Chris Hansen from Dateline on this forum
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That’s exactly the response I expected…I had a feeling she would be very hesitant to take any legal action against a fellow church member, even if she felt she was wronged. Eventually, he’ll be held accountable whether she initiates it or not.
One thing I AM a believer in is karma. Call it what you want, but eventually, I believe we all get what we deserve…
Indy,
If you say your EIA is on the up-and-up, then I believe you. And yes, I am referring to those who sell, among others, the MasterDex 10.[quote=scrim67]My firm bans us from selling EIA’s. That speaks volumes IMHO.[/quote]
I understand your point, scrim, but I’m not sure I would put that much emphasis on what your firm bans. That tells you at least as much about the firm as it does the product or service banned.
For example, most of the wires or large non-indy B/Ds also prohibit reps (not their inhouse RIA, but you as the rep) from producing a comprehensive financial plan or having discretion over a client’s portfolio. Scary stuff, that.
Many B/D’s ban EIA sales. It’s a business decision as opposed to a “EIAs are bad” decision. In some cases, the sale of EIAs will mean lost revenue for the B/D while still having responsibility for oversite. We also can’t escape the fact that many of these products are ripe for abuse which make them a headache that the B/D simply doesn’t want.
EIA's, in general, aren't the problem. The way that they get sold is often a problem. The insurance companies are very guilty for allowing the unsuitable sales of these products. Even if my B/D allowed the sale, I couldn't imagine selling one except in rare situations. I say that because it is rare that I sell a fixed annuity, but an EIA is certainly an acceptable substitute for a traditional fixed annuity in some cases.There is a point here that is being missed. That is, this is yellow journalism.
OK, you're all happy because the product targeted is something most of you don't like. That doesn't change the fact that this was a typical Dateline hatch job. Anyone here old enough to remember the exploding pickup truck debacle? For those who aren't, Dateline producers heard about a problem with GM pickup trucks. These were GMC and Chevy full size trucks. Seems that when the trucks were hit broadside the gas tanks would rupture causing a catastrophic explosion and fire. For dramatic effect they tested a GM pickup by ramming a car into it broadside and the sure enough, big fireball! Well, GM objected. They sued claiming the test was rigged. NBC, at first, stood by the story. Turns out though, the truck in the segment was rigged to explode and that's what they showed. What they didn't show or disclose until forced to was the several attempts to get a non rigged truck to explode. You would think that after ramming several trucks directly in the fuel tanks and not getting a fire that Dateline would have moved on. But instead, que the special effects guy. The resulting Hollywood magic cost NBC millions, the producers their jobs, and Dateline any trace of credibility. Now the Catch a Predator series has run into problems. Turns out the evidence chains have come into question. As viewers, we have to trust that the the transcripts of the online conversations are what Dateline says they are. If they would rig a truck to explode, how hard would it be to alter a transcript? Ethically, they are are as scummy as the people they purport to expose. The general public will not make a distintion between you, the honest financial advisor and the guys this segment showed. The final question posed in the segment advised not to buy equity indexed annuities. Regardless of your opinion of the product, the product didn't rip these people off, the agents did.Scrim, the reason your program bans EIAs is because your program managers are too lazy to investigate to see if there are acceptable EIAs and too lazy to do the necessary oversight for a product that they don’t want to learn. Edward Jones doesn’t do options. Does that mean options trading is never appropriate? The more I hear about your program management, the more I am led to believe that they are unnecessarily hamstringing you and doing a very poor job of supporting your efforts to service your clients. Isn’t your program the same one that requires a ridiculous amount of justification for annuity sales over a certain dollar amount? You may agree with this and be comfortable with the policies in place today, but I wouldn’t be surprised at some point that you come to the realization that management isn’t protecting your clients. Management is protecting their own butts because they are too lazy to do the appropriate oversight and due diligence and would rather treat you all as rookies who should just sell mutual funds. When you come to that conclusion, you’ll resent it and want out.
BG...I do remember that deal...thanks for the reminder. Didn't they end up using dynamite for the special effects? While I agree there are some real sleazeballs that deserve to be exposed, It's a real shame that NBC feels it necessary to tar an entire industry. Anytime I see blanket statements like "you shouldnt' buy an EIA", my first assumption is that there's probably another side to the story. If EIAs were as bad as these folks think, they'd be outlawed by now.[quote=BondGuy]There is a point here that is being missed. That is, this is yellow journalism.
OK, you're all happy because the product targeted is something most of you don't like. That doesn't change the fact that this was a typical Dateline hatch job. Anyone here old enough to remember the exploding pickup truck debacle? For those who aren't, Dateline producers heard about a problem with GM pickup trucks. These were GMC and Chevy full size trucks. Seems that when the trucks were hit broadside the gas tanks would rupture causing a catastrophic explosion and fire. For dramatic effect they tested a GM pickup by ramming a car into it broadside and the sure enough, big fireball! Well, GM objected. They sued claiming the test was rigged. NBC, at first, stood by the story. Turns out though, the truck in the segment was rigged to explode and that's what they showed. What they didn't show or disclose until forced to was the several attempts to get a non rigged truck to explode. You would think that after ramming several trucks directly in the fuel tanks and not getting a fire that Dateline would have moved on. But instead, que the special effects guy. The resulting Hollywood magic cost NBC millions, the producers their jobs, and Dateline any trace of credibility. Now the Catch a Predator series has run into problems. Turns out the evidence chains have come into question. As viewers, we have to trust that the the transcripts of the online conversations are what Dateline says they are. If they would rig a truck to explode, how hard would it be to alter a transcript? Ethically, they are are as scummy as the people they purport to expose. The general public will not make a distintion between you, the honest financial advisor and the guys this segment showed. The final question posed in the segment advised not to buy equity indexed annuities. Regardless of your opinion of the product, the product didn't rip these people off, the agents did.[/quote]Superbly said, BondGuy.
