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Jul 15, 2008 9:41 pm
Borker Boy:

[quote=snaggletooth][quote=pratoman] I had a client come to me with an annuity that would pay him 6% for the rest of his life. He didnt understand that if the market went down some ridiculous amount and his 500k became 100k, while he would collect the 6% for life, his principal would never be recovered. When I explained it to him he was out of his mind.

  This is the exact situation that he is buying that guarantee.  If his account went from 500k to 100k in mutual funds or stocks, he'd be SOL.  If he was in an annuity, the 6% a year for the rest of his life from the 500k would be significantly more valuable than the 100k in pricipal.  Significantly.   Prato- Did you really sell him out of one of the biggest features in his VA?  What did you tell him, that if the account went from 500k to 100k, that instead of 30,000 per year, he could take 4,000 from his remaining principal?  Wouldn't he flip out at that?[/quote]     Neither annuities nor mutual funds are short term investments. I'll put any mutual fund I use against any annuity in the universe over a 7-10 year period, and the mutual fund will blow the doors off your high cost, high commission, low return annuity.   That, I'll GUARANTEE.[/quote]   I think you might be right about net returns, but that's not the point.  Some people want a written guarantee that they will have retirement income for life regardless of market performance and are willing to pay for that peace of mind.    Can you promise someone that they can withdrawal 5% for life from their mutual fund portfolio?  Of course not, but an insurance company can.  An annuity is simply a risk management tool.        
Jul 15, 2008 9:44 pm
Borker Boy:

[quote=snaggletooth][quote=pratoman] I had a client come to me with an annuity that would pay him 6% for the rest of his life. He didnt understand that if the market went down some ridiculous amount and his 500k became 100k, while he would collect the 6% for life, his principal would never be recovered. When I explained it to him he was out of his mind.

  This is the exact situation that he is buying that guarantee.  If his account went from 500k to 100k in mutual funds or stocks, he'd be SOL.  If he was in an annuity, the 6% a year for the rest of his life from the 500k would be significantly more valuable than the 100k in pricipal.  Significantly.   Prato- Did you really sell him out of one of the biggest features in his VA?  What did you tell him, that if the account went from 500k to 100k, that instead of 30,000 per year, he could take 4,000 from his remaining principal?  Wouldn't he flip out at that?[/quote]   I'm sick to death of these flippin' fictitious, undocumented "scenarios" that annuity salesman tirelessly perpetuate. What if your 500K in mutual funds went to 100K...blah, blah, blah. Do any of you annuity turds realize that's an 80% decline in the value of your investments?!?! Are you smoking crack?   Neither annuities nor mutual funds are short term investments. I'll put any mutual fund I use against any annuity in the universe over a 7-10 year period, and the mutual fund will blow the doors off your high cost, high commission, low return annuity.   That, I'll GUARANTEE.[/quote]

Here's a documented scenario for you. I find prospect. I find that prospect owns MF's, stocks, etc..., outside of annuity. I show prospect how he can still own "mutual funds", but his worst case scenario is that he will receive a lifetime income of 9.8% of his initial investment and the best case is probably going to be quite bit better than that. Client says that's what he wants this. I steal the account and the annuity company pays my b/d 7.5% of the premium. B/D turns around and pays me 90% of that. I take that money and buy lots of cool stuff. Old broker gets to look for a new client.
Jul 15, 2008 9:48 pm

You’re right, Bobby. Once they’re in an annuity, it’s nearly impossible to “steal” them from their insurance agent. The costs are far too high.

Jul 15, 2008 9:53 pm
Borker Boy:

I’m sick to death of these flippin’ fictitious, undocumented “scenarios” that annuity salesman tirelessly perpetuate. What if your 500K in mutual funds went to 100K…blah, blah, blah.

  No annuity salesman perpetuated that comment at all...Prato did.
Jul 15, 2008 9:54 pm

[quote=Borker Boy]You’re right, Bobby. Once they’re in an annuity, it’s nearly impossible to “steal” them from their insurance agent. The costs are far too high.[/quote]

You’re welcome to try, though. There’s nothing I like more than getting paid for work that I don’t have to do.

Jul 15, 2008 10:46 pm

[quote=Borker Boy]

  I'm sick to death of these flippin' fictitious, undocumented "scenarios" that annuity salesman tirelessly perpetuate. What if your 500K in mutual funds went to 100K...blah, blah, blah. Do any of you annuity turds realize that's an 80% decline in the value of your investments?!?! Are you smoking crack?   Neither annuities nor mutual funds are short term investments. I'll put any mutual fund I use against any annuity in the universe over a 7-10 year period, and the mutual fund will blow the doors off your high cost, high commission, low return annuity.   That, I'll GUARANTEE.[/quote]   Actually Borker, if you look at average returns, you might be right.  However, when someone is taking distributions, down markets can ravage a portfolio.  Imagine taking 5% withdrawals from a $100,000 portfolio that goes down 20% in the first year of retirement.  Now imagine if you had paid 3.5% up-front.  Now imagine if you still need $5,000 per year from that portfolio (the original 5%).  Now imagine that $5,000 needs to increase with inflation each year.  All of a sudden you are starting a 25 year retirement by taking 6.5% withdrawals in a down market.   If you can't afford to lose money in your retirement account, and you need the income, an annuity is likely the best option.   For your "never" money, I think non-annuity products are better options.
Jul 15, 2008 10:49 pm

[quote=Borker Boy]

I’ll put any mutual fund I use against any annuity in the universe over a 7-10 year period, and the mutual fund will blow the doors off your high cost, high commission, low return annuity.   That, I'll GUARANTEE.[/quote]

That only works if you can keep the client from panicking and pulling out, remember the Dalbar study, average investor makes less than 1/2 of the average performance of MF's which is far less than the "average" return.

