Valuable Players(NOT)

Either you are jealous or annuities are too complex for you to understand or BOTH.

Metell— Youre joking right??? 95% of this guy’s recommendatuions are ANNUITIES? C,mon I used to sell VA’s, back when we slung 403B VA’s to everyone… Still then, VA’s comprised about 60% of my business, the rest were wrap accounts, brokerage, funds, etc… This guy is clearly putting everyone in annuitites- that’s a f$cking joke…

Can you imagine the conversation at his/her office?

Prospective Client:  What kind of investments do you offer?

Broker:  Any kind you want as long as it's an annuity.

Geez, the gross is nice, but the AUM of $23 mil, is that a misprint.

To clarify, I understand that 95% of his production is from annuities, and that they payout higher, but to have 95% of your revenenue and prod. come from that product is a SHAM…

I forsee this joker's commissions continuing to slide due to all the time he's going to be spending in arbitration.  At 95% annuities, I think there's a strong likelihood of some unsuitable investments.

This dude's tagline ought to be "One investment fits all!"

[quote=blarmston]Metell--- Youre joking right??? 95% of this guy's recommendatuions are ANNUITIES? C,mon I used to sell VA's, back when we slung 403B VA's to everyone.. Still then, VA's comprised about 60% of my business, the rest were wrap accounts, brokerage, funds, etc.... This guy is clearly putting everyone in annuitites- that's a f$cking joke...[/quote]

Nope.  Not kidding.

Some folks on here have their businesses structured similarly.

95% fee based

95% stocks

95% mutual funds

95% whatever

There are numerous VAs with numerous benefits, features, and riders.  Similarly there are numerous mutual funds, fee based & wrap accounts, and stocks.  Just because somebody chooses to specialize in a product that you clearly don't understand is no reason to assume that they are doing something illegal, immoral, or inappropriate.

What?  The doctor that only does brain surgery isn't as good as a family practioner?  Something must be wrong...right?  Sue him for malpractice.

What?  The truck driver that only drives a dedicated route from Atlanta to Miami isn't as good as the guy that takes any regional run?  Revoke his driver's license.

You dumbasses don't know how the rep prospects, who his clients are, and how he weeds them out.  You ever think that he might prospect for a specific client that suits his product instead of shoe horning everybody into the same product?  Nope...you just don't think. 

Menotellname,

I think you are the dumbass.  Who do you work for? Most companies would fire a fa for a velocity of almost 6%.  Do the math. 

Sincerely,

Help

P.S.  Go for an interview at any ethical company and tell them that you do 1.7 million on 24 million in assets.  They will not hire you.  Too much risk.

[quote=Help]

Menotellname,

I think you are the dumbass.  Who do you work for? Most companies would fire a fa for a velocity of almost 6%.  Do the math. 

Sincerely,

Help

P.S.  Go for an interview at any ethical company and tell them that you do 1.7 million on 24 million in assets.  They will not hire you.  Too much risk.

[/quote]

Nobody would get fired for a "velocity" of 6% if they are writing primarily annuities.  Get you equity influenced mindset out of your ass.

P.S. - I work for one of the 10 largest financial companies in the United States.  Thank you very much.

You work for an annuity company.

[quote=Help]You work for an annuity company.[/quote]

Wrong.

Try again.

Insurance Company

[quote=Help]Insurance Company[/quote]

Nope.

An independent company and you like annuities?

I am not indy either.

Anyway...

How is a VA that has an M&E of 1.19% to 2% (depending on riders and surrender period) any different than a fee based account?

Both are risk management tools.  Both offer active management.  Both charge fees.  Both offer diversification.

Are you trying to imply that you can't get diversification from 50 mutual fund sub accounts in a VA?  Do you have your current clients invested in over 50 different mutual funds?

No, but I sure as heck have more than 50 choices...and I'll run rings around your 50 subaccounts any day of the week.

Why don't you quit being so coy and just spill the identity of your employer?  I'm not ashamed to tell you that I'm an independent affiliated with LPL...now your turn.

Indyone,

You have great confidence in your abilities.  I don't doubt your claim but I doubt your abilities.

LPL is a fine company.  I am sure they appreciate all of your hard work.

When comparing maximization of returns or preservation of capital most people find the latter to be more important.  If your running rings around anyone your portfolio simply has more risk.  Show me any portfolios returns on a risk adjusted basis and if you have a higher return it's likely you have more risk.

My clients care about meeting their goals.  What is the best vehicle to help them meet their goals, depends on the client.  Va's are not good or bad just another option.

Maybe the guy is INDY....

So when his customers got wacked in 1999 and 2000 he can tell them 7% for next 10 years. Simple and sounds good. Of course there are fees, but baby boomers want security.

The ING product looks pretty good to me. Reguardless 95% is interesting, but maybe his population is all retired school teachers or military officers. Maybe he focuses on Anuities and tells them to put other assets with other brokers?

VA’s are pretty darn good solutions with guaranteed income stream and principal protection vs. managed money. If I were not limited as to my usage of VA’s I would use them more. Hands down.

[quote=bankrep1]When comparing maximization of returns or preservation of capital most people find the latter to be more important.  If your running rings around anyone your portfolio simply has more risk.  Show me any portfolios returns on a risk adjusted basis and if you have a higher return it’s likely you have more risk.

My clients care about meeting their goals.  What is the best vehicle to help them meet their goals, depends on the client.  Va's are not good or bad just another option.[/quote]

Most people want both...and assuming that higher returns automatically mean higher risk, assumes that all choices are on the efficient frontier.  Reality says that most are not.  If they are were, then all risk-adjusted returns would be equal. Higher returns can mean either more risk, and/or better management.

Yes, even though I use VAs in some instances, I can still say confidently that I can generally run rings around VA performance due to fewer choices in a given VA and higher expenses under the VA model.  You think guarantees come for free?  I'll agree on this...VAs are certainly another option, and are a good way to get equity exposure for the risk adverse.

This beats the heck out of debating the merits of a certain firm, doesn't it?!!

Va's are very expensive. 2.5% - 3.5% is probably the avg.  It is easy to put together a portfolio that will outperform a VA simply because of the high expenses.  I am not arguing that.

What I am arguing (an Indyone you seem to get this), is that for most people they would rather suffer a small % return, and protect themselves.  I just met with a prospect yesterday age 60, his entire 7 figure portfolio was 100% equities at AG Edwards, I asked him what his main concern was and he said losing his principal, I am just trying to understand what his advisor is thinking.  If that rep went to court and they called in an expert witness they would tear that rep to shreds and his career would be done.  It is my guess alot of reps focus on home runs instead of focusing on what their clients want.

I am a semi-VA convert…to echo others, it at least is a viable option for some of some people’s $.  The beauty of the guarantees in my view is that you can allocate a heckuva lot more of a portfolio to equities and likely make up the expense differences in returns–due to asset allocation, NOT manager or security selection.  We know the history of equity returns and theoretically will never flinch in a downturn, but as mentioned above, our clients don’t care about how WE feel.  They are liable to make a bad decision at the darkest times in the market, despite our handholding and reinforcing the logic behind staying put.

[quote=Help]

An independent company and you like annuities?

[/quote]

He sits in a bank lobby.....that's why he likes annuities so much.

Joe,

I wouldn't trade places with anyone. I am that happy, last time I checked my office had a door.  All four of them.  Did I mention I have never cold called, walked, mailed or any of that other BS, while your building your business, I am building my net worth... I spend 100% of my time meeting with clients or potential clients.  Don't knock it, there are some crappy bank programs out there, but it is the model of the future.

Bankrep,

If his only concern was loss of principal, why didn't you refer him to the bank CD dept???

[quote=exEJIR]

Bankrep,

If his only concern was loss of principal, why didn't you refer him to the bank CD dept???

[/quote]

Most folks want more growth than a bank CD will allow.

As a salesman and a financial professional one should be able to articulate the features and benefits of a VA.  Most bank clients won't just straight into a brokerage account with no guarantees.  However, a properly articulated VA that allows market participation with the guarantee of principal from a living benefit rider makes the VA a perfect fit for a risk aversed client seeking a greater return.  And, yes...people will pay a little bit more in fees for the VA but they see a value in paying for that guarantee.  Your HNW clients might not see that same value, but $200,000 isn't a large chunk of their net worth either.  A bank client with $400,000 in CDs (yes...they do exist) will move a decent portion into a C share VA that offers 100% liquidity, market participation, and guarantee of principal from a living benefit rider.  Now, you do the math putting 12 million a year into a VA that pays 1.75% upfront and a 1.00% trail starting in year 2.

The client is liquid, happy, has market participation, and guarantee of principal.

Just as stocks aren't suitable for everyone or bonds, or options, va's aren't for everyone either. However, they are most appropriate for the higher income/ net worth clients. Let's leave wrap accounts out of this because if anyone on this board thinks they are a good stock picker over the long term, they are mistaken, (2000- 2002).I've learned the hard way to just gather the assets, and let the pro's manage the money. I focus on clients who have maxed out their 401(k)'s, and IRA's. Put 500,000 in mutual funds and you put the client at risk for a potential capital gain risk, a portion which would be short term.Sheltered in a VA, there's no 1099 and you can move money all over the place without worry of tax consequences. Sure the new tax rates on dividends and cap gains are lower now, but who knows what they'll be in the future? Furthermore, the Va's I use avg. expenses are 1.9% , comparable to most wrap accounts and mutual funds.  Reps who "hate "Va's clearly don't understand them or are working with blue collar clients.

Stok

I forgot to mention the sarcasm dripping from my last post. 

I understand the benefits of VAs.  I fact I have sold them in the past.  Having said that, it only represented 10-15% of my biz, NOT 95%.

I refer people for CD’s all of the time, if that’s what they need.  This particular case the client did not need a CD or a VA.  He needed his portfolio reallocated to include some bonds and other asset classes.  I also do about 15-20% of my business in VA’s.

It seems to me that people who love VA's don't pay attention to what they are unconsiously doing.  Why would someone want a variable annuity laboring under 2.5% to 3.5% in expense, in addition to 1% for every 100% turnover in undisclosed, soft dollar costs of the underlying funds for a total potential cost of 3.5% to 4%.  Even if you only factor in the long term avg. annual equity market returns of, let's say 10% (which I do believe that the next 10 years have a high probability of less return, due to a shrinking equity premium) your net return (let's not forget that the net return will also be taxed at a higher income tax level) might be 5% for an allocated portfolio (stocks+bonds), about what you'd expect from bonds.  Problem is, now you're locked in for 7 years (I know CDSC's vary, I'm generalizing) or your hammered by a penalty.  In addition, Mr. Customer, in the rare case that the market is still below what you invested 10 years ago, since your in 100% equities (how many rolling periods in the last 100 years have had negative market returns, including reinvested dividends, not many I'd say), we'll give you back your pricipal and if you spend a little more on this insurance rider maybe another 20% for a total 10 year annual compounding return of 1.825%!!!!!  Let's not even get into the Income (annuitization) benefit options, which are complete dogsh*t, for anyone who truly understands the math.  Plain and simple, variable annuities are a marketing gimick, just like all the structured market indexed CD's designed to scam people into thinking they can get market "like" (love that double speak b.s.) returns without market "like" risk.  No free lunches.  There are a few occasions where Va's make sense, which I believe are related to the death benefit but the lions share of VA's I've seen are GROSSLY oversold.  Anyone who truly understands the math of these lipstick adorned pigs either has to face that they are looking out for their pocketbook or are too lazy (and/or afraid?) to educate their clients about what's in the clients best interests.  Those who don't truly understand the math or the economy/markets and what an extended 10 year negative total return for the stock market (not considering how a well diversified portfolio of bonds, stocks, reits etc... would do in a flat or negative stock market) really means, should go sell Kirby's door to door and stop giving our business a bad name. 

Look, kiddies; if a well diversified portfolio of let's say 60% stocks (across market cap and style, international, domestic and emerging markets),30% bonds and 10% alternative assets (REITS, Income MLP's, Managed Futures etc... based obviously on the clients means and qualification) or even an well diversified 80% stock 20% bond type portfolio is negative 10 years from now, we'll have more serious issues to worry about. 

I'm not the smartest guy in the world but, risk and return do have some relationship.  The cost of insurance is related to the amount of risk insured plus profit for the insurer.  Insurance is a profitable business.  Who's the winner with VA's, insurer's and brokers, indisputable when it comes down to math, history and my trusty ACME crystal ball  .  Thanks for listenin'

Dude

dude,

You are obviously not the smartest guy in the world.  You got it exactly wrong.

Returns are the least of concerns with a VA.  Risk management and the ability to invest in the market with guarantees are much more important to the VA consumer.  These individuals understand that they may sacrifice a percentage of their returns for a guarantee of their principal.  In fact, they will often times pay more for increase liquidity (C share product) as opposed to being locked up for 7 years.  This is where they see value.  Folks invest in a VA as a step up from a fixed annuity.   Very rarely will somebody with a brokerage account step down to a VA.

Further, the death benefit is also of little concern with a VA, that is why you buy life insurance...not a VA.  Although a consumer typically wants to ensure that any unused portion of the invested amount passes on to their beneficiary they are much more interested in the benefits of having an income stream for themselves. 

Annuitization isn't BS.  It is undersold and misunderstood.  Proper use of annuitization in an arbitrage situation with insurance products is much more beneficial than an equity account.

[quote=menotellname]

Returns are the least of concerns with a VA.  Risk management and the ability to invest in the market with guarantees are much more important to the VA consumer.  [/quote]

The only problem with your explanation is that annuities are by nature long-term investments and as everyone here knows the "guarantees" that VA soak VA buyers to the sink with are meaningless and unnecessary when you're talking about realistic long term time frames. If the client had had it explained to him by a financial professional what sort of risk/reward trade-off he was really making over that long term time horizon he’d know he doesn’t need to pay 2.5- 4% for it. Then he’d lose the worry that plays on him as a result of his nature focus on short term market moves.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Unfortunately few financial professionals take the time to explain why high priced “guarantees” are worthless to the true long term investor, and in fact they often play on that misplaced fear to sell the high fee, high payout product to the ill informed client. I’m not saying never sell a VA, I’m saying give the potential buyer a real understanding of risk/reward and the vast majority won’t buy a VA.

[quote=mikebutler222]

The only problem with your explanation is that annuities are by nature long-term investments and as everyone here knows the "guarantees" that VA soak VA buyers to the sink with are meaningless and unnecessary when you're talking about realistic long term time frames. If the client had had it explained to him by a financial professional what sort of risk/reward trade-off he was really making over that long term time horizon he’d know he doesn’t need to pay 2.5- 4% for it. Then he’d lose the worry that plays on him as a result of his nature focus on short term market moves.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Unfortunately few financial professionals take the time to explain why high priced “guarantees” are worthless to the true long term investor, and in fact they often play on that misplaced fear to sell the high fee, high payout product to the ill informed client. I’m not saying never sell a VA, I’m saying give the potential buyer a real understanding of risk/reward and the vast majority won’t buy a VA.

