the client, however, that it’s always wise to keep a percentage of their post-retirement income guaranteed. One way to do this is show how their Social Security, their pensions, and some money invested in VA’s will guarantee–to the best extent possible, anyhow–a given level of income. Every dime above that needs to be invested in instruments that historically outperform. The real “risk” you need to concern yourself with, is outliving your money.
Most prospects disagree. Most like the temporary security and comfort that fixed-income investments provide. It’s only later, when they run out of money courtesy of a 25-year retirement and soaring costs, that they wish they’d done something–anything–differently. Not my problem. It’s always baffled me how anyone hears the term “fixed income” and doesn’t run in the opposite direction. There are no expenses I know of that are fixed, but we pretend we’re doing people a favor by helping them down a slope from which many will never recover. Our job is not to tell people what they want to hear, or to modify our investment advice based on their “feelings”–it’s to deliver cold, hard doses of the truth. And the truth is that there are NO investors who bought into a diversified portfolio of stocks years ago, and would’ve been better off in bonds, or CD’s, or these abominations called EIA’s.
[/quote]
How do you explain to people why they should continue to pay you to lose money for them?
Are the reps at your b/d even allowed to sell EIA’s? Tell the truth.
[/quote]
How about if YOU tell the truth?
You are not an ‘annuity specialist’ in the sense that you sell clients an annuity for that portion of their portfolio that must be guaranteed.
No…you exploit their fear to sell them as much as product as you can, instead of helping them learn how owning investments that can grow over time-given reasonable costs of investment-are the only things that will allow them to maintain a reasonable standard of living.
By my perception, that’s no different than the snake oil salesmen who traveled from town to town in the old west making outragoeous health claims and separating people from money. You just wear a nicer watch and hide your expenses a little better.
[/quote]
You’re an angry, angry man. Who are you to say what portion MUST be guaranteed? What if the client wants ALL of his largest asset insured? Do you insure your whole house or just the garage that you converted to an S&M dungeon?
Bodysurf says: I only deal with people who are serious about making money, and who
know that the best way to do so is to divorce your feelings about
temporary market swings. Over time, the risk of a diversified
portfolio of stocks goes to zero; for everything that’s “fixed”–let
alone those instruments that lock up principal for 10 years or
more–it’s slow-motion suicide. How anyone can lock in their money at
3% in a world of $3.50 gasoline and skyrocketing medical and nursing
home costs and feel good about it is beyond me, so I don’t bother.
First a disclosure. I have only sold a few EIAs in my career and that
was early on when they first came out and were simpler than they are
today. Annuities in general including fixed and VAs are about 20% of
my book. EIA sales have been abusive and are coming under the scrutiny
of FINRA. If I wanted to place an EIA, my B/D has a list of approved
firms and there are numerous suitability forms that must be completed
and the trade is reviewed by compliance.
That being said BS (nice abbreviation no?) seems to be under the
delusion that there is NO risk in a diversified stock portfolio. He
also suffers under the hubris of thinking that he is smarter than the
market. In addition many of our clients aren’t that concerned with
growing the portion of their funds that are invested in
annuities and are more concerned with capital preservation and
guarantees. When your time horizon (death looming on the horizon) is
about 10years you aren’t that concerned about inflation. They aren’t
willing to take anymore market swings, divorced from emotion or not.
Talking about when every tool is a hammer all solutions look like
nails, BS must not be dealing with the elderly very often. For a young
client I agree that a portfolio of diversified stocks, a long term risk
taking investment strategy and using covered calls in a down market is
most likely appropriate.
Not all EIA or fixed annuities are 10 years or longer. I just placed a
portion of some portfolios in a 5.25% 5 year surrender fixed product
for some of my older income oriented clients who just couldn’t take the
downturn in this current bear market. They know this money is not
going to grow. They don’t care. They want to take the income and not
worry about it while the rest of their money is in play.
Our job is not to tell people what they want to hear, or to modify our
investment advice based on their “feelings”–it’s to deliver cold, hard
doses of the truth.
Sometimes you have to compromise from your high horse know it all
attitude and work with your clients to keep them from bolting and
completely destroying their financial plans.
As to the fees in VAs being buried in the prospectus. Not true. The fees are clearly detailed for each option in the sales material and often in the application and suitability forms.
Any product…ANY product can be inappropriately sold or under disclosed with the risks minimized. Just ask any long term bond holder who was ‘sold’ a bond. Do you think they were disclosed that the call date is theoretical. Did they get completely informed of the ramifications on their bond market value when rates go up? How about those stocks that were sold based on hot air back in the dot com boom? Did their advisors discuss P/E ratios, market cap, cash to debt ratio of the company? Or did they just say buy this stock it’s growing and as part of a diversified portfolio of stocks over time there is no risk. Enron… Worldcom anyone??
[quote=anonymous]
Primo, I've got to defend Bobby on this one.
He's an annuity salesman. He doesn't claim that everyone should own an annuity. He doesn't claim that all of someone's money should be in an annuity. He only sells annuities. His claim is that he sells annuities when they are appropriate and if they aren't appropriate he doesn't work with the client. That sounds to me like the way that an annuity salesman who wants to specialize should work.
Whether he owns one or not is irrelevant. We don't know if they are appropriate for his situation. I sell a fair amount of annuities, yet I wouldn't buy one based upon my current financial situation.