Everything works great in a vacuum, unfortunately we don't live in a vacuum, people panic and crap happens.
Jul 15, 2008 11:10 pm

[quote=ExPropTrader] [quote=Borker Boy]

I'll put any mutual fund I use against any annuity in the universe over a 7-10 year period, and the mutual fund will blow the doors off your high cost, high commission, low return annuity.   That, I'll GUARANTEE.[/quote]

That only works if you can keep the client from panicking and pulling out, remember the Dalbar study, average investor makes less than 1/2 of the average performance of MF's which is far less than the "average" return.

Everything works great in a vacuum, unfortunately we don't live in a vacuum, people panic and crap happens.
[/quote]   It's kind of like mortgages.  Everyone used to do the 30 year fixed although the average life of a mortgage was 5 years.   It's so easy to say this is the best when you talk theoretically.  But my clients, and yours, don't live in a theoretical world.  They do what they want, sometimes they listen, sometimes they don't.    I would actually LOVE to see a study that has 1000 people sit down and say, "We will stick with this strategy for 10 years".  Then, 10 years later, I wonder how many people would have actually stuck to the same strategy?  My guess is that a lot of them would have changed course.   Case in point, how many got into tech in 1999?  Real Estate in 2006? 
Jul 16, 2008 12:12 am
snaggletooth:

[quote=pratoman] I had a client come to me with an annuity that would pay him 6% for the rest of his life. He didnt understand that if the market went down some ridiculous amount and his 500k became 100k, while he would collect the 6% for life, his principal would never be recovered. When I explained it to him he was out of his mind.

  This is the exact situation that he is buying that guarantee.  If his account went from 500k to 100k in mutual funds or stocks, he'd be SOL.  If he was in an annuity, the 6% a year for the rest of his life from the 500k would be significantly more valuable than the 100k in pricipal.  Significantly.   Prato- Did you really sell him out of one of the biggest features in his VA?  What did you tell him, that if the account went from 500k to 100k, that instead of 30,000 per year, he could take 4,000 from his remaining principal?  Wouldn't he flip out at that?[/quote] Snags With all due respect, i never said i sold him out. The 6% guarantee was important to him, and if he sells out it will be his decision without my advice. If you read my post you would realize that my point is he was sold on the annuity based on his principal being guaranteed to him and his heirs no matter what the market did and no matter whether he took the 6% every year or not. That was not the case. As I said in my post, these products, in my opinion, have their place. But they are often sold for the wrong reasons without full disclosure. Not always, but often these products are sold to people who think they are buying a free lunch, and there is no free lunch.
Jul 16, 2008 12:27 am
Hobby Bull:

[

Pratoman is lying.

ok   
Jul 16, 2008 12:29 am
ExPropTrader:

[quote=Hobby Bull]

Pratoman is lying.
[/quote]

Deja Vu

ex prop - you gotta be freakin kidding me. This guy is retard and you know it.
Jul 16, 2008 12:31 am

[quote=anonymous]"

There's no question that prospects often don't understand these things.  That's not a problem with the product.  That's a problem of the person buying something that they don't understand and the problem of a rep not understanding what they are selling or nor being forthright.  [/quote]   And thats the only thing i have a problem with
Jul 16, 2008 12:34 am

[quote=Hobby Bull]

Here's a documented scenario for you. I find prospect. I find that prospect owns MF's, stocks, etc..., outside of annuity. I show prospect how he can still own "mutual funds", but his worst case scenario is that he will receive a lifetime income of 9.8% of his initial investment and the best case is probably going to be quite bit better than that. Client says that's what he wants this. I steal the account and the annuity company pays my b/d 7.5% of the premium. B/D turns around and pays me 90% of that. I take that money and buy lots of cool stuff. Old broker gets to look for a new client.
[/quote]   How is that documented. Your a liar.   Every time you tell a story or make a point, its about the commish
Jul 16, 2008 12:36 am
snaggletooth:

[quote=Borker Boy]I’m sick to death of these flippin’ fictitious, undocumented “scenarios” that annuity salesman tirelessly perpetuate. What if your 500K in mutual funds went to 100K…blah, blah, blah.

