Equity Indexed Annuities
110 RepliesJump to last post
“Can someone help convince me these are good for ANYBODY…”
I think the agent that sold them to her enjoyed the trades. Equity indexed annuities are something that is rarely appropriate for clients and especially the long surrender versions with extremely high CDSC. They were a hot product for awhile when the markets were going up uppity up... but now that we are facing a possible flat market where the indexes that they are linked to don't have a lot of movement, I can't imagine why anyone would want such a thing.bspears, do the surrender charges get waived at death?
I like defending EIA's. I've never sold one, but they can be appropriate. Unfortunately, they sure seem to be usually sold in an inappropriate manner.I assume they have a death put, still getting info on them. I also found out because they were sold in FL I can’t change broker of record on them for my client. LUCKILY, she isn’t needing this for income…
The ones I've seen require the beneficiaries to annuitize over 5 years. Otherwise, they lose the "bonus," index credits and pay a surrender charge.
I just received an unsolicited email about a gold indexed annuity. Here's the sales pitch to potential salesmen:We've got a hot new annuity product that features a gold index as one of the investment choices your client can pick from. It also has a high initial bonus, a short walkaway period, big commission ... and a killer trip with only $1.2mil to qualify.
You're either going to sell this, or compete with it.
I went to the guy’s website, where he boasts about his firm having an industry-leading 99.5% client retention rate.
Who wouldn't have that kind of retention rate if they had their entire book locked up in EIAs? Whether they want to or not, none of his clients are going anywhere for a long, long time.i thought eia’s were hot when the market was completely in the crapper. “no downside risk” remember. it is when the market is up uppity up people begin to question their choice as they are not fully participating in the giddiness. they were sold pretty much strictly on emotion, nothing else. market participation w/o downside risk, lol.
Well, if the market is going down or sideways there is nothing to participate in. You only get a teeny weeny interest rate guarantee with a lot of downside in the lack of liquidity and a monster CDSC. Why in the world would anyone settle for this when they could get a shorter term investment or even a tax free muni bond with a guaranteed return that would beat the crap out of the "guaranteed" rates. If the market is going uppty up , risk adverse investors are willing to settle for a little less return, as long as there is some return better than a coffee can under the back porch......which is about what EIAs are returning right now.i thought eia’s were hot when the market was completely in the crapper. “no downside risk” remember. it is when the market is up uppity up people begin to question their choice as they are not fully participating in the giddiness. they were sold pretty much strictly on emotion, nothing else. market participation w/o downside risk, lol.
Spears, I sure can't defend the kind of high-surrender EIA you're seeing...nor an annuity that forces a client to withdraw over a minimum of 60 months. All I can say is what I've said before...not all EIA's are created equal. At the moment, given fixed annuity rates, I'm not seeing much of a niche for any EIA, but the markets could change that.Funny, I had an ederly (89) come in today with her helper. She said she had some stuff with her old broker in FL and wanted it moved up here…Well,…yep…2 EIA’s, 1 purchased in 2002… has 330k in it with a whopping 26% surrender and another with a face amount of 171k, surrender 127k…Purchased in 2005. Can someone help convince me these are good for ANYBODY…
To understand these EIA’s(and each one is different), you need to pour through the contract…which isn’t provided until you are putting your John Hancock on it. I had clients that went to an “educational” seminar and put a small amount in an EIA. After reading through the contract it is plain that every calculation(and there are many) are made to minimize the clients return and maximize the profits of the insurance company. The contract is approximately 50 or so pages long with dozens of calculations and huge surrender fees(starting at 16%) that last for 10 years. I have spent about 15 hours between the brouchure and the contract( a lot of disconnect between the two) and I’m sure I understand it better than the insurance schlub that is trying to sell it to them. My assistant ordered a selling kit from the insurance provider who issues this annuity(AVIVA) and they promptly sent her one, along with a commission schedule(this product had gross commission of 9.5%). They didn’t care who my assistant was, or if she was licensed… The more I learn about these products, the worse they look.
AVIVA has dozens of contracts can you specify which one it is your talking about.
mm06,
Whichever product you are trying to push is the one that is the best. I will now sell it to all of my clients. What do I need to do so that you can get some compensation from my sales?Funny, I had an ederly (89) come in today with her helper. She said she had some stuff with her old broker in FL and wanted it moved up here…Well,…yep…2 EIA’s, 1 purchased in 2002… has 330k in it with a whopping 26% surrender and another with a face amount of 171k, surrender 127k…Purchased in 2005. Can someone help convince me these are good for ANYBODY…
C'mon, do tell...I know of a few wackos in FL and it would be fun to know who this is. One specifically, the website is no longer working, but he's been out all over the place recruiting, recruiting, recruiting. Was touting an AVIVA product as the best thing since sliced bread, and now, guess what? AVIVA terminated his contract, which means also terminated the contracts of the entire "downline".