[/quote] An annuity is not an investment, it is an investment vehicle. You can be a fixed income investor, a moderate investor, or an aggressive growth investor and accomplish this with an annuity. I did not ask how much of his money was in an EIA, I asked how much was in an annuity. If you only work with one type of investment because of your belief is that investment is superior enough to work exclusively with it, then certainly your own money should be in it. I know I won't get an answer, but I would be curious to know what the reason his own money is not gauranteed as he rails about the importance of this product. As far as his "claims" about his sales practices, have to say they sound awful hollow.[quote=Primo][quote=anonymous]
Primo, I've got to defend Bobby on this one.
He's an annuity salesman. He doesn't claim that everyone should own an annuity. He doesn't claim that all of someone's money should be in an annuity. He only sells annuities. His claim is that he sells annuities when they are appropriate and if they aren't appropriate he doesn't work with the client. That sounds to me like the way that an annuity salesman who wants to specialize should work.
Whether he owns one or not is irrelevant. We don't know if they are appropriate for his situation. I sell a fair amount of annuities, yet I wouldn't buy one based upon my current financial situation.
[/quote] An annuity is not an investment, it is an investment vehicle. You can be a fixed income investor, a moderate investor, or an aggressive growth investor and accomplish this with an annuity. I did not ask how much of his money was in an EIA, I asked how much was in an annuity. If you only work with one type of investment because of your belief is that investment is superior enough to work exclusively with it, then certainly your own money should be in it. I know I won't get an answer, but I would be curious to know what the reason his own money is not gauranteed as he rails about the importance of this product. As far as his "claims" about his sales practices, have to say they sound awful hollow.[/quote]Why are you so obsessed with me? Seems kind of gay. I'm sorry that I trigger your father issues. I'm not your dad. I'm not the one that abused you. I'm here to help.
If a person is retiring and wants to roll their 401(k) into and EIA and take immediate income from it, are there products out there that will allow them to do so?
If you only work with one type of investment because of your belief is that investment is superior enough to work exclusively with it, then certainly your own money should be in it.
I don't think that someone specializing in one investment vehicle has anything to do with its overall superiority. It just has to be superior enough to be in the client's best interest often enough to make a good living from it. I would guess that Bobby is an annuity salesman because it is a smart business decision for him. Just because he's usually a jerk is no reason not to take his claims at face value. He may sell them when they aren't appropriate, but he hasn't given us any indication that this is the case. He hasn't said one way or another what % of his money is in annuities. I'm failing to see how it matters. If you felt that you could make more money only selling annuites while still only doing what is best for your clients, would you do it? I would.If a person is retiring and wants to roll their 401(k) into and EIA and take immediate income from it, are there products out there that will allow them to do so?
Borkerboy, I don't know the answer. I'm one of those people whose B/D won't allow us to sell them. (complete B.S. since they aren't securities) Anyway, even if one could, it seems like for the immediated need something simpler with a higher guaranteed minimum might be better. I'm sure someone more knowledgeable will chime in.The EIAs I’ve looked at (I can’t and won’t sell them either) all seem to be designed for 10+ years. Then, if you’re able to abide by the myriad rules, you’ll be eligible to receive all of the wonderful promises at the end of the contract period.
The ones I've seen are not designed for immediate income and will even take back the earned interest and bonus credit on the allowed "free" 10% annual withdrawal.[quote=Borker Boy]The EIAs I’ve looked at (I can’t and won’t sell them either) all seem to be designed for 10+ years. Then, if you’re able to abide by the myriad rules, you’ll be eligible to receive all of the wonderful promises at the end of the contract period.
The ones I've seen are not designed for immediate income and will even take back the earned interest and bonus credit on the allowed "free" 10% annual withdrawal. [/quote]Give some examples of these promises, at the end of the contract period, that you've "looked at."
[quote=VA Salesman] [quote=Primo][quote=anonymous]
Primo, I've got to defend Bobby on this one.
He's an annuity salesman. He doesn't claim that everyone should own an annuity. He doesn't claim that all of someone's money should be in an annuity. He only sells annuities. His claim is that he sells annuities when they are appropriate and if they aren't appropriate he doesn't work with the client. That sounds to me like the way that an annuity salesman who wants to specialize should work.
Whether he owns one or not is irrelevant. We don't know if they are appropriate for his situation. I sell a fair amount of annuities, yet I wouldn't buy one based upon my current financial situation.
[/quote] An annuity is not an investment, it is an investment vehicle. You can be a fixed income investor, a moderate investor, or an aggressive growth investor and accomplish this with an annuity. I did not ask how much of his money was in an EIA, I asked how much was in an annuity. If you only work with one type of investment because of your belief is that investment is superior enough to work exclusively with it, then certainly your own money should be in it. I know I won't get an answer, but I would be curious to know what the reason his own money is not gauranteed as he rails about the importance of this product. As far as his "claims" about his sales practices, have to say they sound awful hollow.[/quote]Why are you so obsessed with me? Seems kind of gay. I'm sorry that I trigger your father issues. I'm not your dad. I'm not the one that abused you. I'm here to help.
[/quote] Project much? To quote you "Yaaaawwwwnnnn". As far as trying to help. I will believe that when you post something helpful.
[quote=Primo]
If you felt that you could make more money only selling annuites while still only doing what is best for your clients, would you do it? I would. I probably could make more money only selling annuities. It's the "while still only doing what is best" part that hangs me up.[/quote]Ask your clients "How much of your assets are you comfortable leaving unprotected?" and see what they say.
How much of your assets are you comfortable leaving in an annuity for 8-10 years so as to avoid surrender and get those great income guarantees?
If it’s paying an 11.5% commission, I’d have to recommend 100%!
[quote=Incredible Hulk]How much of your assets are you comfortable leaving in an annuity for 8-10 years so as to avoid surrender and get those great income guarantees?[/quote]
NOOOOOO!!! Don’t give them something to object to! Let them figure it out, themselves.
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