  No annuity salesman perpetuated that comment at all...Prato did.[/quote]   When did i perpetuate that comment snags? When did you get a hard on for me. I never said anything to perpetuate that comment i simply said that annuities make sense in certain situations but not all. Here is exactly what i said:   "I agree with B24. Too many clients dont understand what they are buying. I had a client come to me with an annuity that would pay him 6% for the rest of his life. He didnt understand that if the market went down some ridiculous amount and his 500k became 100k, while he would collect the 6% for life, his principal would never be recovered. When I explained it to him he was out of his mind. Annuities work in a lot of situations, but not all. No matter what the situation, if the client isnt fully made aware of all the "stuff", then it was nothing more than another high commission sale."
Jul 16, 2008 1:16 am

[quote=pratoman]Snags

With all due respect, i never said i sold him out. The 6% guarantee was important to him, and if he sells out it will be his decision without my advice. If you read my post you would realize that my point is he was sold on the annuity based on his principal being guaranteed to him and his heirs no matter what the market did and no matter whether he took the 6% every year or not. That was not the case. As I said in my post, these products, in my opinion, have their place. But they are often sold for the wrong reasons without full disclosure. Not always, but often these products are sold to people who think they are buying a free lunch, and there is no free lunch.[/quote]   Prato- My apologies for what I inferred...I misread.  I didn't really think you would sell him out of it just because of that.   BUT, while there may be some reps that don't explain the annuity correctly, I can't be too sure that investors haven't forgotten what they were told.  If it's tough for some advisors to understand annuities, how are their clients ever going to understand it?  Even if clients were explained correctly, whose to say they will actually remember what they heard?    7% on principal and 7% on income base is very simple for me to understand.  But the average investor barely understands asset allocation, and good luck on having them understand step-ups and lock in's of the income base due to good performance, then 7% compounded on that next year in a bad year.    I can easily see that they hear just about as much as Helen Keller, even when the annuity is correctly explained and everything is disclosed.
Jul 16, 2008 1:22 am

[quote=pratoman] 

When did i perpetuate that comment snags? When did you get a hard on for me. I never said anything to perpetuate that comment i simply said that annuities make sense in certain situations but not all. Here is exactly what i said:   "I agree with B24. Too many clients dont understand what they are buying. I had a client come to me with an annuity that would pay him 6% for the rest of his life. He didnt understand that if the market went down some ridiculous amount and his 500k became 100k, while he would collect the 6% for life, his principal would never be recovered. When I explained it to him he was out of his mind. [/quote]   Prato, I was just saying that you wrote that example.  No annuity salesman said it, that's all.  It was intended for Borker Boy.  No offense to you.   My reading comprehension isn't up to snuff and I haven't been very good with my words today.  Sorry. 
Jul 16, 2008 2:16 am
pratoman:

[quote=Hobby Bull] [

Pratoman is lying.

Bobby - (alias hobby) I;ve been reading thru the posts quietly minding my own business and just ignoring you and your posts and your calling everyone who disagrees with you a liar, and your personal attacks on everyone who doesnt think annuities are a good idea.  But i guess its time to speak You are a f*cking idiot. Since you left to start your own forum, this board has been peaceful and everyone has been helping everyone with very few exceptions. Now you are back, and wasting everyones time by starting a war for no f*cking reason on earth. You cant just state your opinion and move on. Just for the record, for those who dont know, on Bobbys forum, if you say something he doesnt like, he "sends you to the ghetto" He did it to me, because he didnt like that i asked the board if they had been receiving more spam since they signed up for the website. Didnt like it so he called me a liar. Just as well, i wasnt enjoying the forum anyway, not that it wasnt good, it was just more of an insurance and annuity feel. He also did it to Joedabroker, who has posted some petty constructive posts.   I assume you are here because your forum was getting boring to you.   Bobby you are an asshole, and there are an awful lot of people here who i know for a fact agree with me. So keep calling everyone who disagrees with you a liar, keep selling annuities to clients for whom they are suitable, and to those for whom its not as well, and go f*ck youself.   I think everyone here will agree that I've been posting some constructive stuff here, and I'll continue to do so. Eventually i trust you'll go away, since you've aleady proven that you have the attention span of a monkey.   Again, just for the record, i have no issue with VA's i do them on occassion, where they are appropriate. My only issue is with those who sell them to the wrong people for the wrong reasons. And thats because i, like most of you, have a vested interest in the public perception of our profession, or business, whatever you choose to call it.   So Bobby, call me a liar, call everyone else on this board who doesnt agree with you a liar, and take your holier than tho attitude and stick it up your arse    [/quote]

Liar.
Jul 16, 2008 2:30 am
Hobby Bull:

Liar.

  Whatever, made my point.
Jul 16, 2008 2:41 am

Well said Prato

Jul 16, 2008 2:45 am

quote :""I agree with B24. Too many clients dont understand what they are buying. I had a client come to me with an annuity that would pay him 6% for the rest of his life. He didnt understand that if the market went down some ridiculous amount and his 500k became 100k, while he would collect the 6% for life, his principal would never be recovered. When I explained it to him he was out of his mind. "

  AMEN. I see this ALMOST EVERY TIME--and again this week. You folks say you explain it, and you do (I used to, and still do-rarely-but with no load/no CDSC annuities only-- IF ITS ABOUT INCOME), but unless you repeat it monthly forever, only maybe 10% "get it" that it's not a 6% "return".   It IS about the commission. That's fine, but let's call it was it is. Or start selling the no-load GMWB if it is not.