200k New Money
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I suspect no matter when or what or why you will always have a reason to not use a VA. Nothing wrong with that. Your clients. I just don't think categorically excluding any product is good practice.
You simply can not create the same animal like many profess they can via some sort of derivative or other product combination.
In the mean time my model is pretty much market neutral. I sure do wish I could put it into a VA contract. I've been waiting years for a firm to come out with a VA contract that acts like a wrap account and lets you trade in it as you see fit. Even called several actuaries to have them consider it and never got an answer.[quote=Ron 14]
The reason VA's are out there and the reason all of these bells and whistles "look" so good is because THE VA COMPANY WILL BENEFIT IN A BIG WAY. I choose to keep those benefits in the pockets of my clients. Again, no reason to insure a house that has already burned to the ground.
[/quote] Why don't you ask your clients what THEY want since it's THEIR money. Using your simple-minded theory of "insuring a house that has already burned to the ground", you obviously would not have bought today's VA's in 2003. Well, had you done so, from 2003 to the peak in 2007, your clients may have locked in their income base at some 75%+- higher than their initial investment. Then, when the market blew up AGAIN, they would have done 7% on top of that in 2008. But, because you so diligently chose, on your clients' behalf to not show them VA's because it was "like paying a cover charge 30 mins before the bar closes", your clients could easily be back at their same levels as 2003 or lower. In my opinion, your problem is that you see things in black and white, like a textbook. This is real-life man. The market goes up and it crashes eventually. This is not the last time the market will crash. You have the chance to allow your clients to lock in their values as the market goes back up and allow them to maximize income from the highest point, because the market WILL recover and it WILL f'ing blow up again.[quote=Ron 14]
The reason VA's are out there and the reason all of these bells and whistles "look" so good is because THE VA COMPANY WILL BENEFIT IN A BIG WAY. I choose to keep those benefits in the pockets of my clients. Again, no reason to insure a house that has already burned to the ground.
[/quote] An interesting analogy. Very cute. Also very wrong. Do you not insure the new house you build just because the chances of it burning down twice are slim? Of course the insurance company benefits - why the hell do they take anybody's money ever? To make a profit for themselves? The same can be said for any company that manufactures any financial product. Why not give your client the choice of taking the insurance or not taking it? Lord knows you don't know what the future holds. Some may buy the extra insurance for the peace of mind it provides. Some may decline it and take on the risk themselves. I mean, it's their money, let them have a say in how it gets utilized.I also hate VAs but conceede snaggs point(with less douche and retard comments)… However the reason I hate VAs is the majority of my clients can live on their pensions(if we can’t lump sum) and SS. So the money they had in their 401k is bonus…
However for some clients if they only have $500K and SS and need $30K a year off of that, I like the VAs for the income rider... in this case good luck taking a 6% income stream off a regular portfolio.. My only concern is moving forward if VA companies start decreasing income riders(say down to 4% then I will have to see if it justifies the extra fees) but as of right now they are ok with me.Annuity accounts are insured up to $100K by state.. So yeah they kind of can...No it can’t. And there is no guarantee that the insurance company will be around in 10 years to guarantee the annual payments for life.
[quote=Spaceman Spiff][quote=deekay][quote=HymanRoth]
[/quote]Good call snags. Meanwhile just about all of the EIA's you sold in the last 2 weeks are already capped out. See you at Dow 10k.
[/quote] You realize lots of people buy EIAs as an alternative to other conservative investments and to NOT be exposed to market risk, right?[/quote] No, they don't. They buy them because some guy tells them that they can't lose anything in them, but yet can participate in the upside of the market. The only people I've ever seen buy an EIA are gullible people who probably shouldn't be investing in anything other than CDs or Fixed annuities. They never read the fine print. If they did, they'd figure out quickly that their "can't lose" strategy has just cost them a ton. I just reviewed one for a client's husband last week. He's been buying a new one every year for the last 4 years. I asked him what he's going to do for income when he retires in 10 years. At that point there's going to be a 22% surrender penalty on 60% of his money. He won't have any money that's not under some kind of surrender penalty. I ran this little scenario for him: Let's say he has to get to his money in 7 years because he lost his job and he has bills to pay. His annuity today is worth $10,000. 22% surrender, 10% penalty, and (since he doesn't have a job) 15% taxes for fed and state combined. His $10K just turned into $5300. In a fixed annuity he would have paid probably at most a 5% surrender. In a VA, 7% max. So, sure, you don't lose any principle, but man does it hurt to have to hit that money in an emergency. This guy's EIA also orce annuitization if he wants to withdraw. All because he wants to be in the market, but doesn't have the balls to ride it out when things get tough. [/quote] Yeah but most of them say you can take 10% out each year, so there would be no reason to liquidate it all and pay surrender fees. I think these are ok for a portion(small) of the money, if you are looking to mimic an absolute return fund that instituions like yale and harvard use. I think these get used wrong by people who throw 100% in with no regard. Also in a side note, easy to bash what you can't sell(EDJ)..
Thanks for the commentary. I never said that I wouldn’t use VA’s and I never said that there weren’t situations in which they make sense. What I am saying is with the market as low as it is why would someone pay 3% in fees to insure their fears and to guarantee themselves the ability to take 5% of their own money out on an annual basis?
[quote=Gaddock]
I suspect no matter when or what or why you will always have a reason to not use a VA. Nothing wrong with that. Your clients. I just don't think categorically excluding any product is good practice.