I’m not gonna cut and paste something for the 3rd or 4th time, but EIA are sold at market bottoms when people are pissed they lost their asses and are told, “Look here, market goes up you get market returns, it drops, you are safe.” I would like to see some stats on investor behavior in 2002-2003 vs. 2006-2007. Which point in time were they more worried about losses?
I have been selling annuities for 6 years (VA, EIA, and Fixed). The idea of AVIVA's Structured Annuity is good but I DO NOT Like the 6 year lock in. I would prefer an annual lock. My favorite contracts are Jackson National's Perspective II VA, AIG's 5 yr 5% Guaranteed fixed annuity, and Standard's 5 & 7 year Indexed annuity (has a principal guarantee rider & annual point to pt) Thoughts?
I just lost a prospect to an Aviva hawker. He agree to come sit with me after he did it (actually he did it, then came to see me). He took ALL of his life savings and dumped it in (like 800K). He says to me “well, I get 7% guaranteed on my account no matter what the market does. And if the market goes up, I get more!” Yeah, oncce I asked him to bring in the contract and showed him the “fine print”, he was pi$$ed!! He had NO idea about the surrender fees, and had NO IDEA that the growth was really only on the income base value. He also didn’t realize there were growth caps. Give me a break.
[quote=B24]I just lost a prospect to an Aviva hawker. He agree to come sit with me after he did it (actually he did it, then came to see me). He took ALL of his life savings and dumped it in (like 800K). He says to me “well, I get 7% guaranteed on my account no matter what the market does. And if the market goes up, I get more!” Yeah, oncce I asked him to bring in the contract and showed him the “fine print”, he was pi$$ed!! He had NO idea about the surrender fees, and had NO IDEA that the growth was really only on the income base value. He also didn’t realize there were growth caps. Give me a break.[/quote]
No wonder you’re so bitter. Do you really think we’re gonna believe that anyone, let alone a prospect, would come by for you to criticize what they’ve done? You have a poor relationship with the truth, don’t you?
I had a very interesting conversation with a guy yesterday who does EIA and “bonus” fixed annuity business exclusively. He actually brought up the fact that a lot of people in town believe he’s churning his clients’ annuities, and he said that to the untrained observer, it could easily appear that way.
He said he and another CPA sat down several years ago and figured out how to beat the insurance companies at their own game. He buys several annuities for a client with a variety of companies, gets the upfront bonus on the deposits, and then follows their rules and gets out of the contract and moves to something else and gets another bonus. He said he keeps an amount liquid that the client feels comfortable with, but 1035s the rest of their money in and out of annuities without incurring any surrender penalties. He said he averages his clients 7-8% annually and nets upwards of $500K a year. The average commission he receives is 11.5%. He markets himself--surprise!-- as being totally anti-stock market and turns away anyone that wants to buy individual stocks or mutual funds. I've been very skeptical of this guy's business practices until he showed me on paper what he does. Now, I'm just feeling sort-of naïve. Could it be that there actually exists an ethical annuity churner?[quote=Borker Boy]I had a very interesting conversation with a guy yesterday who does EIA and “bonus” fixed annuity business exclusively. He actually brought up the fact that a lot of people in town believe he’s churning his clients’ annuities, and he said that to the untrained observer, it could easily appear that way.
He said he and another CPA sat down several years ago and figured out how to beat the insurance companies at their own game. He buys several annuities for a client with a variety of companies, gets the upfront bonus on the deposits, and then follows their rules and gets out of the contract and moves to something else and gets another bonus. He said he keeps an amount liquid that the client feels comfortable with, but 1035s the rest of their money in and out of annuities without incurring any surrender penalties. He said he averages his clients 7-8% annually and nets upwards of $500K a year. The average commission he receives is 11.5%. He markets himself--surprise!-- as being totally anti-stock market and turns away anyone that wants to buy individual stocks or mutual funds. I've been very skeptical of this guy's business practices until he showed me on paper what he does. Now, I'm just feeling sort-of naïve. Could it be that there actually exists an ethical annuity churner?[/quote]SO now you've seen the light