[/quote]

The only thing wrong with your explanation is that you fail to understand that the VA is a step-up for most VA investors.  As such, they are willing to pay extra for the guarantee.  Having the "best" performance is not paramount to them.  Having a "better" performance than a CD and/or fixed annuity with a guarantee of their principal is paramount.

Hopefully one of you ignorant "professionals" with understand that a VA is "best" thing for a client that WILL NOT purchase equities without guarantees.  Doing the best thing for the client means getting them the best rate of return within their risk tolerance, not putting them in the most aggressive investment or an investment that is beyond their risk tolerance.

The problem is that you keep talking overall ROR and fees.  VA buyers don't mind the fees and a slightly reduced ROR if there are guarantees of their principal.  This is where they see VALUE.  Value is something they don't see from your long drawn out diatribes over marginally better rates of return without a guarantee.

Does a fee based account typically have lower fees than a VA with the same investments?  Yes.

Will most people buy those investments without a guarantee of principal (especially if they are risk aversed)?  No.

What is a happy medium?  A variable annuity.

I agree with almost everything Dude said.    I'll add that VA's are also a terrible means to leave money to heirs as they are not taxed very favorably.

If a VA is used as a risk management tool I can see how they might be appropriate in a very small minority of situations.

However, I would rather see my clients invest in an asset allocation that matches their risk tolerance and forego the dressed up guarantees that VA's offer.

I work in a bank program and in my practice approximately 2% of my entire business is done in annuities.    Most of that 2% was unsolicited to boot.    Most of my colleagues have 50-80% of their practice in annuities.   Draw your own conclusions.

We could debate this until the frogs goto bed but that's what makes for good yet constructive conversations.

scrim

Yes, they are waaaaay overused--particularly before the latest living benefit guarantee bells and whistles came along.  When I've used one of those guarantees, I've tried to explain it thusly (if that's a word):

Look, here's a nice mix of investments that would probably do fine for you over any meaningful, long-term period--without any safety net...however, I know you, and I want to make sure you at least know that you can get a guarantee (if you want it) in case something goes horribly wrong at the time (or over a period of time) that you can least afford it...(or, "I know you're a wuss and might want a guarantee").  Now, this guarantee (explain bells and whistles of the thing) may sound too good to be true, so here's "the catch"--the insurance company doesn't ever plan to have to make good on it, and they charge you more to manage the $ than an equivalent mutual fund.  However, we should be able to make up some or all of that by investing more aggressively (since we have the guarantee now...I believe the insurance people call that a moral hazard--people with insurance are more likely to engage in risky behavior).

The demographic I think this option should be shown is similar to the people who may need to at least consider long term care insurance:  they have enough money that they don't want to lose it, but not enough to "self-insure" the portfolio...that is, they'd be taking 4% or less or their investments for income in retirement.  Luckily, with these 4 year surrenders they're coming out with, you can reevaluate within a reasonable amount of time, and perhaps get part or all of the $ out if you and the client decide you don't need/want the guarantee.  I don't know I'd ever use it for myself, but more and more I can see where I might for my mother--because it's a potential compromise  between what she wants (to feel safe) and what she needs (equity exposure to beat inflation and grow her future income).

By the way, with the comp structure on these things, I don't see how it really "makes" the advisor any more over the long term....all it can do is bring future years income forward--but on an L,C, or B share, it seems you earn about the same (over a 10 yr period) from an annuity as you do from a 1% fee based account.

 Mr. MeNoTellName said

dude,

You are obviously not the smartest guy in the world.  You got it exactly wrong.

Returns are the least of concerns with a VA.  Risk management and the ability to invest in the market with guarantees are much more important to the VA consumer.  These individuals understand that they may sacrifice a percentage of their returns for a guarantee of their principal. 

Mr.MeNotSoSmart Dude Replys:

I say the premise of your statement is cloudy.  Ability to invest in market with guarantees, without concern for returns?  Hmmmmm.  At the end of the day when the returns are likely to look like bond returns why not buy bonds, plus maintain better liquidity?  Well maybe 'cause a bond will pay me 100bps vs 500bps. 

Mr.MeNoTellName says:

Further, the death benefit is also of little concern with a VA, that is why you buy life insurance...not a VA.  Although a consumer typically wants to ensure that any unused portion of the invested amount passes on to their beneficiary they are much more interested in the benefits of having an income stream for themselves. 

Mr.DumbDude reply's:

Um, what about clients who are uninsurable?  I agree that life insurance is a better vehicle for those who qualify.  Again I note that it is in rare circumstances where it makes sense.

Mr.MeNoTellName says:

Annuitization isn't BS.  It is undersold and misunderstood.  Proper use of annuitization in an arbitrage situation with insurance products is much more beneficial than an equity account.

Mr.Dumb*ss replys:

Fine.  get out your calculator and riddle me this:

Client age 65

$100,000 deposit

5% interest bond over 25 years

level withdrawal rate at 6% a year ($6000 every year)

ending value:$48,886.55 (client age 90)

*If we took this same assumption all the way to 100 ending value would be $4,163

I use 6%, because I ran a bunch of SPIA quotes awhile ago and the average income paid came to about a 6% rate or so (for folks around 65).

Anyway, the client would have to live to at least 101 to justify insuring their income stream (the true purpose of an annuity) which is pretty unlikely (even though people are living older). 

Menotellname:

If you believe that the client truly ends up the winner in a bet between the insurance company and your client (which is exactly what insurance is) I can understand why you wouldn't want to tell us your name.  Sorry for the low blow, but you weren't very polite in addressing me.

The point is, is that insurance is profitable business for a reason. They are making money by employing very smart people (actuaries) who assess the real risks of a given outcome and exploiting the percieved risk of an outcome among those who are uneducated as to those risks.  Sure, insurance is needed for some things like protecting young working families, passing money through an ILIT etc... but insuring an income stream.  If it really was a better option for your client than buying a bond, insurance companies wouldn't be selling it.  I may not be that smart but I do understand that insurance companies wouldn't be able to guarantee those investments with their hordes of cash if the client wasn't giving away excess returns to those very institutions that you seem to evangelize for.

Peace 

Here is a great article articulating VA's :

http://www.fpanet.org/journal/articles/2003_Issues/jfp0103-a rt9.cfm

Dude says  "I use 6%, because I ran a bunch of SPIA quotes awhile ago and the average income paid came to about a 6% rate or so (for folks around 65)."

I say - SPIA rates were at an all time low.  I would recommend looking at them when interest rates on a 5 yr fixed annuity are around 6% you'll be blown away.  They were probably using 2%.  The time to use SPIA hasn't been in the past couple of years.

That article was very comprehensive and alot of info to absorb.

This only reinforces why I prefer not using VA's.   I want my clients to understand as much as possible what they are investing in.

VA's are so much more complicated than investing outside a VA.

I subscribe to the Keep It Simple Stupid mantra.

Is that always a good thing?    I'm not sure.

Scrim

Scrim,

Sometimes they're not going to get it.  If it's right for them it's right for them, thats why they are coming to someone who does get it.  I have alot of clients who are on the fence thinking they can do things themselves, then they do something stupid, and call me and ask me how to fix it.   How do you fix lost money?  You don't. 

I'm sure that annuitization is ok in some circumstances (like protecting assets from creditors, maybe).  I still hold that insurance companies wouldn't be doing it if it were truly better than a client investing on their own.  I just don't believe that insurance companies are selling a magic no risk stock market returns vehicle.  Also, when interest rates were higher my illustration would have been just as valid, 'cause I was using recent interest rates.  In that case the 25 year bond would have had a better rate and therefore better numbers, still making annuitization look like the dogsh*t it is.  Insurance companies are buying a 25 year bond and keeping the differnce, it's that simple.  All ya' annuity guys out there can send me your clients with $100k and I'll pay you $5k, invest the difference in a 25-30 year bond, pay your clients a $6,000 annual income.  In the end, I'll pocket about $40k,(since avg mortality age will likely be 90 to 92) all for being "obviously not the smartest guy in the world" to quote Mr.MeNoTellName. 

Annuitization makes WAY more sense than buying a bond.  Great products, those annuities. 

Just face that you like the $cheese$, like an easy sell or don't really understand what you are doing to your clients.  I'm not trying to insult anyone here, I used to be a bank rep facing the temptation of those juicy fixed (and variable) annuity sales everyday.  believe me, I've wanted it to be true that I was doing good for my clients by recommending an annuity.  I've analyzed the product from every direction to see how I can make it make sense for a client.  In the end I decided that sleeping at night was more important. 

Also, for all of you selling those market indexed CD's (or annuties for that matter) to your unknowing victims, shame on you! These things are even more sleazy than plain vanilla annuities.  That crap is boiler room worthy crap.  I hope y'all understand why these things will perform worse than a bond of same maturity.  Same goes for almost all structured notes and derivative products that have multiple moving parts (sounds kinda like a fixed annuity huh?).  It's kinda interesting how in essence a derivative is insurance.  I'm not saying that all derivatives are crap, just the ones that are packaged into these god awful mechanations of confusion.  "market like" returns . 

"There's no free lunch"

Repeat it over and over again.  Tell it to your clients.  Spend less time convincing yourself that you are doing good for your clients by accepting their ignorance as wisdom and capitalizing on their desire to get a free lunch.  Tell 'em the truth (risk and return are related, inflation is risk), even though it's not what they want to hear and hold their hand through the discomfort, educating them along the way.  That's what we are paid our fees and commissions for.  Otherwise sell 'em a bond (or bond fund if you really like) and be done with it.

Peace

Bank Rep said:

Scrim,

Sometimes they're not going to get it.  If it's right for them it's right for them, thats why they are coming to someone who does get it.  I have alot of clients who are on the fence thinking they can do things themselves, then they do something stupid, and call me and ask me how to fix it.   How do you fix lost money?  You don't. 

Just 'cause they lost money doesn't mean a variable annuity is the remedy.  It might give them a false sense of security that they can get the magic risk free market returns they really want, but in the end they'll end up with about 5% (v.s. about 9% over the next 10 years 'cause of fees)or so annual returns and a nasty CDSC if they need the money before 7 years is up.  Yeah you could use C shares but now their expected annual return will be about 4%, taxed at income levels instead of long term cap gains and dividend rates.

Snake Oil.  Maybe it'll cure your prospects fear, they'll still end up financially sick like they were before. 

Dude,

What 25 year bonds are you recommending?  What happens if we enter another excessive inflationary period?  If your using corporates what happpens when the company fails or their credit rating drops substantially?

Annuitties, especially SPIA's offer something nothing else can when used right and at the right times.  By the way I only use annuties about 15% of the time, I just think alot of people knock them when they have very valid uses and the people who like them alot probably don't get them either, that is another post about the lack of requirements to become a financial advisor in the US.  I disagree strongly that someone in a VA is going to earn 5%, just like anything there are good and bad products we can look at expense ratios in mutual funds from .2% to 4% doesn't mean one is better than the other.  Of course keeping expenses in check increases the odds you will be successful, what about a low cost annuity, I favor one by Integrity Life M& E 1.0% w/ ETF's,  total cost 1.4% -1.7% includes my comp...

Annuity payments locked in @ X$'s every year: great inflationary hedge. 

Look, 25 year bonds paying 5% is pretty general, could be a diversified portfolio, Muni's, whatever.  Right now 30yr Gov's are at 4.7.  you'd still be better owning those than to annuitize. 

Integrity Life @ 1% M&E, this must be without any riders or extra goodies.

I have a few questions.

Why would you put a tax efficient investment which has virtually no capital gains distributions (ETF's) and could really benefit the client in a taxable account since they most likely will only pay capital gains when selling (unlike mutual funds which pay out yearly) and wrap 'em up in a VA?  Much better to hold ETF's in a taxable account 

What's the surrender period/charge on this annuity? (how about commishions ?)

If there are no goodies (riders) on this VA (if that's the case), what's the attraction?

Definitely a cheap VA from what I'm hearing you say.  Still sucks compared to owning them in a taxable account and paying a 1% wrap fee on it. 

I'm sure this next comment will be controversial and/or thought provoking.

Let's live in a vacuum for the next minute or two.

Let's assume every financial product paid the same exact compensation to the seller.

Where would annuites then fall on our list as we build are clients portfolios?

The answer to this question probably says alot.

scrim

Scrim, my practice would look very much like it does since I do less than 10% in VAs.  If comp was my first priority, I'd do a lot more of them.

Annuities have a place in teh investment world bec

stupid keyboard...wouldn't let me finish

...because they provide equity exposure (VAs at least) that some folks would be too afraid to have in their portfolios...

Well said Indyone, I agree my biz would not change if I only cared about comp I would do 100% of my biz in EIA's and Life Insurance as an investment.

You are assuming everyone wants to accept the risks associated with the market.  They are not.  Look at the billions in Money market funds, that cash is there because some people will not do anything without guarantees. 

Explain to me how putting $ in a VA with annual expenses of 2.5% (that is with a living benefit and MAV death benefit) is going to net 5%.  Say the subaccounts return 10% -2.5% = 7.5

Not to much difference here:

American Legacy III

Returns on american fund subaccounts & funds

Growth Fund 11.8 (10yr)  13.1 (since 84')  / Fund 12.25% 10yr.

Growth and Income 9.1 (10yr) 11.3 (since 84') /  Fund 10.19 10yr.

International 9.0 (10 yr) 8.3 (since 90') / fund 9.92 10 yr.

Small Cap 11.9 (since 98') / fund 10yr. 8.54

As a matter of fact, sometimes the performance of the subaccounts will be higher in a flat or bull market because of the lower levels of cash present in the VA. In a bear the opposite can happen. That’s one of the reasons AF has held up in bear mkts so well, i.e. higher levels of cash…

[quote=Greenbacks]

I just got done looking at an article in a trade magazine. They put the numbers up on 50 of what they consider valuable players in our profession. Several of them caught my attention  but one really stood out. 

Production 2004  $1.7 million

Projected Production 2005 $1.4 million

AUM $ 23 million

Clients (Victims) 153

Product mix 95% annuities 4% securities 1% mutual funds!

Can you believe this clown  

But yet our profession looks upon this guy as a Valuable player

Not to stereo type but this guy is in a Bank and his BD is INGClones start!

This sounds like the practice Doug "3" Mil Hill ran out of the back of his car training newbie IR's...............OH, excuse me "3" Mil hates Life Insurance Companies and Annuities, he prefers to churn and burn Stocks, Bonds, & Mutual Funds...............

OK, Before you Drones & Clones start slamming me, I am just kidding, this posting was just too boring............................ I just jad to shake things up.............

I think most of you have lost the jist of the post, how can someone justify a volicity of 6%, I know mine is approx .85%.  What is everyone else’s??

[quote=forestjw]I think most of you have lost the jist of the post, how can someone justify a volicity of 6%, I know mine is approx .85%.  What is everyone else's??[/quote]

Have you ever sold an annuity?