[/quote] This is great advice. I can point out 15 things that are wrong about 401ks, yet almost everyone in our industry recommend clients put some of their money in them. There are no inheritently good or bad products, but they can be utilized improperly - even the holy grail of retirement planning, the qualified retirement plan.Some will. Some won't. So what? NEXT!Thanks for the commentary. I never said that I wouldn’t use VA’s and I never said that there weren’t situations in which they make sense. What I am saying is with the market as low as it is why would someone pay 3% in fees to insure their fears and to guarantee themselves the ability to take 5% of their own money out on an annual basis?
What do you do instead?Thanks for the commentary. I never said that I wouldn’t use VA’s and I never said that there weren’t situations in which they make sense. What I am saying is with the market as low as it is why would someone pay 3% in fees to insure their fears and to guarantee themselves the ability to take 5% of their own money out on an annual basis?
Hell, Capital Income Builder is paying basically the same dividend at Dow 12k as it is now. You can get that for 1%/yr. Whats the use of the extra fees and the insurance and the step up and all the bells and whistles when you income check is the same even though your account value is down ?
You can't get CAIB for1%/yr though... Secondly, current yield on CAIBX is probably around 5%.. But if the companies they are holding start decreasing their dividend(not out of the question) then the yield will drop. Lots of exposure here too. I don't doubt the fund(although i don't use it).Hell, Capital Income Builder is paying basically the same dividend at Dow 12k as it is now. You can get that for 1%/yr. Whats the use of the extra fees and the insurance and the step up and all the bells and whistles when you income check is the same even though your account value is down ?
Wow. What a great strategy. Where did you learn that...the Mutual Fund Store?Hell, Capital Income Builder is paying basically the same dividend at Dow 12k as it is now. You can get that for 1%/yr. Whats the use of the extra fees and the insurance and the step up and all the bells and whistles when you income check is the same even though your account value is down ?
Next … what would you say to an arbitrage model that has no risk beyond the company paying a special dividend? The best case scenario you get 40% worst case you get 12% (numbers from the last one I did).
In one month Annualize that! I just coded my software to search them out. They come and go fast. Think these trades are good for a few referrals? If you thought yes you're correct.Human nature is weird. Everybody wants to jump in and slam each other about not making money in a quick barrage of posts but not respond to a post about making a lot of money with a 90% + chance of a complete success regardless of the direction and volatility of the market.
If you did the exact opposite on every trade you've made how would you have done? Doesn't that suck? he he he. Me too until I got my head around the concept. Ron 14 asked me why not just trade my own account. The same reason a Dr. doesn't treat himself and or attorneys will tell you those that represent themselves have fools for clients.Come on guys, get real.
Here’s the problem: After 2008 we are ALL looking for the silver bullet (at least most people are). We are looking for things that would make our business/practice better. We are looking at DIFFERENT solutions for people (again, most of us).
Here’s the reality. As much as most of us would like to change, our business has become so unwieldy, that change happens slowly (even if you don’t have a huge practice, it still takes time!). Have you tried teaching the 30 year mutual fund vets about annuities? Have you tried teaching clients about annuities? It’s the same thing. These things are detailed, and difficult to understand at times. Change is difficult.
(This also applies to the majority of us who did not grow up in the trading pits with options–Gaddock, you can talk to us as much as you like about making BIG money, but at some point you have to realize that we–I--are in different positions, have different client bases, have different practice needs. We can’t just jump ship and change the entire direction of our business model overnight, or even over the course of a month).
So seriously, the name calling, finger pointing, e-peen measuring is totally un-needed. I come here to listen and participate in discussions about what others are doing. If someone doesn’t agree with you, let’s hear it (there have been some great posts lately, even this one has a lot of good in it); leave the retard/stupid/asshole/d***s on MySpace.
[quote=Gaddock]Next … what would you say to an arbitrage model that has no risk beyond the company paying a special dividend? The best case scenario you get 40% worst case you get 12% (numbers from the last one I did).
In one month Annualize that! I just coded my software to search them out. They come and go fast. Think these trades are good for a few referrals? If you thought yes you're correct.[/quote] I stand opposed to VA's at this market level and people are all over me. This guy throws this junk in a post and nobody says anything. Unbelievable. And comical.[quote=Ron 14][quote=Gaddock]Next … what would you say to an arbitrage model that has no risk beyond the company paying a special dividend? The best case scenario you get 40% worst case you get 12% (numbers from the last one I did).
In one month Annualize that! I just coded my software to search them out. They come and go fast. Think these trades are good for a few referrals? If you thought yes you're correct.[/quote] I stand opposed to VA's at this market level and people are all over me. This guy throws this junk in a post and nobody says anything. Unbelievable. And comical. [/quote] What's sad and comical is I was ready to tell you exactly how to do it step by step with explanations of the quantifiable risk and why and this is your response LOL People are strange. poor bastard. Me, I would have been drooling over such a post and be a willing participant in learning everything about it I could.[quote=Ron 14]
I stand opposed to VA's at this market level and people are all over me. This guy throws this junk in a post and nobody says anything. Unbelievable. And comical. [/quote] It's cleaned up...sorry. I was a little agitated in that moment in time.Gaddock was going to solve all of our problems and teach us how to lead our clients to wealth through trading with no risk and I opened my mouth and blew it for everyone. I apologize.