Indy, you say that EIA’s basically give you chance to make a little more or less than a fixed annuity. What’s really the point then? Is it really worth the trouble for you and your clients?
Separate question. Don't you think that small of an advantage is really not that huge of a deal and that the world would OVERALL be a better place if they were outlawed altogether? If Insurance co's and the gov aren't going to fix the problems why not just get rid of em. It would save a lot of problems.[quote=Dark Knight]Indy, you say that EIA’s basically give you chance to make a little more or less than a fixed annuity. What’s really the point then? Is it really worth the trouble for you and your clients? [/quote]
Yeah, why let people have the option of choosing one particular investment vehicle when they could get by with something else? Come to think of it, is it really worth the trouble to have so many mutual funds when so many of them are basically the same? What’s the point with all these choices?
[quote=Dark Knight]Don't you think that small of an advantage is really not that huge of a deal and that the world would OVERALL be a better place if they were outlawed altogether? If Insurance co's and the gov aren't going to fix the problems why not just get rid of em. It would save a lot of problems.[/quote]
Amen, comrade!! If Big Brother decides something isn't a huge advantage compared to something else, wouldn't we be better off to simply forbid it all together? It would save a lot of problems. Free markets and personal freedom can be so messy.
After that, I'd like to go after colors next. Let's face it - we have way too many colors than are necessary. Aqua and sky blue, for instance - who really needs both of them? And what the heck IS chartreuse, anyway? Sounds kinda shady, if you ask me. What would it hurt to outlaw a few of these shades?
[quote=Dark Knight]Indy, you say that EIA’s basically give you chance to make a little more or less than a fixed annuity. What’s really the point then? Is it really worth the trouble for you and your clients?
Separate question. Don't you think that small of an advantage is really not that huge of a deal and that the world would OVERALL be a better place if they were outlawed altogether? If Insurance co's and the gov aren't going to fix the problems why not just get rid of em. It would save a lot of problems.[/quote] That depends on when you're looking. When CD and FA rates are crap, I use EIAs. At the moment, FA rates are increasing to the point where your argument makes some sense, but that's not always true. When 5-year CDs and FAs are 3.5% and less, an EIA looks pretty attractive as an alternative. If the regulators want to outlaw the Allianz MasterDex 10, that's just fine by me, but to outlaw EIAs as a class takes a tool out of my toolbox when rates are low and/or when I want to diversify a very risk-adverse client.Morphius - I understand and agree with your point it is valid. Capitalism rules. My question though was really more of a theoretical question. Wouldn’t in fact more people benefit than those that would “suffer” if EIA’s didn’t exist. Note I mentioned IF the gov and market aren’t going to fix the problems that exist. That would of course be the better solution.
My real hope is just that they can control this problem a lot better than they currently do. Indy - good point on the rate situation, makes sense.[quote=Dark Knight]Morphius - I understand and agree with your point it is valid. Capitalism rules. My question though was really more of a theoretical question. Wouldn’t in fact more people benefit than those that would “suffer” if EIA’s didn’t exist. Note I mentioned IF the gov and market aren’t going to fix the problems that exist. That would of course be the better solution.
My real hope is just that they can control this problem a lot better than they currently do. Indy - good point on the rate situation, makes sense. [/quote] Some people have their money in CDs where the real rate of return is potentially negative. They run the risk of running out of money. Should CD's be banned? Something like 6% of term policies pay off, should those be banned, since 94% don't pay off? Knives are good to cut food with, but some people use them to stab others. Should they be banned? These might be a stretch, but it's not the CD's, Term LI, knives, or EIA's. By getting rid of a product that can help somebody, to avoid someone suffering from it doesn't make sense. That's because it's not the EIA, it's the insurance agent. Ultimately the consumer needs to know what they are buying. How many pieces of literature do you give a prospect/client? How many of them actually open it? It's not your fault they don't. They should be opening it, reading the fine print, looking at the prospectus. In a perfect world, the client should be able to trust the person selling the product. But we know it's not a perfect world. For the record, I have not sold any EIA's. But it's not because I think the product is a rip off. There hasn't been a situation yet that I have had to use it. The clients I focus on are not in that market. But if I came across someone who wanted that guarantee and needed better return than a CD or money market, it might make sense. I'm with Indy on this...the surrender period is important and I couldn't see locking away money for 10+ years to benefit too many folks.I’ll add for clarification, that I can count the EIAs I’ve used on one hand. At the same time, one of them I sold was to an aunt who is extremely risk-adverse. It made sense as other alternatives five years or less were running 3% at the time. Thus far, she’s averaging about twice that.
“That’s because it’s not the EIA, it’s the insurance agent.”
In many instances, it is also the EIA. The insurance companies need to share in the blame. There is absolutely no reason why they should approve the sale of an EIA with a 15 year surrender charge that doesn't get waived at death to a 73 year old looking to leave an inheritance.