Do you even know what an annuity is?

If you answered "yes" to both of the previous questions, do you understand annuity compensation?

Then figure the standard annuity compensation times .95.  Also factor in 25 bps in trails from previous business.  Then you can see how it is possible to achieve a "velocity" of 6%.

Or you could simply find another line of business where it is not necessary to understand numbers.

[quote=forestjw]I think most of you have lost the jist of the post, how can someone justify a volicity of 6%, I know mine is approx .85%.  What is everyone else's??[/quote]

.88% YTP (Yield To Pocket). And yes, annuities are part of the mix. I can see how someone could have 6% ROA. If an advisor specializes in annuities and focuses their business solely on pursuing clients who fit the product, need the product and want the product, then 6% is easily achievable. Well, at least for the first year or two. Seeking clients who fit the product, rather than finding products or strategies that fit the client is nothing more than another way to approach our business. Muni Bond Brokers use this method to build their books, if for a lot less commission. I've used this same method for years, utilizing Tax Free Bonds, to gain a seat at the table. Nothing wrong with it that I can see. Wish Tax Frees paid 6%!

[quote=menotellname][quote=mikebutler222]

The only problem with your explanation is that annuities are by nature long-term investments and as everyone here knows the "guarantees" that VA soak VA buyers to the sink with are meaningless and unnecessary when you're talking about realistic long term time frames. If the client had had it explained to him by a financial professional what sort of risk/reward trade-off he was really making over that long term time horizon he’d know he doesn’t need to pay 2.5- 4% for it. Then he’d lose the worry that plays on him as a result of his nature focus on short term market moves.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Unfortunately few financial professionals take the time to explain why high priced “guarantees” are worthless to the true long term investor, and in fact they often play on that misplaced fear to sell the high fee, high payout product to the ill informed client. I’m not saying never sell a VA, I’m saying give the potential buyer a real understanding of risk/reward and the vast majority won’t buy a VA.

[/quote]

The only thing wrong with your explanation is that you fail to understand that the VA is a step-up for most VA investors.  As such, they are willing to pay extra for the guarantee.  [/quote]

They're willing to pay, and pay heavily for a "guarantee" that everyone here knows they don't need. There will always be a tiny percentage that even after the best faith attempt of the rep involve to explain why that expensive guarantee isn’t needed, will still want the VA. That’s there problem. <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

The insurance industry’s problem, and the problem with most of the “bang ‘em into an annuity” types here is they don’t even make that good faith attempt to explain to the customer why the guarantee is meaningless. In fact, they go in the opposite direction and try to base their basic marketing strategy on getting the unsuspecting customer to believe that need that guarantee IS NEEDED.

It’s one thing to be a car salesman and tell people they don’t really need the rustproofing, but you’ll sell it to them if they can’t live without it. It’s another to bang on each car buyer that without the rustproofing their car will disappear in a couple of years.

[quote=scrim67]

I'm sure this next comment will be controversial and/or thought provoking.

Let's live in a vacuum for the next minute or two.

Let's assume every financial product paid the same exact compensation to the seller.

Where would annuites then fall on our list as we build are clients portfolios?

The answer to this question probably says alot.

scrim

[/quote]

Good point. Try looking at it this way, what if the client was a family member you cared about. Where would VAs fall then in your product mix?

I agree with most of Mike's points.

Let me put it this way.

When I sit down with a prospective client for the first time I'll usually say something to the effect:

"Unless you came in here and specifically asked for a CD or an annuity I won't present it because I do not believe in locking my client's money up"

I feel that most clients aren't sophisticated enough to understand why they shouldn't be buying fixed or variable annuities. They are drawn to all of these bells and whistles which they (and sometimes the seller sadly)  hardly understand either.    A perfect case is my own father.   A few years ago, before I got into my practice, my dad rolled my mom's 401k accont into an equity index annuity.  My dad is extremely intelligent, doesn't make rash decisions, and is very analytical.  That being said he was sold "fool's gold" in my humble opinion.   I'm sure the salesperson was happy though.   As soon as it's out of surrender I'll transfer the account to me.

Perhaps an immediate annuity for some clients might be suitable but I can't find a compelling case for FA's or VA's.

This is just my opinion  YMMV

scrim

Scrim, Mike

Bravo gentleman.  I appreciate your thoughts.

To all the fence sitters and interested parties:

Look even if you were to get 10% equity returns going forward (I think 10% is perhaps a little generous, given the shrinking equity risk premium) and you were to invest it all in equities (most "make you whole" and "make you whole plus 20%" guarantees I've seen require 80/20 or 60/40 mixes: I'm not going to give any respect to the annuitization dogsh*t guarantees) and the total cost were to come to only 2.5% (seems cheap to me)including all underlying fund expenses, M&E and frivolous fat (whew), your return would be 7.5%, not that much better than a straight bond portfolio over the last ten years and I'm being generous on the return assumptions.  eg: 10 year trailing returns on the muni funds I've been looking at: 5.2% tax free (about 7.88% TEY in my state for those in the 28% bracket or 7.625% for those in the 25% bracket in my state) Plus the client would have remained liquid (no withdrawal penalties), which definitely has a value.  In addition they would have gotten bond like returns for taking bond like risk, just like you'd get if you bought equities in a VA with guarantees (bond like returns, bond like risk, got it? no magic stock JuJu in those VA's ladies and gentlemen). 

In a VA you'd have converted all your cap gains and dividends to income, paid income taxes on those returns (just like bonds) and received a 7.5% return over the last ten years, if you owned 100% equities, or got lucky and had stellar funds, which I could then up my numbers for the bond returns if I sought out the top 10% muni bond funds over the last 10 years.  Problem is, is that if these clients are bond like risk takers and the market does tank over the next ten years, they get 120% of their principal for an amazing 1.825% annual compounding return!!!  Sign me up for some of that stock market like return baby!!! Point is, if they are bond buyers, give 'em bonds at least they'll understand why they got their 5% at the end of 10 years instead of losing money at 1.17% a year(inflation @ 3% minus 1.825%). 

I know that some of y'all are thinking about those fancy I 'EN' G (among others) thingamajiggers that pay 5% or 7% a year GUARANTEED to the principal if you annutize after 10 years.  Well kiddies, I done did the math on those winners and came to the realization that the return a client would have to get on their own outside the annuity to replicate the ending income level after the 5% or 7% was credited to the principal coupounding after 10 years was equal to about 2% to 3% annually over the period (until client dies).  How's that for inflation protection?! 

Goooooood Stuff man, what is it?  

Labrador.

Labrador?  What's that man?

Dog Sh*t, my dog ate my stash and I had to follow him around for a week with a baggy maaaan. 

Damn' I love bein' dum.

Hugs 'n Kisses

[quote=scrim67]

A perfect case is my own father.   A few years ago, before I got into my practice, my dad rolled my mom's 401k accont into an equity index annuity.  My dad is extremely intelligent, doesn't make rash decisions, and is very analytical.  [/quote]

So if I understand you correctly your father understood the benefits of a contract that could only go up and would never go down and that product was well within his risk tolerance.  Further, it offered a good enough return that buying power of his funds would not be eroded by inflation.  On the other hand, he did not invest in a portfolio that had no guarantees even though there was a greater upside potential.

Sounds like the individual that sold him the annuity is a criminal.  He should have pressured him into something with a greater potential with no tax benefits that is well beyond his risk tolerance.

[quote=mikebutler222][quote=scrim67]

I'm sure this next comment will be controversial and/or thought provoking.

Let's live in a vacuum for the next minute or two.

Let's assume every financial product paid the same exact compensation to the seller.

Where would annuites then fall on our list as we build are clients portfolios?

The answer to this question probably says alot.

scrim

[/quote]

Good point. Try looking at it this way, what if the client was a family member you cared about. Where would VAs fall then in your product mix?

[/quote]

I would still sell everything.  Including VAs.  There is definitely a market for them if properly sold.

Me,

If it was a family member of yours, how would have you recommened they allocate their assets?

Scrim

[quote=menotellname][quote=mikebutler222][quote=scrim67]

I'm sure this next comment will be controversial and/or thought provoking.

Let's live in a vacuum for the next minute or two.

Let's assume every financial product paid the same exact compensation to the seller.

Where would annuites then fall on our list as we build are clients portfolios?

The answer to this question probably says alot.

scrim

[/quote]

Good point. Try looking at it this way, what if the client was a family member you cared about. Where would VAs fall then in your product mix?

[/quote]

I would still sell everything.  Including VAs.  There is definitely a market for them if properly sold.

[/quote]

Your family members are "a market"? You wouldn't explain to them what an absolute waste that "guarantee" is to long term investors?

Wow, that insurance company you work for did a great job on your head, pal  

VA's instill disipline.

If someone never invested a penny their life.... Maybe cd's, funds and savings... On a VA dosent one get the higher of the side funds performance or the guarentee.

2000 is fresh in the mind of millions of 45 - 60 year olds. Some of these people would rather lose the risk for above savings or cd rates.

This thread is enlightening so thanks.

Exec,

The problem is, is that the premise of someone getting market like returns without the risk is dishonest.  These riders (guarantees) are a product, manufactured to make a profit for the insurance company by leveraging the lack of understanding among the risk averse population.  If people are allowed to stay uneducated and convinced that these products somehow change the rules, they will miss out on much better and fundamentally more honest options.  If you look throughout history, the better times to invest was after one of the last three biggest bear markets (1929-1932, 1972-1974 and 2000-2002).  We are paid to educate and direct our clients into the best available investments relative to their comfort with risk, not to satiate nieve and uneducated fears by taking advantage and profiting from those fears. 

Look, we all have brains, so let's use them.  Why would a VA pay so much more (especially in the $100k plus area) than comparable A share mutual funds or any other "plain vanilla" investment?  Because the client is getting a better deal?  Because there is magic in the product that changes the rules of the capital markets (stock like return for bond like risk)?  Because we are doing so much more good for our clients?

Or..... The Insurance company is making a hell of a lot more $$$ off this (must be better for the client ) and guess where that $$$ comes from?  The clients' pocket. 

If clients aren't with the potential of loosing money, they should buy bonds, pure and simple if they want better than CD rates. 

Dude-

One thought-you are PRESUMING that the bear market is over....just like the talking heads at CNBC.

Meanwhile, name one major market index which has actually traded at a new high.  Not a 52 week high, but an all time high.  That would be what many technicians and strategists would use as a criteria to determine the end of a bear market.

I'll be waiting for your reply.

Bear market. NASDAQ is up what 100% is 3 years. Sounds like a nice run up. I know this is mostly tech, but thats about 33% a year.

Dude I hear you and agree the insurance companies are making a ton off of VA's. They promoted the hell out of them over the past few years going into rising rates. So ING 7% after fees is not much higher then savings at 4.1%. If the fund performs then one could get more, but rates are rising.

Exec,  are you a broker?  I don't want to presume anything but it doesn't sound like you are in this business.  I'm not trying to insult anyone.  I guess I am just percieving that there are some small cracks in your understanding of these things, which I guess we all have room for improving our understanding of financial products.  Either way, it's cool you have interest if your not in the biz.

100% total return in three years is 23.3% annual compounding rate of return.

Hope that helps

Also

33% annual compounding return over 3 years is 165% total return.

big difference. 

Joe,

Point taken.  We have not broken the all time highs so I guess we're in a secular bear market with the recent 3 years being a cyclical bull.  Anyway I tend to believe that up is the direction from here.  And my points about VA's are still valid, which is really my main focus here.  I think you'd agree?  Not much interest in debating the minutia (hope that's spelled right). Thanks for correcting me though.

[quote=scrim67]

Me,

If it was a family member of yours, how would have you recommened they allocate their assets?

Scrim

[/quote]

It depends on the family member.

Can you please tell me my family member's, age, income, net worth, investable assets, investment objective, risk tolerance...

[quote=mikebutler222]

Your family members are "a market"? You wouldn't explain to them what an absolute waste that "guarantee" is to long term investors?

Wow, that insurance company you work for did a great job on your head, pal  

[/quote]

scrim, Mike, and dude

Obviously you three work at a wirehouse that preaches "annuities are the anti-christ".

Now, scrim...you have already stated that your father is intelligent, analytical, and doesn't make rash decisions.  As such, I can reasonably presume that he was well informed and asked several questions when he purchased his equity indexed annuity.  Obviously he saw value in the product.

Further, you stated that you will wait until the contract is beyond surrender to pitch your asset allocation concept.  Why?

Can't you convince your analytical father of the lost opportunity cost of sitting in that "wasteful" EIA? 

Can't you articulate how he can cash it now and still redeem .93 on the dollar (assuming a 7% surrender) and how your asset allocation program will earn his 7% back...and then some...over the next 7 years (assuming 7 years left in the EIA contract)? 

Can't you guarantee that your asset allocation program is better? 

Won't he buy because your management fees are cheaper and he gets a better return on his money if you achieve the exact same rate of return (less fees)?

The only reason I assume that you don't articulate this to him is:

1)  You are not a very good salesman.

2)  You cannot guarantee your performance and your father sees a greater value in the guarantees (even with a reduced performance).  He prefers guarantees over potential growth.

3)  The EIA is actually a much better fit for his risk tolerance.

4)  Your asset allocation program is BS and cannot outperform an EIA.

5)  All of the above.

In closing...

...remember...

...cheaper isn't necessarily better.

If I articulate that a certain guarantee costs .5% more to manage and the person purchases that guarantee...guess what?  They see a value in the guarantee (whether the value is real or perceived is not the issue).

Me said:

scrim, Mike, and dude

Obviously you three work at a wirehouse that preaches "annuities are the anti-christ".

Reply:

Obviously you are clueless.  I have worked in both the bank and wirehouse environments.  My opinions have remained the same, since I actually understand these products. 

Obviously you are clueless.  Wirehouses do not preach that annuities are the antichrist.  This is the most ignorant thing I've heard you say.  I've worked for two different wirehouses, both with a much larger and sophisticated VA platform than the bank I worked for.  In fact it's easier for me (less compliance headache) to sell a VA at a wirehouse than at the bank.

Me said:

Now, scrim...you have already stated that your father is intelligent, analytical, and doesn't make rash decisions.  As such, I can reasonably presume that he was well informed and asked several questions when he purchased his equity indexed annuity.  Obviously he saw value in the product.

Reply:

Me, you really are getting desperate here.  If you think that your clients really fully understand what you are selling them (no matter how informed they are), then you are really, really stupid.  I have worked with many very intelligent people who owned annuities when they came to me and were confused by the product, hell I get confused sometimes when I'm looking at these pieces o' sh*t.  

I've got a retired GE executive as a client (if you're not familiar with the standards GE requires for their managers, let's just say cream of the crop) who ran a joint venture with Boeing in their jet engine division.  Point is he is a very smart guy.  Anyway, I put him in a simple 60/40 stock and bond portfolio and I still have to engage in continuing education to keep him comfortable.  This investment is waaaay easier to understand than a VA let alone an equity indexed annuity.

Equity indexed annuities are even greater peices of sh*t.  They pay us more and get clients less return!!!

Generally speaking EIA return's look like this: quarterly average of the s&p500's gain.   F*ck'd up!!!!!.  I ran the numbers on a couple of these and when the stock market was up say, 10% annually over the relative time period, the annuity would have paid about 5% to 6%.  Two important factor 1) quarterly average 2) index "price" (not including dividends)

Me,

I don't like to be rude and insultative (you took the first shots bud), but you are venturing into waters here that expose either how nieve you are or how dishonest you are.  Pick one.  Keep on hiding behind the B.S. political speak of "features that benefit the client" blah, blah, blah.  Also you expose your self when you make points like:

"1)  You are not a very good salesman."

To poke at scrim for not convincing his father to get raped by the withdrawal penalty on a product which is pure, unrefined,disease ridden, menotellname infested dogsh*t, is really really stupid.  It's probably because waiting a year makes the most financial sense and opportunity costs are harder quantify than "penalty" costs.  You are boiler room material.

cheaper isn't necessarily better, but to use that as a justification for bullsh*tting the client is sleazy.  If you don't believe that liquidity is one of the most important elements to a clients' financial security (which needs to be accounted for in their "risk tolerance") well, I think everyone here get's the point.   

I'm wasting my time here.

If a man needs to eat you can sell him a fish or a stove.  Think about that long and hard. 

I am not arguing that annuitties will outperform a mutual fund portfolio they probably won't (assuming you're not using a mf wrap account w/1.5% fee).  What I am arguing is different strokes for different folks.  It's that easy.  Yes some annuitties can get very complicated, others aren't that complicated at all. 

You want to talk about complicated, explain to a client where his money/wealth went and how your going to help him earn it back.  Fat chance.  There is a reason the average Mutual fund is held three years and it isn't because advisors are moving the money into better funds for whatever reason.  It is because stupid advisors think they know what people want and need.  Ask your next prospect Mr. Jones say the market turns south, what point are you going to dump my portfolio and do something different what you feel is right.  I ask this question to everyone I meet with, some people say you mean you have lost people money?  I am amazed.    

Let's put this into perspective:

If you bought the Vanguard 500 (S&P index fund) at the peak in March of 2000 and were dumb enough to not diversify into other asset classes (mid cap, sm cap at least) then you are about even as of today (O.K. your down by -1.3%, I'm not splitting hairs here ) including reinvested dividends.  Yeah who's to say it will be permanent, but we still have 4 years to go before you've held it ten years and you have broken even at year 5 being really stupid (not diversifying) during the 2nd worst bear market in history!!! Look at your Ibbotson chart and tell me how many BIG drops you see and how far apart are they (3 big drops about 30 to 40 years apart). Now if you had been smart and diversified among capitalizations, bonds and reits, you most likely broke even with a little extra by the end of 2003.  Who needs a guarantee.  This makes $ for the insurance companies (and us) for a reason.

I'm getting tired and going home (It's 9:11pm Pac Time) have a good night.

dude,

You're in the wrong ballpark.  Nobody here is arguing rate of return except you.

The argument is that a VA has a place for certain clients that are risk aversed.  Your illogical rationale is that there is no place for a VA.

You, sir (and I use the term quite loosely), are very stupid to believe otherwise.

The clients that buy VAs and EIAs don't want the "best" return.  Hell...nobody can offer them the best return.  EIAs and VAs that are sold properly offer a better upside potential than a fixed annuity or CD without the downside potential of a pure equity account.  I believe that this concept is easy enough to understand for somebody with average intelligence (this is where you are excluded).

P.S. - I don't believe scrim likes you implying that his daddy is stupid.

People DO want guarantees.  They WILL pay for them.  VA's are excellent investment vehicles for the risk adverse whose situation warrents them being in equities.

[quote=BankFC]

People DO want guarantees.  They WILL pay for them.  VA's are excellent investment vehicles for the risk adverse whose situation warrents them being in equities.

[/quote]

People are often talked into or sold things they  don't need by dishonest sales people and/or salepeople willing to take advantage of the customer's unfounded fears (imho, the two sales people are both dishonest).

People don't walk into an office and say "By golly, I'll have me one'a them guaranteed annuity thingees". What happens is some salesman hears the uninformed buyer talk about his fears of the market, and instead of explaining how diversified long term investors really don't face the dangers the customer thinks, the saleman plays on that unfounded fear, hands the customer a propaganda piece from an insurance carrier DESIGNED to take advantage of that unfounded fear and he writes a big commission annuity ticket.

I can count on one hand the number of times someone walked into my office and wanted a VA.   I'll do my best to show them the full story and if at the end of my presentation they still want a VA I'll provide them one.

About a month ago one of my clients (of only 4 months) was almost talked into liquidating their account to a competitor for a VA.   I showed them the full story and afterwards they decided to stay put.   I told them specifically after I'm done explaining the true story of VA's if you still want it I have the same exact VA product.  

I imagine going forward they will view me as their trusted advisor and the chances of me losing their biz in very small.

That's my story for the day.

scrim

[quote=menotellname][quote=mikebutler222] <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Your family members are "a market"? You wouldn't explain to them what an absolute waste that "guarantee" is to long term investors?

Wow, that insurance company you work for did a great job on your head, pal   <?:namespace prefix = v ns = "urn:schemas-microsoft-com:vml" />

[/quote]

scrim, Mike, and dude

Obviously you three work at a wirehouse that preaches "annuities are the anti-christ".

[/quote]

I have no idea how someone who’s ever BEEN in a wirehouse (or ever been a broker, fot that matter) could entertain such a bizarre idea. Wirehouses LOVE annuity sales. The informed members of the sales force, OTOH, knowing better and having more product choices than you, the insurance agency guy have, don’t like them all that much.

[quote=menotellname] If I articulate that a certain guarantee costs .5% more to manage and the person purchases that guarantee...guess what?  They see a value in the guarantee (whether the value is real or perceived is not the issue).

[/quote]

They “see” a value that doesn’t exist because you, the insurance agent, decided to prey on their ignorance rather than fulfill your professional obligation to educate them. I suspect the fact you have nothing else to sell tham AND the big commission check was the motivation.

[quote=menotellname]

The argument is that a VA has a place for certain clients that are risk aversed.  Your illogical rationale is that there is no place for a VA.

[/quote]

“Risk aversed” (sic) or propagandized by a salesman and his annuity literature all designed to play up the “benefit” of the guarantee everyone here knows he doesn’t need?

The day I see some annuity literature that says something like “You really don’t need this, but if you can’t sleep at night without it” I’ll think better of the insurance company and the flacks they hire. Until then it’s obvious that they play on and play to unfounded fears for big, big commission checks. Nothing more than the guys who sell “credit life” to suckers paying 29% on credit card debt.

[quote=dude]

Let's put this into perspective:

If you bought the Vanguard 500 (S&P index fund) at the peak in March of 2000 and were dumb enough to not diversify into other asset classes (mid cap, sm cap at least) then you are about even as of today (O.K. your down by -1.3%, I'm not splitting hairs here ) including reinvested dividends.  Yeah who's to say it will be permanent, but we still have 4 years to go before you've held it ten years and you have broken even at year 5 being really stupid (not diversifying) during the 2nd worst bear market in history!!! Look at your Ibbotson chart and tell me how many BIG drops you see and how far apart are they (3 big drops about 30 to 40 years apart). Now if you had been smart and diversified among capitalizations, bonds and reits, you most likely broke even with a little extra by the end of 2003.  Who needs a guarantee.  This makes $ for the insurance companies (and us) for a reason.

I'm getting tired and going home (It's 9:11pm Pac Time) have a good night.

[/quote]

You're right, of course. The only people who can't admit it are those addicted to 6% commission products or have nothing lese to sell.

“You really don’t need this, but if you can’t sleep at night without it”

That's funny I tell people this all the time, disclose the costs vs. a mutual fund show them illustrations of both and people still choose the VA.

Instead of arguing this point let's change the disccussion to investing in CD's for growth.

OMG,

That is like saying a person who has a small child SHOULD NOT buy an SUV for protection in a crash because it is more expensive, costs more in gas, and well frankly, you might not even have a crash anyway. 

So if you were a car salesman you would sell everyone a Ford Focus? 

That isn't the world we live in.  Some people want protection whether they will use it or not, and WILL pay more to get it.

What is the percentage yield cost of peace of mind?  I'd say it is about total VA costs M&E costs with GMIB riders (which by the way, is only 1.7% in the JH Venture, where is everyone coming up with 3% plus??).

I don't know about YOU...but I am UNWILLING to look at my 65 year old client, who just lost 30% of her money in another market downturn, and tell her she is going to have to "adjust" her lifestyle...not so long as their are tools to avoid it and still grow her money.

To many advisors take the emotions OUT of it...that's the problem.

Of course nobody comes in ASKING for an annuity...nobody comes in asking for MFS Total Return or American Funds Europacific fund either...so that means you don't sell it to them???

Terrible argument point...unworthy of further thought.

[quote=bankrep1]

“You really don’t need this, but if you can’t sleep at night without it”

That's funny I tell people this all the time, disclose the costs vs. a mutual fund show them illustrations of both and people still choose the VA.

[/quote]

If tell them they don't need it, fine, I believe you. You and I both know that's rare AND that annuity sales pieces paly up the bogus "need" for the guarantee.

I think the point is that clients do come in and ask about mutual funds in general terms way more than they do about VA's.

Just my .02

scrim

[quote=BankFC]

Of course nobody comes in ASKING for an annuity....

[/quote]

The point is several annuity defenders have said it's a good product for people who "need" a guarantee. The fact is there isn't a single person HERE who thinks they need that guarantee. They should have it explained to them that their fears are unfounded. Instead, what happens is those unfounded fears are used as a hook to sell them an annuity.

LOL...they come in and ask about "investing"...and since the only thing you think about it mutual funds, to you, that's what they are asking about.

BY the way...I don't care what a client comes in asking about anyway...we are professionals, remember?  We have a fiduciary responsibility to match investments with goals, time frame, and risk tolerance. 

If all your doing is having them point to one of five or six allocation models and shoving them in it, you aren't much more than a glorified order taker.

[quote=BankFC]

OMG,

That is like saying a person who has a small child SHOULD NOT buy an SUV for protection in a crash because it is more expensive, costs more in gas, and well frankly, you might not even have a crash anyway. 

[/quote]

Not even close. If you need a car example it's more like the salesman who knows the cars he sells will never rust and have lifetime rust warantees, yet he tries to sell rust proofing to everyone who walks into the showroom OR he doesn't bother to explain to people afraid of rust that there's nothing to worry about.

[quote=BankFC]I don't know about YOU...but I am UNWILLING to look at my 65 year old client, who just lost 30% of her money in another market downturn, ...'

[/quote]

Please be serious. You're not talking to yokels who are prospective annuity buyers here. We know better. Just when as ANY 65 year old client looking for income like your example EVER seen a 30% loss in a properly diversivified account? Moreover, just what is your 6% commission going to do for her aside from lock her into something?

[quote=mikebutler222][quote=BankFC]

Of course nobody comes in ASKING for an annuity....

[/quote]

The point is several annuity defenders have said it's a good product for people who "need" a guarantee. The fact is there isn't a single person HERE who thinks they need that guarantee. They should have it explained to them that their fears are unfounded. Instead, what happens is those unfounded fears are used as a hook to sell them an annuity.

[/quote]

Did you not see my other post??  A LOT of people could care less about their ACTUARIAL risk of losing their money...it's peace of mind and a safety net they want...like it or not.

here you go...

[quote=BankFC]

OMG,

That is like saying a person who has a small child SHOULD NOT buy an SUV for protection in a crash because it is more expensive, costs more in gas, and well frankly, you might not even have a crash anyway. 

So if you were a car salesman you would sell everyone a Ford Focus? 

That isn't the world we live in.  Some people want protection whether they will use it or not, and WILL pay more to get it.

What is the percentage yield cost of peace of mind?  I'd say it is about total VA costs M&E costs with GMIB riders (which by the way, is only 1.7% in the JH Venture, where is everyone coming up with 3% plus??).

I don't know about YOU...but I am UNWILLING to look at my 65 year old client, who just lost 30% of her money in another market downturn, and tell her she is going to have to "adjust" her lifestyle...not so long as their are tools to avoid it and still grow her money.

To many advisors take the emotions OUT of it...that's the problem.

[quote=BankFC]

LOL...they come in and ask about "investing"...and since the only thing you think about it mutual funds, to you, that's what they are asking about.

BY the way...I don't care what a client comes in asking about anyway...we are professionals, remember?  We have a fiduciary responsibility to match investments with goals, time frame, and risk tolerance. 

If all your doing is having them point to one of five or six allocation models and shoving them in it, you aren't much more than a glorified order taker.

[/quote]

I'm not sure who this is directed to, based on the mutual fund comment. I will say this however, if we really did take our profession seriously and DID match INFORMED (education is part of our job too) clients to proper investment vehicles there'd be a massive drop-off in the number of annuities sold.

[quote=BankFC][quote=mikebutler222][quote=BankFC]

Of course nobody comes in ASKING for an annuity....

[/quote]

The point is several annuity defenders have said it's a good product for people who "need" a guarantee. The fact is there isn't a single person HERE who thinks they need that guarantee. They should have it explained to them that their fears are unfounded. Instead, what happens is those unfounded fears are used as a hook to sell them an annuity.

[/quote]

Did you not see my other post??  A LOT of people could care less about their ACTUARIAL risk of losing their money...it's peace of mind and a safety net they want...like it or not.

[/quote]

You seem to continue to mss the point. Their "peace of mind" is only at risk because they haven't met a professional who explained their fears are unfounded.  More likely what they've met is someone who played on their unfounded fears and used annuity propaganda built on the bogus "need" for a "guarantee".

[quote=BankFC]

here you go...

[quote=BankFC]

OMG,

That is like saying a person who has a small child SHOULD NOT buy an SUV for protection in a crash because it is more expensive, costs more in gas, and well frankly, you might not even have a crash anyway. 

So if you were a car salesman you would sell everyone a Ford Focus? 

That isn't the world we live in.  Some people want protection whether they will use it or not, and WILL pay more to get it.

What is the percentage yield cost of peace of mind?  I'd say it is about total VA costs M&E costs with GMIB riders (which by the way, is only 1.7% in the JH Venture, where is everyone coming up with 3% plus??).

I don't know about YOU...but I am UNWILLING to look at my 65 year old client, who just lost 30% of her money in another market downturn, and tell her she is going to have to "adjust" her lifestyle...not so long as their are tools to avoid it and still grow her money.

To many advisors take the emotions OUT of it...that's the problem.

[/quote] [/quote]

Scroll back, I've already answered this.

[quote=mikebutler222][quote=BankFC]

OMG,

That is like saying a person who has a small child SHOULD NOT buy an SUV for protection in a crash because it is more expensive, costs more in gas, and well frankly, you might not even have a crash anyway. 

[/quote]

Not even close. If you need a car example it's more like the salesman who knows the cars he sells will never rust and have lifetime rust warantees, yet he tries to sell rust proofing to everyone who walks into the showroom OR he doesn't bother to explain to people afraid of rust that there's nothing to worry about.

WOW...according to your example, you are telling your clients their accounts will NEVER go down, and they have NO MARKET RISK.  NO???  Let's use your example:

"It's like the salesman who knows the car he sells (the investments he sells) will never rust (lose principle) and has guaranteed warranties (mutual funds have guarantees?  wait, no, thats a VA )...blah blah blah.

Your piss poor example and faulty logic lead me to question your reasoning and analytical skills.  But I definitely welcome a rebuttal.

Not as fast on the trigger now huh?

I should have gone to law school.

Honestly, Mike, at least you could be a man and own up to your faulty logic...

[quote=BankFC][quote=mikebutler222][quote=BankFC]

OMG,

That is like saying a person who has a small child SHOULD NOT buy an SUV for protection in a crash because it is more expensive, costs more in gas, and well frankly, you might not even have a crash anyway. 

[/quote]

Not even close. If you need a car example it's more like the salesman who knows the cars he sells will never rust and have lifetime rust warantees, yet he tries to sell rust proofing to everyone who walks into the showroom OR he doesn't bother to explain to people afraid of rust that there's nothing to worry about.

[/quote]

WOW...according to your example, you are telling your clients their accounts will NEVER go down, and they have NO MARKET RISK.  NO???  Let's use your example:

"It's like the salesman who knows the car he sells (the investments he sells) will never rust (lose principle) and has guaranteed warranties (mutual funds have guarantees?  wait, no, thats a VA )...blah blah blah.

[/quote]

It's obvious you're deeply confused (although my guess isn't you're as confused as you pretend, you're just as confused as you need to be to sell a massive commission product). Perhaps we should start fresh with something more to the point. We've hear over and over again that some people “need” that guarantee. <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

1) Tell me, does a diversified, balanced long term investor “need” a guarantee? Or do they just think they need a guarantee?

2) You mentioned the mythical 65 year old client who just lost 30% of their portfolio in a downturn and may need to change their life style due to it. Just when has ANY 65 year with a balanced income portfolio lost 30% of their portfolio value in a downturn?

Either you’re as clueless as the guy who thinks he needs a “guarantee” or you know you’re using bogus examples.

[quote=BankFC]

Honestly, Mike, at least you could be a man and own up to your faulty logic...

[/quote]

Gee, I had no idea you'd have a fit if I stepped away for an entire 10 minutes. Get a grip pal, and try decaf 

Hey what about the people that invested their life savings in the stock market in Japan?  Oh wait thats different....

Their "peace of mind" is only at risk because they haven't met a professional who explained their fears are unfounded.  More likely what they've met is someone who played on their unfounded fears and used annuity propaganda built on the bogus "need" for a "guarantee".

-----------------------

Two issues here--the second sentence above is probably true in a lot of cases.  However, I'm not on board 100% with the first: the idea that a professional can explain away someone's fears w/logic.  As a woman who I'm married to is fond of saying, "you can't deny me my feelings." (insert marriage joke here!)  If logic ruled the behavior of the consumer why would anyone EVER buy a brand new car?  My theory for that kind of purchase, among thousands of others, is that it "feels good."  And many people, no matter how compelling the evidence, cannot seem to use logic and numbers to their advantage.  Mutual fund flows clearly show how bad we humans are at staying the course--assets always peak in a category/fund/asset class very close to the the peak in value....and bottom out at the point of maximum opportunity.

Cowboy

Add yourself to the stupid list

[quote=mikebutler222][quote=BankFC][quote=mikebutler222][quote=BankFC]

OMG,

That is like saying a person who has a small child SHOULD NOT buy an SUV for protection in a crash because it is more expensive, costs more in gas, and well frankly, you might not even have a crash anyway. 

[/quote]

Not even close. If you need a car example it's more like the salesman who knows the cars he sells will never rust and have lifetime rust warantees, yet he tries to sell rust proofing to everyone who walks into the showroom OR he doesn't bother to explain to people afraid of rust that there's nothing to worry about.

[/quote]

WOW...according to your example, you are telling your clients their accounts will NEVER go down, and they have NO MARKET RISK.  NO???  Let's use your example:

"It's like the salesman who knows the car he sells (the investments he sells) will never rust (lose principle) and has guaranteed warranties (mutual funds have guarantees?  wait, no, thats a VA )...blah blah blah.

[/quote]

It's obvious you're deeply confused (although my guess isn't you're as confused as you pretend, you're just as confused as you need to be to sell a massive commission product). Perhaps we should start fresh with something more to the point. We've hear over and over again that some people “need” that guarantee. <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

1) Tell me, does a diversified, balanced long term investor “need” a guarantee? Or do they just think they need a guarantee?

2) You mentioned the mythical 65 year old client who just lost 30% of their portfolio in a downturn and may need to change their life style due to it. Just when has ANY 65 year with a balanced income portfolio lost 30% of their portfolio value in a downturn?

Either you’re as clueless as the guy who thinks he needs a “guarantee” or you know you’re using bogus examples.

[/quote]

Mike,

First of all I'm not using BOGUS examples, I am exposing YOUR BOGUS example (see post on page 10 if you need a refresher).

But to answer your questions...

1.)  Well Mikey, the answer is yes and no.  If the guarantee will prevent them from making unwise decisions during downturns in the market (which they could), then YES they are worth it.  If they USE the guarantees, then YES they are worth it.  If their behavior is unlikely to be influenced and they DON'T use it, then NO, it is not worth it.

However, I submit that by that definition NO insurance (health, vision, dental, life, homeowners, disability) is worth it unless you use it.  In line with your reasoning, as a financial advisor, DO YOU advise against disability, LTC, and health insurance???? 

2.)  I've seen many 65 year olds lose 30% or more during the terrible times at the beginning of this decade with "moderate" portfolios.  How soon you forget...obviously you didn't have any money in the market then.

bankfc

I think mike is referring to periods >5 years, hell even periods of 3 years have been ok for balanced portfolios.  refer to my post earlier about the s&p 500 index fund to see how an all US equity non diversified portfolio (no bond, mid or small cap exposue) has done over the last 5 years (second worst bear market in history).... about even.  Anyone who would have put a risk averse 65 year old woman in just the s&p 500 would have been an idiot, but still she wouldn't have needed the guarantee (I'm talking about the 'make you even' after 10 year type guarantees) since she's about even now.

Ironically, the Hartford Annuity guy came in today and I talked with him.  He intrigued me with a new spin on the guarantee rider concept, they have a guaranteed withdrawal benefit for life that will increase with the portfolio (5% withdrawal rate annually based on account value stepped up annually with account increase but will not go down and is guaranteed for life) costing 50 bps.  I thought it interesting enough to look into since it is not 'annuitization' (substitute: 'dogsh*t').  Only downfall is that the client has to wait until 60 (which you can't withdraw VA's w/o penalty until 59 anyway).  Also, they have pretty low overall costs, it appears, as well as my favorite fund companies.  This might be ok for a few of the clients I work with, but still is going to have to pass the dogsh*t screen, which I have yet to find a VA that does.

I'm not closed minded to these things completely, I've just seen soooooooo many of them that were improperly sold (I used to work at a bank, no wonder compliance was so heavy handed) where the client was f*cked because of the penalty period.  I am close minded to the Equity Indexed annuities though.  Pure snake oil. 

Bottom line is that I have sold a few VA's before but they fit a very specific need (rolled over from a fixed annuity who's $'s were for heirs and client couldn't qualify for life insurance and they wanted better potential for return as an example) and might consider them in the future but I'm not standing on top of a soap box preaching that a client needs the protection, 'cause the truth is that they don't. 

Bank FC said:

1.)  Well Mikey, the answer is yes and no.  If the guarantee will prevent them from making unwise decisions during downturns in the market (which they could), then YES they are worth it.  If they USE the guarantees, then YES they are worth it.  If their behavior is unlikely to be influenced and they DON'T use it, then NO, it is not worth it.

Reply:

THis is why we take a client's risk tolerance (you know the boilerplate questionaires we all use) in to consideration.  The more likely they are to make unwise decisions in a downturn the larger the bond allocation.  We don't put a risk averse 65 year old into 100% equities.

Bank FC said:

2.)  I've seen many 65 year olds lose 30% or more during the terrible times at the beginning of this decade with "moderate" portfolios.  How soon you forget...obviously you didn't have any money in the market then.

Reply:

There are virtually NO Balanced portfolios (definition: moderate risk tolerance roughly 60/40-stocks/bonds ) that were down 30% at any point during the bear market, in fact there are almost NO Moderate Aggressive portfolio's (80/20) that were down 30% during the bear market, in fact there were almost NO well balanced all equity portfolios (diversified across capitalization, international and REITs) that were down 30% during the bear market.  If your defining moderate as all Blue Chip stocks then of course a NON diversified Large Cap equity portfolio would have been down by 30% during the bear market.  You are using invalid examples here.  I get the impression that Scrim and Mike are believers in diversification BAnkFC, your making a moot point.

mikebulter just got pwn3d.

By golly, I'll have me one'a them guaranteed annuity thingees". What happens is some salesman hears the uninformed buyer talk about his fears of the market, and instead of explaining how diversified long term investors really don't face the dangers the customer thinks,

Um ...Actually.... yes I have had people come in and ask for those annuity thingies  And while they are not for everyone or even for very many people, I agree that any guarantees that make the client more comfortable with the idea of investing in the markets are valuable.  Valuable in that they get the client actually investing instead of losing ground by being safe in CDs.  Valuable in that they may get the client to take a more appropriate level of risk than they would have done otherwise.

It seems that mikebutler can predict the future and be assured that his clients will not experience a downturn in account value when they decide to withdraw income from their investments.  How does he know that there will not be a need or what level of danger will be in the future stock markets?  It must be nice to be so perceptive.   It must be nice to be so young.

There is also the difference between needing something and wanting something.   I don't NEED to buy that 1949 Buick Roadmaster that will probably be a money pit, but I want it anyway.   It is most likely that VA clients don't really NEED to have guarantees but if they WANT to have guarantees and are aware of the costs and are willing to make that trade-off then I don't see an issue.

The people who are against VAs have a valid point in that many of the annuities were sold improperly and without full disclosure.  This is why we are seeing so much more compliance review.  I don't have a problem with this either.

Asset allocation is a good tool and is part of a VA as well as any other managed portfolio.   Whether portfolios in the past were down 30% or not for well balanced (and that is a slippery definition as well) is moot.  The value of choosing certain guarantees in a VA is that the portfolio may be down in the future but the income is guaranteed.  Many people will make that trade off.   Security at a price.

Hey what about the people that invested their life savings in the stock market in Japan?  Oh wait thats different....

[quote=bankrep1]

Hey what about the people that invested their life savings in the stock market in Japan?  Oh wait thats different....

[/quote]

ROFLMAO, that's your example of someone with a diverisifed income portfolio? The Japanese equity market?

[quote=Cowboy93]

Their "peace of mind" is only at risk because they haven't met a professional who explained their fears are unfounded.  More likely what they've met is someone who played on their unfounded fears and used annuity propaganda built on the bogus "need" for a "guarantee".

-----------------------

Two issues here--the second sentence above is probably true in a lot of cases.  However, I'm not on board 100% with the first: the idea that a professional can explain away someone's fears w/logic. [/quote]

I actually agree with you. You're not going to succeed in explaining what we all here know to be true with 100% of the people you work with. If you've done as good a job at it as possible and they understand, but still want the annuity, do it.

OTOH, if we all really did that, and if most annuity propaganda was honest and didn't press hard on the "SCARE THEM" button, annuity sales would drop 99%.

[quote=BankFC]

Mike,

First of all I'm not using BOGUS examples, I am exposing YOUR BOGUS example (see post on page 10 if you need a refresher).

[/quote]

No, you’re using a twist on it, which makes it bogus. HOWEVER, if you’d like to return to your “if they want an SUV for safety” example it’s really not a bad one. In that case you explain to them if SAFETY is what they want they DON’T want an SUV (and I’m not an SUV hater) because there are other, far safer vehicles.

See? You explained the truth to them about their fears and their mistaken idea of what addresses that fear. Instead, what most annuity sales people do is hear the fear and sell them the biggest, fattest SUV with the biggest possible commission EVEN THOUGH the sales guy knows it doesn’t “solve” their problem.

[quote=BankFC]

But to answer your questions...

1.) Well Mikey, the answer is yes and no. If the guarantee will prevent them from making unwise decisions during downturns in the market (which they could), then YES they are worth it.

[/quote]

Oh spare me. The annuity is going to do that, and NOT YOU? Just what’s your job?

[quote=BankFC]

However, I submit that by that definition NO insurance (health, vision, dental, life, homeowners, disability) is worth it unless you use it. In line with your reasoning, as a financial advisor, DO YOU advise against disability, LTC, and health insurance????

[/quote]

That’s the very same BS line annuity sales people use all the time. LTC and disability and health insurance ADDRESS A REAL NEED. No one here thinks that ANYONE with a well diversified portfolio on a long term basis NEEDS the “guarantee”.

[quote=BankFC]

2.) I've seen many 65 year olds lose 30% or more during the terrible times at the beginning of this decade with "moderate" portfolios. How soon you forget...obviously you didn't have any money in the market then.

[/quote]

That’s a complete and total crock. Diversified portfolios did NOT take a 30% dump, much less income oriented portfolios. I can provide examples, can you? Oh, and spare me the “obviously you didn’t” line, I’m more than confident I’ve been doing this far longer than you have.

[quote=babbling looney]

By golly, I'll have me one'a them guaranteed annuity thingees". What happens is some salesman hears the uninformed buyer talk about his fears of the market, and instead of explaining how diversified long term investors really don't face the dangers the customer thinks,

Um ...Actually.... yes I have had people come in and ask for those annuity thingies  And while they are not for everyone or even for very many people, I agree that any guarantees that make the client more comfortable with the idea of investing in the markets are valuable. 

[/quote]

If you can't explain them them they're wasting their money on it, fine. OTOH, you and I both know annuity sales pieces try to work UP, not down, that baseless fear.

[quote=babbling looney]

It seems that mikebutler can predict the future...

[/quote]

Come on, BL, I respect you. Let's not play some silly game where you try to tell me YOU think a diverisified long term investor needs a guarantee.

[quote=babbling looney]

There is also the difference between needing something and wanting something.   I don't NEED to buy that 1949 Buick Roadmaster that will probably be a money pit, but I want it anyway.  

[/quote]

Just likem there's a difference in buying a car because you want it and buying a "guarantee" because you have unfounded fears that some lowlife used to their advantage to bang you into an inappropriate annuity.

mikebulter just got pwn3d.

I don't use chatboards often. 

What the hell does this mean?

Thanks.

pwn3d = owned

Kind of leet speak.   If you are "owned" in an on line game, you just got your butt handed to you on a silver platter.   As in "I pwn3d u noob"

BL - MMORPG player since they were invented. Huge waste of time but a lot of fun.

Thanks BabblingLooney.  Still a little confused by the acronyms, abbreviations and jargon though. I should know this sh*t since I'm under 30, oh well.

How did mike get "owned".  I haven't seen any posts which make a "titanium" case against mike's postition.  Mostly making assumptions that are inaccurate, but then again I'm biased.

No, I don't think there is necessarily a guarantee needed in a well managed diversified portfolio. 70% of my business is in managed, by me, stock and bond portfolios (which have done very well thank you) and very little in annuities, less than 2%.  Some people do need guarantees or safety nets. 

However your contention that YOU don't think a guarantee is needed is also a conceit of the highest level.  Investing may be about numbers, alpha, beta, sharpe ratios, efficient frontiers to you and me: to the LOLs (little old ladies) it is about safety and comfort.  The emotional stress and nervousness that keeps many from investing is a huge stumbling block.  IF a VA is able to help or mitigate that; then, again I don't have a problem. However, with the huge caveat that the client be fully informed.  It isn't all about wasting their money, as you stated.  It isn't a waste if you get what you want.  I want a big fat Buick that I know will be costly.  But it will be sooo  cool after I put in a  455 with a tubo automatic....but I digress. 

I have already said that many annuities have been sold unethically.  Those guys should be strung up by their gonads. 

You need to put your animus towards annuities and "insurance salesmen", which I also can appreciate, aside and consider the client's needs and fears which you may consider superfluous and silly. But those needs are real.

[quote=dude]

How did mike get “owned”. I haven’t seen any posts

which make a “titanium” case against mike’s postition. Mostly making

assumptions that are inaccurate, but then again I’m biased.

Thanks Skee, although I think in this post you'd give mike a little respect, he's fighting a noble fight.  But it's been fun to watch you two dance.

How boring it would all be if we were all the same.  This place can get distracting.  I need to make more cold calls and will probably check out for awhile.

[quote=dude]

mikebulter just got pwn3d.

I don't use chatboards often. 

What the hell does this mean?

Thanks.

[/quote]

It means the guy using the expression has a mental age of 13 

[quote=skeedaddy] [quote=dude]

How did mike get "owned".  I haven't seen any posts
which make a "titanium" case against mike's postition.  Mostly making
assumptions that are inaccurate, but then again I'm biased.

[/quote]

Mike always puts up a good fight, but often gets "owned". I've put him in his
place a couple of times. I especially hate when he rebutts on a line by line
basis and turns a post into a short novel with multiple pages. Oh and his
tendency to always have the last word. I'm used to it, so I let him have his
way.

I think he might have been an excellent District Attorney. [/quote]

ROFLMAO, you've done WHAT????? Too funny.

BTW, what you really hate about me responding line by line is that I use YOUR words and rebut each and every assertion.

[quote=babbling looney]

No, I don't think there is necessarily a guarantee needed in a well managed diversified portfolio.

[/quote]

Come on BL, you can drop the qualifier, the "necessarily". You and I both know the facts are that a diversified long term investor doesn't "need" a guarantee for anything aside from a misplaced fear.

[quote=babbling looney]

However your contention that YOU don't think a guarantee is needed is also a conceit of the highest level. 

[/quote]

No, it's a fact. If you're talking "need" so they can sleep at night even after the best faith efforts of a financial professional to explain why they don't need it, that's another issue and I would agree with you.

The problem I have is that the vast majority of annuity sales are done by salemen who not only don't make a good faith effort, they play up that baseless fear and use annuity propaganda that does the same.

[quote=babbling looney]

  I want a big fat Buick that I know will be costly.  But it will be sooo  cool after I put in a  455 with a tubo automatic....but I digress. 

[/quote]

You don't just digress, you're changing the subject. Wanting a big, fat Buick (I agree, btw, beautiful car) is an emotional desire. Wanting a "guarantee" from an annuity is rarely, rarely a desire, it's a response to an unfounded fear. It's as if you told me you wanted that Buick because you knew if you had it you could sleep well at night knowing the space aliens wouldn't bother you. 

[quote=babbling looney]

I have already said that many annuities have been sold unethically.  Those guys should be strung up by their gonads. 

[/quote]

And I agree, but if we did annuity sales would drop 99%. 

 [quote=babbling looney]You need to put your animus towards annuities and "insurance salesmen", which I also can appreciate, aside and consider the client's needs and fears which you may consider superfluous and silly. But those needs are real. [/quote]

sigh... again, for the last time and I'll let this go, they ARE NOT REAL, they are unfounded and based on illinformed fear AND a annuity sales system that tries to create and/or expand that unfounded fear.

Having said that I HAVE sold annuities to that tiny fraction of people who, after they hear all the facts, don't care about reason and facts.

[quote=babbling looney]

BL - MMORPG player since they were invented. Huge waste of time but a lot of fun.

[/quote]

OK, I have a question for you, what's a "MMORPG" and what online games do you play?

BL, having reconsidered your post during my commute to the office (It's 5 minutes, tops, I'm a lucky guy ) let me add this.

If by "need" you've been talking about the kind of "need" someone who thinks they need sleeping pills because without them the mega-city of tiny people living under their bed will keep them up all night, I will agree with you.

All I'm saying is that if after we show them there is no city there, they still "need" the pills, fine. Sell them the pills. OTOH, most annuity sales are made by people who will quickly nod their heads about that noisy city and hand the customer a propaganda piece that explains the danger of the little city and how you can avoid it.

That's what I hate about most annuity sales and annuity salesmen.

[quote=dude]

Thanks BabblingLooney.  Still a little confused by the acronyms, abbreviations and jargon though. I should know this sh*t since I'm under 30, oh well.

How did mike get "owned".  I haven't seen any posts which make a "titanium" case against mike's postition.  Mostly making assumptions that are inaccurate, but then again I'm biased.

[/quote]

Right here is where Mike got owned:

However, I submit that by that definition NO insurance (health, vision, dental, life, homeowners, disability) is worth it unless you use it. In line with your reasoning, as a financial advisor, DO YOU advise against disability, LTC, and health insurance????

Further...Mike compounds his ignorance by contending that he is right (below).

That’s the very same BS line annuity sales people use all the time. LTC and disability and health insurance ADDRESS A REAL NEED. No one here thinks that ANYONE with a well diversified portfolio on a long term basis NEEDS the “guarantee”.

Finally, Mike whines that his auto sales analogy was "twisted" and used against him but that could not happen if his logic wasn't so faulty.

Bottom line:  Mike has been owned more times than my relatives.

[quote=menotellname]

Right here is where Mike got owned:

However, I submit that by that definition NO insurance (health, vision, dental, life, homeowners, disability) is worth it unless you use it. In line with your reasoning, as a financial advisor, DO YOU advise against disability, LTC, and health insurance????

Further...Mike compounds his ignorance by contending that he is right (below).

That’s the very same BS line annuity sales people use all the time. LTC and disability and health insurance ADDRESS A REAL NEED. No one here thinks that ANYONE with a well diversified portfolio on a long term basis NEEDS the “guarantee”.

[/quote]

ROFLMAO, only an insurance hack could say, with a straight face the standard "You have insurance on your home and health, why not your investments" line. Only that hack could try to equate the REAL NEEDS addressed in the two former with the bogus "need" of the latter.

Rather than your childish "he got owned" you should actually try to defend that line. I'm betting you won't.

[quote=menotellname]

Finally, Mike whines that his auto sales analogy was "twisted" and used against him but that could not happen if his logic wasn't so faulty.

[/quote]

Again, nonsense. My example was the car salesman that tried to sell rust proofing to cars made of galvanized steel that don't rust. BankFC twisted it to "That is like saying a person who has a small child SHOULD NOT buy an SUV for protection in a crash because it is more expensive, costs more in gas, and well frankly, you might not even have a crash anyway. ".

That IS twisted, I never said anything of the sort.

Mike,

Any body that uses ROFLMAO has no room to call somebody "childish".  After all...you have indeed been "owned".

BankFC has pretty much abused you in every gentlemanly way possible.  Hell...neither BankFC nor I initiated the use of the term "owned".  An impartial 3rd party that has witnessed you being verbally raped has realized that you have been "owned" in every politically correct way.

At least you can take solace in the fact that the longer you continue being verbally raped the greater the chance that you will receive a "reach around".

If by "need" you've been talking about the kind of "need" someone who thinks they need sleeping pills because without them the mega-city of tiny people living under their bed will keep them up all night, I will agree with you.

Aha, we finally agree.  The needs and the fears of some clients, while not real to you and me are real to them.  Investing is cerebral for a few clients (mostly engineers and technical types) and must be for us as professional advisors, but for most people investing is a scary insecure emotional experience.  Our job is to calm the fears and get people to invest in spite of themselves.  Sometimes it takes an additional safety net to make people do things.  The Flying Wallendas didn't use a net but they were professionals.  You can expect amateurs not to be afraid of falling and feeling more comfortable with a net below.  That is how I look at the guarantees in some annuities.

You don't just digress, you're changing the subject. Wanting a big, fat Buick (I agree, btw, beautiful car) is an emotional desire

Not a change of subject. I was trying to show that a desire for something I know is going to be expensive and something I don't really need (similar to the annuity guarantees) can go against logic.  Doesn't stop me from wanting anyway.

MMORPG= Massively Multiplayer Online Role-Playing Game.  Currently I play WOW=World of Warcraft. Did play UO Ultima On Line, Everquest, and for a brief time SWG Star Wars Galaxies. You can only do one of these at a time or it will consume your life.  I know, I know a massive waste of time. But for me a good way to relax and get my mind off of  the pressures of work in the evenings or on a lazy weekend day.   Other things I do to relax are to design web pages or play music on my guitar.    We all need downtime.  Some people play golf, or watch televised sports games. This is my way  

[quote=menotellname]

Mike,

Any body that uses ROFLMAO has no room to call somebody "childish".  After all...you have indeed been "owned".

BankFC has pretty much abused you in every gentlemanly way possible.  Hell...neither BankFC nor I initiated the use of the term "owned".  An impartial 3rd party that has witnessed you being verbally raped has realized that you have been "owned" in every politically correct way.

At least you can take solace in the fact that the longer you continue being verbally raped the greater the chance that you will receive a "reach around".

[/quote]

Yeah, I didn't expect you to defend the line... you never disappoint. 

[quote=mikebutler222][quote=menotellname]

Mike,

Any body that uses ROFLMAO has no room to call somebody "childish".  After all...you have indeed been "owned".

BankFC has pretty much abused you in every gentlemanly way possible.  Hell...neither BankFC nor I initiated the use of the term "owned".  An impartial 3rd party that has witnessed you being verbally raped has realized that you have been "owned" in every politically correct way.

At least you can take solace in the fact that the longer you continue being verbally raped the greater the chance that you will receive a "reach around".

[/quote]

Yeah, I didn't expect you to defend the line... you never disappoint. 

[/quote]

Again...your words were never twisted and you HAVE been OWNED!!!

[quote=babbling looney] <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

If by "need" you've been talking about the kind of "need" someone who thinks they need sleeping pills because without them the mega-city of tiny people living under their bed will keep them up all night, I will agree with you.

Aha, we finally agree.  The needs and the fears of some clients, while not real to you and me are real to them. 

[/quote]

Fair enough. OTOH, the average insurance guy and his company shamelessly promote that fear of the mega-city under the bed. IMHO that makes them lower than whale….

I’m convinced, for example, menotell would sell meteorite insurance (“Can you be certain your or your loved ones will NEVER be impacted by a meteorite? Do you KNOW how many meteorites hit the Earth every year? Have you ever seen THE MOON????”) if they could charge a fat enough commission.

[quote=babbling looney]

You don't just digress, you're changing the subject. Wanting a big, fat Buick (I agree, btw, beautiful car) is an emotional desire

Not a change of subject. I was trying to show that a desire for something I know is going to be expensive and something I don't really need (similar to the annuity guarantees) can go against logic.  Doesn't stop me from wanting anyway.

[/quote]

Well, I’d say the difference is profound in the two “needs” unless your need for the Buick is based on irrational fears.  ;)

 [quote=babbling looney]

MMORPG= Massively Multiplayer Online Role-Playing Game.  Currently I play WOW=World of Warcraft. Did play UO Ultima On Line, Everquest, and for a brief time SWG Star Wars Galaxies. You can only do one of these at a time or it will consume your life.  I know, I know a massive waste of time. But for me a good way to relax and get my mind off of  the pressures of work in the evenings or on a lazy weekend day.   Other things I do to relax are to design web pages or play music on my guitar.    We all need downtime.  Some people play golf, or watch televised sports games. This is my way <?:namespace prefix = v ns = "urn:schemas-microsoft-com:vml" /> 

[/quote]

Believe me, I wasn’t attacking. I agree completely and I’ve even played a little BF1942 online. The graphics and interplay with others around the world is amazing. I just didn’t know what the acronym stood for. BTW, where’s the G&T you’ve mentioned in the past fit in  your relaxation? I share that taste, but as with anything else, there can be too much of a good thing. J

Thanks for the good natured exchange.

[quote=menotellname][quote=mikebutler222][quote=menotellname]

Mike,

Any body that uses ROFLMAO has no room to call somebody "childish".  After all...you have indeed been "owned".

BankFC has pretty much abused you in every gentlemanly way possible.  Hell...neither BankFC nor I initiated the use of the term "owned".  An impartial 3rd party that has witnessed you being verbally raped has realized that you have been "owned" in every politically correct way.

At least you can take solace in the fact that the longer you continue being verbally raped the greater the chance that you will receive a "reach around".

[/quote]

Yeah, I didn't expect you to defend the line... you never disappoint. 

[/quote]

Again...your words were never twisted and you HAVE been OWNED!!!

[/quote]

Yeah, that's it. Repeating that "owned" thing is so very, well, you.

Say, is there even any hope for a testicular transplant for you so you could try to defend that "You insure your..." line? You and I BOTH know you use it everyday. 

Mike said:

I’m convinced, for example, menotell would sell meteorite insurance (“Can you be certain your or your loved ones will NEVER be impacted by a meteorite? Do you KNOW how many meteorites hit the Earth every year? Have you ever seen THE MOON????”) if they could charge a fat enough commission.

Reply.

ROFLMAO

MeNoTellName Got

pw3ned

or something like that.

(I probably did it wrong but you get the idea)

[quote=babbling looney]

MMORPG= Massively Multiplayer Online Role-Playing Game.  Currently I play WOW=World of Warcraft. Did play UO Ultima On Line, Everquest, and for a brief time SWG Star Wars Galaxies. You can only do one of these at a time or it will consume your life.  [/quote]

Holy Crap.  You're a bigger dork than me.

[quote=Mike Damone][quote=babbling looney]

MMORPG= Massively Multiplayer Online Role-Playing Game.  Currently I play WOW=World of Warcraft. Did play UO Ultima On Line, Everquest, and for a brief time SWG Star Wars Galaxies. You can only do one of these at a time or it will consume your life.  [/quote]

Holy Crap.  You're a bigger dork than me.

[/quote]

 I think you've underestimated your dork quotient

[quote=dude]

MeNoTellName Got

pw3ned

or something like that.

(I probably did it wrong but you get the idea)

[/quote]

It's actually "pwn3d" but I won't be nit picky.

[quote=mikebutler222][quote=Mike Damone][quote=babbling looney]

MMORPG= Massively Multiplayer Online Role-Playing Game.  Currently I play WOW=World of Warcraft. Did play UO Ultima On Line, Everquest, and for a brief time SWG Star Wars Galaxies. You can only do one of these at a time or it will consume your life.  [/quote]

Holy Crap.  You're a bigger dork than me.

[/quote]

 I think you've underestimated your dork quotient

[/quote]

I just got pwn3d by mikebuttler. 

Holy Crap.  You're a bigger dork than me.

 Thanks.  It takes years of practice and dedication.  You should try the Myst series for serious dorkdom. 

Thanks for the leeway Mike D.

[quote=Mike Damone][quote=mikebutler222][quote=Mike Damone][quote=babbling looney]

MMORPG= Massively Multiplayer Online Role-Playing Game.  Currently I play WOW=World of Warcraft. Did play UO Ultima On Line, Everquest, and for a brief time SWG Star Wars Galaxies. You can only do one of these at a time or it will consume your life.  [/quote]

Holy Crap.  You're a bigger dork than me.

[/quote]

 I think you've underestimated your dork quotient

[/quote]

I just got pwn3d by mikebuttler. 

[/quote]

It takes a big man to laugh at himself. It takes an even bigger man to laugh at the big man laughing at himself. 

[quote=babbling looney]

Holy Crap.  You're a bigger dork than me.

 Thanks.  It takes years of practice and dedication.  You should try the Myst series for serious dorkdom. 

[/quote]

What's that, a latter day D&D? 

Mike,

Sorry I couldn't own you on this post any more today.  I was too busy bringing in my "little" bank clients.  I'm not even going to go there, you'll refute it anyway, and frankly, I could care less.

I didn't twist your logic...i quoted you WORD for WORD and owned you the entire way.  You portray as if the market is infallable and will always post positive returns.  Did you pass the 7 last month???

Mike, in all seriousness, how can you be comfortable basically guaranteeing to retirees that they're money will be safe no matter what??

You act and speak as if you have some crystal ball...I really think you need to realize you aren't dealing with play money, and sometimes people don't want or have the heart to "stick it out" during down cycles.  You're 2% extra you might make someone a year is not worth the risk of them taking some serious losses in the future and not being able to recoup.

You must deal primarly with younger folks.  That would explain your overly exhuberant approach to the markets.  I deal with retirees and near retirees almost exclusively, and they simply do not/will not/should not/ put the lion's share of their money at risk.

It's not about what the market does overall...it's about what the markets doing WHEN YOU NEED IT.  How is it you can guarantee all will be well THEN???  You can't.

Oh brother, you asked for it now. Get ready for another 10 pages.

You know Mike is a twat because he can't agree with one thing anyone says.  If you read any post by anyone on this bored, they will say I agree this may be true but this is BS.  Mike on the other hand is all knowing, he is right about everything, and the rest of the world is wring about everything, not only are they wrong he has a paragraph explanation why they are wrong.

[quote=dude]

Mike said:

I’m convinced, for example, menotell would sell meteorite insurance (“Can you be certain your or your loved ones will NEVER be impacted by a meteorite? Do you KNOW how many meteorites hit the Earth every year? Have you ever seen THE MOON????”) if they could charge a fat enough commission.

Reply.

ROFLMAO

[/quote]

roflmFao!

[quote=menotellname]

Mike,

Any body that uses ROFLMAO has no room to call somebody "childish".  After all...you have indeed been "owned".

BankFC has pretty much abused you in every gentlemanly way possible.  Hell...neither BankFC nor I initiated the use of the term "owned".  An impartial 3rd party that has witnessed you being verbally raped has realized that you have been "owned" in every politically correct way.

At least you can take solace in the fact that the longer you continue being verbally raped the greater the chance that you will receive a "reach around".

[/quote]

Yes of course Ron you are soooo  mature and Mike is not.  Hence your use of the terms 'reacharound' and "owned".  Real mature.

Little man, many of us have ties older than you.  Now, go sit back at your little desk in the bank lobby and sell some more annuities to some scared retirees.  After all, Elliot Spitzer needs something to do in the next few years.

Besdies, I need people like you for the good of my business.  When  a client is considering hiring an experienced independent advisor such as myself or Babs, it's always good to have a few 'horror stories' to tell about the guy who sits in the lobby in the bank....so they know what to do when they go to draw the big check out of their savings account and the teller tries to steer them to the guy in the little cube in the corner of the lobby.  I always train them what to do when that guy(such as yourself) tries to shove an annuity down their throat before they walk out with that check.

But of course you wouldn't do that.....

Joe,

Your old and ignorant. 

Your probably the guy who escorts his client to the bank, so I can't talk to them and to make sure they can't change their mind.  I always see the Northwestern Mutual guy doing this, I laugh.  It's like if your that worried about me stealing your clients don't you see why this is such a good position to be in.

The world it is a changing.  I have a door Joe.  No cube here. 

[quote=bankrep1]

Joe,

Your old and ignorant. 

Your probably the guy who escorts his client to the bank, so I can't talk to them and to make sure they can't change their mind.  I always see the Northwestern Mutual guy doing this, I laugh.  It's like if your that worried about me stealing your clients don't you see why this is such a good position to be in.

The world it is a changing.  I have a door Joe.  No cube here. 

[/quote]

No, sir, I am neither.

I don't need to walk them to the door.  Most I don't need to worry about at all.  Some of the newer folks I do coach a little to prepare if I know they are going to take out a large check.

My comments were not directed at you, but rather metellnoname.  I rather suspect you were cut form different cloth than he.

[quote=bankrep1]

You know Mike is a twat ....[/quote]

What little respect I had for you is gone...

[quote=BankFC]I didn't twist your logic...i quoted you WORD for WORD...

[/quote]

Not even close. You took logic about the historic performance of diverisfied portfolios over the long term and turned into gibberish about telling car buyers that they'd never have an accident.

[quote=BankFC]

 You portray as if the market is infallable and will always post positive returns. 

[/quote]

Diversified portfolios over the long term. Learn about the reality of the business you work in. This one's as dumb as your claim that the 65 yr old income earner's portfolio took a 30% dump.

[quote=BankFC]Mike, in all seriousness, how can you be comfortable basically guaranteeing to retirees that they're money will be safe no matter what??

[/quote]

Gee, sounds like you're NOW saying annuitizing is a great deal for the client, lol...

[quote=BankFC]

You're 2% extra you might make someone a year is not worth the risk of them taking some serious losses in the future and not being able to recoup.

[/quote]

How about detailing how these "serious losses" happen in diverisfied portfolios over the long term and how YOU can prevent it. This should be rich....

How about detailing how these “serious losses"

happen in diverisfied portfolios over the long term and

how YOU can prevent it. This should be rich…

Mike,



While you answer that question, answer this one

(another one you avoided). How would working at a

wirehouse (again) make me a better advisor for my

clients? It sure isn’t from a product standpoint, and

it isn’t from a asset gathering standpoint either. And

when you look at expenses and benefits, it really isn’t

from a payout standpoint either…



I could walk in to MS or ML tomorrow, and they would

GLADLY take me and my clients…does the fact that a

wirehouse prints the statements make a difference?



THIS should be rich…lol.

"I guess I'm just starting to second guess myself on the
whole "dream" of what this career can offer. I meet so
many folks lately that have made TONS of money so many
different ways, and I begin to wonder if this career is
worth the headaches. Any advice? "

Full post by BankFC here:

http://forums.registeredrep.com/forum_posts.asp?TID=1618&amp ;PN=1

Ok dude, not looking to start a flame war here, but I have to call you out on this one.  On one thread you're lecturing to Mike and I and others about how great annuities are, and how great it is to work at the bank.....how you could walk into any ML or SSB office and get hired on the spot. Then, on "What's up at Firms/Frustration", you post(quoted above) asking for advice from "veterans" (implying a lack of experience on your part) and questioning whether or not you can ever make significant comp in this business and still have some time off(implying you have not acheived such).

What gives?

I'll grant you sound pretty knowledgeable.  But, sometimes you only learn about the bad things that can happen with a product through experience.

What happens if the market continues to be tough and some of the VA carriers out there can't make good on their living benefit guarantees?  There are already rumors within the business of some carriers who were aggressive in marketing these early on being in that position.  From what I understand it is now extremely difficult to purchase reinsurance for these benefits now days.

Food for thought.

[quote=BankFC] [quote=mikebutler222]How about detailing how these "serious losses" happen in diverisfied portfolios over the long term and how YOU can prevent it. This should be rich....

[/quote]

ANSWER THIS 1 QUESTION: How do you know what the
market will do WHEN THE CLIENT NEEDS THE MONEY, not
"over the long term?"

[/quote]

You seem a little confused here (nothing new), but you do realize that as a client gets closer to being an income oriented investor from a growth oriented investor (nearing retirement) you change the asset allocation to one that’s more conservative, heavier in fixed income and dividend oriented equities, right? Also, you do realize a portfolio doesn’t “freeze” nor does its value the day a client retires, right? If the guy’s 60 when he retires, you can expect him to live (and therefore his investments need to grow) for another 20 years and his wife even longer? Right?

[quote=BankFC]

You are the type of schmuck who
loses his clients money, and takes no ownership or
blame. I take accounts from guys like you all the
time.

[/quote]

In your dreams, lobby boy, in your dreams.

[quote=BankFC]

Mike, I'll answer your question. I must say though you
really do show your ignorance. Owning an annuity does
not mean annuitizing.

[/quote]

Golly, really? You mean owning an annuity doesn’t mean you’re required to annuitize it? Wow, next thing you know you’ll be telling me that owning a stock isn’t the same thing as writing a covered call on it. You really are a market master, oh wise one…

[quote=BankFC]

Every annuity I use has a LIVING
BENEFIT that guarantees income WHILE THE MONEY IS
INVESTED.
[/quote]

I assume you’re talking about Hartford’s “Principle First” and “Principle First Preferred”, right, since Hartford doesn‘t call any of its benefits a “living benefit“? There is a “living benefit amount”, but that’s the amount paid under PF or PFP. Perhaps you mean the “Lifetime Builder” option I’ll discuss below.

[quote=BankFC]
Ex: I can invest a $500,000 rollover into the Hartford
Leaders VA, invest them in a diversified portfolio of
American Funds, Franklin Income, MFS Total Return,
etc...and GUARANTEE when they need income, they will be
able to have AT LEAST 5% a year with ANNUAL STEP UP
based on market gains THAT DO NOT GO BACK DOWN if
market contracts back. Guaranteed for life, regardless
of future market performace (or more importantly, lack
thereof).

[/quote]

“Guaranteed for life”, uh, no. Under PF and PFP all you’re granting them is a return of their principle at either 5% or 7% a year (depending on which PF or PFP you choose). There’s no guarantee for life, in fact the prospectus (here’s the link, http://www.hartfordinvestor.com/common/prospectus/individual _annuities/p_ldrs_hli.pdf , check page 26) says each withdrawal is treated as a partial surrender and is subtracted from the contract’s value.

[quote=BankFC]
For life w/ no annuitization and income cannot EVER
decrease.

[/quote]

Nope, again all you’re promising is the return of the principle invested until it runs out (back to your assumption of flat or sideways markets that you’re supposedly protecting people from) at the 5% or 7% pace.

Now, perhaps you’ve been talking about the “Lifetime Benefit Payment”, under the “Lifetime Income Builder“ (and irrevocable rider that must be selected at purchase, and you can‘t have it with PF or PFP. Page 39), once a contract owner hits 60. That does guarantee life payments of 5% of benefit value, but it ends at the owners death.

BTW, the “annuity commencement date”, ten years after the purchase or when the owner reached 90, whichever is later, makes annuitization mandatory (page 42). Is that a good deal for clients?

Here’s a few definitions from Hartford;

PRINCIPAL FIRST: An option that can be added at an additional charge where, if elected you may take withdrawals during the life of the Contract Owner that are guaranteed to equal your total Premium Payments as long as certain conditions are met. The guaranteed amount will be different if you elect this benefit after you purchase your Contract. This benefit is called the Guaranteed Income Benefit in your Contract.

Guarantee Living Benefit Amount
The Income Preferred product has a unique feature that protects the client’s premium payments from a volatile market. This feature is called the Guaranteed Living Benefit Rider. This benefit guarantees that the available withdrawals over the life of the contract will be no less than the amount of purchase payments, regardless of the contract value, as long as the contract remains in Living Benefit Status.

The Hartford's Principal First Benefit Amount
The Benefit Amount is the basis used to determine the maximum payout guaranteed under The Hartford's Principal First. The initial Benefit Amount is your Premium Payment(s). The Benefit Amount is reduced as we make payments. The Benefit Amount is referred to as the Guaranteed Remaining Balance in your Contract.

The Hartford's Principal First Preferred Benefit Amount
The Benefit Amount is the basis used to determine the maximum payout guaranteed under The Hartford's Principal First Preferred. The initial Benefit Amount is your Premium Payment(s). The Benefit Amount is reduced as we make payments. The Benefit Amount is referred to as the Guaranteed Remaining Balance in your Contract.

If I’ve missed something I’m confident you’ll let me know.

[quote=BankFC]Mike,

How would working at a wirehouse (again) make me a better advisor for my clients? It sure isn't from a product standpoint,...

[/quote]

I know that's what you claim, that doesn't make it true. As you admitted yourself we have tools for HNW people that you don't. What you didn't admit is that Trust/PB takes most every tool beyond them most basic away from you.

[quote=BankFC] and it isn't from a asset gathering standpoint either.

[/quote]

I'm not sure how "asset gathering" makes you better for your clients, but before you sound off about the assets you've "gathered" (been handed, is more like it) be honest enough to admit the assets that the bank wants to keep from you in the form of savings accounts and CDs and the assets that Trust/PB takes from you. On top of that consider the assets you'd be able to take with you if you were to leave. Bank brokers are notorious for being unable to move a sizable amount of what we generously call "their book'.

Then consider what can happen if your manager decides to take some or all of "your" branches from you (he sure doesn't consider them yours, nor doea he consider the book he gave you to handle yours) to give to a new hire.

[quote=BankFC]
when you look at expenses and benefits, it really isn't
from a payout standpoint either...

[/quote]

You said yourself your payout was lower oneverything but your beloved annuities (btw, didn't you say yourself it was a small part of your business?), and you've never made a good arguement that your benies were better.

[quote=BankFC]

I could walk in to MS or ML tomorrow, and they would
GLADLY take me and my clients...

[/quote]

They may hire you (over course had you not washed out you could have stayed there all along) and what small percentage of customers you can move. The vast majority of moves are, of course, the other way.

[quote=BankFC]

does the fact that a
wirehouse prints the statements make a difference?

[/quote]

? You mean does it matter that your bank uses a real brokerage to clear through matter? Well, it says a little bit about your podunk firm that they have to outsource that to a real brokerage....

[quote=mikebutler222]

[quote=BankFC]Mike,

How would working at a wirehouse (again) make me a better advisor for my clients? It sure isn't from a product standpoint,...

[/quote]

I know that's what you claim, that doesn't make it true. As you admitted yourself we have tools for HNW people that you don't. What you didn't admit is that Trust/PB takes most every tool beyond them most basic away from you.

Mikey, what i was referring to were very niche products that basically no one in my ML office used anyway aka "currency baskets" going long on the rubble and yen, short on the rupie, etc etc...not a demand for that where I am.  So from a product standpoint you don't have a leg to stand on.

[quote=BankFC] and it isn't from a asset gathering standpoint either.

[/quote]

I'm not sure how "asset gathering" makes you better for your clients, but before you sound off about the assets you've "gathered" (been handed, is more like it) be honest enough to admit the assets that the bank wants to keep from you in the form of savings accounts and CDs and the assets that Trust/PB takes from you. On top of that consider the assets you'd be able to take with you if you were to leave. Bank brokers are notorious for being unable to move a sizable amount of what we generously call "their book'.

Then consider what can happen if your manager decides to take some or all of "your" branches from you (he sure doesn't consider them yours, nor doea he consider the book he gave you to handle yours) to give to a new hire.

Mikey, again, you have NO IDEA what your talking about, and, as your friend, i must tell you it makes you look silly.    I don't work for a national or even a regional bank.  We are a 2 billion dollar bank with about 70 branches.  We have no Private Banking and Trust ONLY does trust work.  I am not going to repeat this again Mikey so pay attention!!!    No conflict of interest in my set-up.

I cover 10 branches, so if my manager were to split my territory that would be fine, I'm spread a little thin as it is.  But I made my goals at ML with NO BRANCHES, so I'm not concerned.

[quote=BankFC]
when you look at expenses and benefits, it really isn't
from a payout standpoint either...

[/quote]

You said yourself your payout was lower oneverything but your beloved annuities (btw, didn't you say yourself it was a small part of your business?), and you've never made a good arguement that your benies were better.

I make about 35% payout on avg (can go up to 40%)...my friends at ML and UBS aren't much higher at all.  Plus the bank gives me better bene's than you get I am sure.  Paid mileage (currently 44.5 cents per mile), pay ENTIRE health ins premium, 6% into 401K whether I put in or not, cell phone, laptop, expense account...

Mikey, tell me what wire you work for that has better benefits?????

[quote=BankFC]

I could walk in to MS or ML tomorrow, and they would
GLADLY take me and my clients...

[/quote]

They may hire you (over course had you not washed out you could have stayed there all along) and what small percentage of customers you can move. The vast majority of moves are, of course, the other way.

Mikey, I didn't wash out.  I was ahead of pace.  I left for a better and easier road.  I didn't like calling at night (I did it anyway).  I didn't like the constant chasing around people who weren't really serious anyway.  The bank is much better for gathering assets. 

[quote=BankFC]

does the fact that a
wirehouse prints the statements make a difference?

[/quote]

? You mean does it matter that your bank uses a real brokerage to clear through matter? Well, it says a little bit about your podunk firm that they have to outsource that to a real brokerage....

You think Pershing is a podunk firm?  Do you know ANYTHING???

Joe,

To answer your question, I am 5 years in the industry, 4 years as an FA...but that includes a move to a new state a year and a half ago and a change of firms from ML to the bank.

To answer your question:

The obvious answer in your senario (being invested as a retiree in a down market) is, portfolios being equal, I would want to be IN a VA...wouldn't you?  Even if there is only a CHANCE that the insurance company would pony up on the living benefits, isn't that better than no chance at all???

Joe,

I should add the the above post.

Unlike Mikey, I don't claim to have a crystal ball.  Even though I think it is HIGHLY unlikely the ins companies (like Hartford and JH and ING) would default on their guarantees...but for arguments sake I will say it is possible (as possible as Mikey having a social life, so not very). 

All else equal (we are debating the merits of the VA bene, so lets say the portfolios are virtually the same), in a down market, as a retiree which would you want?  A CHANCE at a guarantee or no chance? 

Not to mention, in the WORST CASE senario, the client could annuitize for a period certain or whatever if the market was THAT BAD.

You seem much more level headed than Mikey, so I welcome your response.

[quote=BankFC]Mikey, what i was referring to were very niche products that basically no one in my ML office used anyway…..<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

[/quote]

You can keep saying that, but it doesn’t make it so.

QUOTE=BankFC] I don't work for a national or even a regional bank.  We are a 2 billion dollar bank with about 70 branches.  We have no Private Banking and Trust ONLY does trust work.  I am not going to repeat this again Mikey so pay attention!!!  <?:namespace prefix = v ns = "urn:schemas-microsoft-com:vml" />  No conflict of interest in my set-up.

[/quote]

Sure, at your mystery bank life’s perfect…. and of course you can invent life there any way you like, since no one can check on business at your mystery bank.

[quote=BankFC]I cover 10 branches, so if my manager were to split my territory that would be fine, I'm spread a little thin as it is. 

[/quote]

Hey, why not? I mean, if you’re going to create a mystery bank that’s a fantasy world, why not tailor it to perfection?

[quote=BankFC]

But I made my goals at ML with NO BRANCHES, so I'm not concerned.

[/quote]

Sure you did. Plenty of successful wirehouse guys jump all the time for the higher payout and the prestige of the bank lobby.

[quote=BankFC]I make about 35% payout on avg (can go up to 40%)...my friends at ML and UBS aren't much higher at all. 

[/quote]

Wow, your friends at ML and UBS sure are small producers if that’s their payout…

[quote=BankFC] Plus the bank gives me better bene's than you get I am sure.  Paid mileage (currently 44.5 cents per mile), pay ENTIRE health ins premium, 6% into 401K whether I put in or not, cell phone, laptop, expense account...

Mikey, tell me what wire you work for that has better benefits?????

[/quote]

Your benies don’t sound impressive, and it would seem you don’t have profit sharing.  BTW,  the major wirehouses have much the same bennie programs, you don't need a specific name. It is funny, however, that you would ask ME for a name but your mystery bank goes unnamed...

[quote=BankFC]
Mikey, I didn't wash out.  I was ahead of pace. 

[/quote]

Sure you were 

[quote=BankFC]

You think Pershing is a podunk firm?  Do you know ANYTHING???

[/quote]

That reading comprehension thing of your may be part of why you washed out at ML. I didn’t call Pershing Podunk, I called YOUR firm Podunk as it has to outsource such a basic business responsibilityl…

LOLOL

Securities clearing is basic???  That's why even really large banks like SunTrust (National Financial) are podunk too.  LOL.

Mike, I'm glad you know EVERYTHING in the world.  What a joke you are.

Mike, what firm do you work for?  By the way, you asked first...

Mike, I can't say anymore.  You do plenty for me.  You are an idiot.

[quote=BankFC]

LOLOL

Securities clearing is basic???  That's why even really large banks like SunTrust (National Financial) are podunk too.  LOL.

[/quote]

Yep, clearing is basic for a firm that claims to be a brokerage. So is printing your own statements. And yes, SunTrust is podunk.

[quote=BankFC]Mike, I'm glad you know EVERYTHING in the world. 

[/quote]

Everything? Nope. More than you? Why, obviously. 

[quote=BankFC]

Mike, what firm do you work for?  By the way, you asked first...

[/quote]

This is pretty old territory here, pal. Since the majors ML, MS, UBS, SB are all fairly interchangable you don't need a specific name. OTOH, you keep hiding behind your mystery bank so that you can make up the working conditions as you go along.

[quote=BankFC]

Mike, I can't say anymore.  You do plenty for me.  You are an idiot.

[/quote]

I see, so since you can explain your errors about the Hartford annuity you brought up, you just want to run away. That's fine. Enjoy the bank lobby...

No errors.  Go back and see.  I just didn't quote the prospectus like an anal rentitive codger with nothing else to do all day.

Enjoy that creamy can of Ensure for lunch.  Funny how you never did say who you work for...are you paranoid or lying?

Fact is, I don't care.  You should go home for the day.  Your wife is probably in the bed banging that young bank broker that pushes annuities all day...lol.

[quote=BankFC]

No errors.  Go back and see.  I just didn't quote the prospectus ....[/quote]

You might want to learn to, since you so inaccurately explained the "living benefit" you talked about. A simple return of principle isn't 5% income for life, much less without annuitization.

[quote=BankFC]

Joe,

I should add the the above post.

Unlike Mikey, I don't claim to have a crystal ball.  Even though I think it is HIGHLY unlikely the ins companies (like Hartford and JH and ING) would default on their guarantees...but for arguments sake I will say it is possible (as possible as Mikey having a social life, so not very). 

All else equal (we are debating the merits of the VA bene, so lets say the portfolios are virtually the same), in a down market, as a retiree which would you want?  A CHANCE at a guarantee or no chance? 

Not to mention, in the WORST CASE senario, the client could annuitize for a period certain or whatever if the market was THAT BAD.

You seem much more level headed than Mikey, so I welcome your response.

[/quote]

Thanks for the compliment.

The geographic change and firm change can make it tough to keep growing.  Trust me I know from first hand recent experience.

FWIW, if the market gets THAT BAD they client may not be able to annuitize if the insurance carrier isn't able to make good on their claims.  Eventually the state insurance commsisionsers would likely engineer a sale of the book of business to another carrier, but who knows what that would do to the product features.

I've not heard anything about the carriers you mentioned, but I've heard rumors about others being in pretty bad shape.  I've also been told that VA carriers can't really reinsure their living benefits anymore.

Back to work...

I don't think you need to bring in wives and mothers to make a point or to trash someone.

I was referring to the Lifetime Benefit Payment you moron.  I figured a advisor of your stature would be able to infer that without my holding your hand...

5% at age 60 (with annual step based on performance) until contract owner dies...cannot go down.  EXACTLY what i said.

moron

[quote=BankFC]

I was referring to the Lifetime Benefit Payment you moron.  I figured a advisor of your stature would be able to infer that without my holding your hand...

5% at age 60 (with annual step based on performance) until contract owner dies...cannot go down.  EXACTLY what i said.

moron

[/quote]

No, that's not "exactly"

 what you said;

Ex: I can invest a $500,000 rollover into the Hartford
Leaders VA, invest them in a diversified portfolio of
American Funds, Franklin Income, MFS Total Return,
etc...and GUARANTEE when they need income, they will be
able to have AT LEAST 5% a year with ANNUAL STEP UP
based on market gains THAT DO NOT GO BACK DOWN if
market contracts back. Guaranteed for life, regardless
of future market performace (or more importantly, lack
thereof).

For life w/ no annuitization and income cannot EVER
decrease. Plus I can invest slightly more aggressively
(still within risk tolerance) because they have
PROTECTION.

The Income Builder is broken into two payment types, the first is  "benefit payment" which is just another "return of principle" guarantee at 5% per year (btw, just what’s the big deal amount promising to return principle at the rate of 5% a year? Can you name a time when a regular, balanced portfolio couldn’t have provided full return of principle if you only took it back at 5% a year?) which is NOT “5% income for life”, as the withdrawals count as deductions to the contract value.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

The second type of payment is the “Lifetime Benefit Payment” (only after the owner is over 60) which is nothing more than  annuitization at 5%.

BTW, the selection of "Income Builder" has to be made at the time of purchase, you can't select with it the PF or PFP options AND it's irrevocable.

"I've not heard anything about the carriers you mentioned, but I've heard rumors about others being in pretty bad shape."

Hi Joe, lets hear some names.

[quote=skeedaddy2]

I don't think you need to bring in wives and mothers to make a point or to trash someone.

[/quote]

Agreed.

Speaking of wives, though, did you know that Zacko bought his wife a boob job last year?  That was a topic of ongoing discussion on one of the jones threads for a while.  He never posted a picture for us, though.

[quote=Mike Damone]

"I've not heard anything about the carriers you mentioned, but I've heard rumors about others being in pretty bad shape."

Hi Joe, lets hear some names.

[/quote]

I prefer not to spread rumors.  PM me if you really want a name.

Man,

y'all are bulldogs, especially mike.  It get's jucy around here.  Where's my popcorn?

Bank broker, wirehouse broker, whatever.  Ultimately the way things are going we're all going to be bank brokers some day!  Just ask Paine Webber, Pru, Smith Barney, Shearson, Everen, etc., etc. -- you can call all of them bank brokers now because of the UBS', Wachovia's, & Citigroups of the world.

Seriously (although the above is sadly a bit serious), as someone pointed out, the bank brokerage business has changed substantially over the years.  Yes, there are still a lot of the series 6 "platform" reps in some bank programs selling MFs & VAs to bank customers with maturing CDs.  But, there now are many bank programs that have very impressive full-service brokerage capabilities and approaches to doing business little different (if at all) from the wirehouses.  So, I'd be careful about how we might pigeonhole someone just because they're working within a bank structure.

[quote=Duke#1]

 Yes, there are still a lot of the series 6 "platform" reps in some bank programs selling MFs & VAs to bank customers with maturing CDs.  But, there now are many bank programs that have very impressive full-service brokerage capabilities and approaches to doing business little different (if at all) from the wirehouses.  So, I'd be careful about how we might pigeonhole someone just because they're working within a bank structure.

[/quote]

Mikebuttler will never believe you. 

Mike Damone is right...don't even waste your time (I wasted too much today, but it still was a good day) if he refutes you...he'll either say your wrong or say you're lying. 

I don't know about that guy...he says he works for a wire, but he doesn't say which one, which lead me to believe he's the one lying.

[quote=BankFC]

he says he works for a wire, but he doesn't say which one

[/quote]

Are you guys blind?  You don't recognize that old gasbag stanwbrown in his new wig and glasses. 

[quote=jonesnewbie] [quote=BankFC]

he says he works for a wire, but he doesn’t say which one

[/quote]

Are you guys blind? You don’t recognize that old gasbag stanwbrown in his new wig and glasses.

[quote=Ron Jeremy] [quote=jonesnewbie] [quote=BankFC]

he says he works for a wire, but he doesn’t say which one

[/quote]

Are you guys blind? You don’t recognize that old gasbag stanwbrown in

his new wig and glasses.

The one and only - nice work Ron, as usual.