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How do you sell crappy bonds?

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Jun 29, 2010 11:06 pm

You're done for around here, Navet.

No one likes you.

You really are a giant tool, who since day 1 has contributed absolutely nothing constructive to these forums. Nothing but criticism, negativity, and endless complaints about how this industry is apparently flawed.

Jun 30, 2010 1:53 am

dayum navet GHGR must be another one of those Glen Beck racist gun toting Bible beating Nascar watching hunting fishing GW big oil dirty coal anti-gay rights sumbiatches you are sooo sick of huh?

Either way he pretty much just handed you your ass!!! You should probably just leave quietly like Mike Gegelman didn't do before someone totally humiliates you.

Jun 30, 2010 3:12 am

Must hit close to home, huh ND. Lets see ND, Notre Dame? Hardly. probably North Dakota, where cousins get married. Thump that bible preacher.

Now softy. Just promise me you won't tell your mommie I've been picking on you. Listen. if you're gay, then deal with it. No male pays that much attention to another male without being gay. But really, "noone here likes me"??? Are you shi--ing me? Are you in junior high? Tell me junior, do you think anyone in this industry gives a sh-t about you? You obviously have low self esteem, so I'll let it go for now. Anyway, you bore me.

Jun 30, 2010 2:07 pm

Sorry ice, that was a great post, but you're casting pearls before swine.  See, the problem is you get paid for all of those products.  And in navet's mind, that creates a conflict of interest.  Evidently the only way for us to work in this industry without any conflict of interests is to have a salary.  That way we know that we're going to be able to write that check for our country club dues every month and we don't have to be conflicted about what we do with out client's portfolios. 

navet - with your vast experience in the brokerage industry of what, months, tell me how you would set up your business to give people the financial advice they need, but without all of those pesky conflicts that you perceive as a problem at EDJ.   

Jun 30, 2010 2:41 pm

Ice, well said!

Great post!

Jun 30, 2010 4:48 pm

Thanks ICE. The problem is at Jones I am surrounded by Spiff's and not you or BG. My reason for posting the comments I do is that this is an annonomous site and I can ask these questions and get great feedback without alienating the people I work with. I realize that these questions are often pointed and negative. But I've been in sales for over thirty years and I like to have my head straight before I sit down with a customer. I've had great success with VA's for boomers. I've gotten away from American A shares. In fact BG, I sold some Oppenheimer last night, thanks for the info. Anyway, as long as I'm in this business(probably not too much longer) I will continue to post my questions here, even if(like Softy says) nobody likes me...ouch...hahahahaha....

Jul 1, 2010 2:08 am


You guys miss me...admit it. 





I sense you're struggling with your career choice at this point, and the choice may very well be that you should find a new industry.  But maybe I can help you reconcile something?

You are absolutely right that there are huge conflicts of interest in this business - and there always will be.  The ONLY person that can decide whether you run an ethical show, or a dishonest show, is you.

You question the merits of cold calling on a product, such as a bond or a stock.  The first thing you should realize is that you aren't ACTUALLY trying to sell what you are calling about (although, some people do).  You just want the product you call with to get people interested in MEETING YOU. 

Once you get some face time, if the bond you called them about originally isn't appropriate...tell them!  "Mr. Prospect, I really don't think that XYZ Bond is right for you, but if you're open to another idea or two, I'd be happy to run a more appropriate alternative by you?"  Blah, blah, blah.  A prospect is going to respect you for NOT selling them something they really don't need, and most likely LET YOU sell them something else. 

So don't think that just because you're pitching a product on the phone, that you have to actually sell it.  You're looking for contacts and appointments, not necessarily $10,000 bond sales.  And if that still makes you uncomfortable, DON'T pitch product on the phone - pitch appointments. 

As far as what you CAN sell clients..


Eyes crossed here


-You think the stock market is too volatile right now to buy (I disagree, but this is about you) sell all of your equity wrapped inside of a VA with a GMAB rider.  Your clients will be GUARANTEED to get their money back if the market is truly ready to sh!t the bed. 

-Clients need some growth, not just their money back?  Sell them their equity in a VA with a GMIB rider, that will give them 6%+ per year on their income base, combined with income for life (or spousal income for life, if they need it).

-Bond market "overbought?"  Alright, ADVISE your clients about how to shortern the duration of the fixed income piece of their portfolio.  Take a look at high yield.  Or GNMAs.  Or BABs.  Or all of them.  Show them how to protect their fixed income in a low interest rate market where you suspect a bubble in Treasuries.  THEY DON'T KNOW THIS STUFF ON THEIR OWN!

-Surely, many of your clients and prospects have CDs yielding < 1.5%.  Show them how they can take advantage of fixed annuities and get a better rate (replacing CDs with Fixed Annuities could be a great cold call campaign also).

-Do any of your clients have mutual funds in a taxable account, when the client (and spouse) are NOT utilizing their Roth IRA limits?  You could do them WONDERS just by getting them to move their funds into a Roth (even if it's the same funds).

-How about life insurance?  Do your clients and prospects have enough term insurance to cover their mortgage and other debt, as well as replace their spouses income (for life) if one of them died?  I bet a lot of them need more. 

-How will your clients pay their final expenses?  Certainly term isn't the only answer, as most people don't have the discipline to implement a BTID strategy.  I personally think most people could benefit a great deal from $50 - $100K in GUL, and can easily pay it up by age 40 or 50.  It's relatively inexpensive, and it's permanent (unless they break a world record for age).

-Do ANY of your clients carry their own disability insurance?  I know hardly any of mine do, and it's something I should either partner with a pro on, or get more versed on it myself.  It's so cheap, but yet could completely save a household so much headache and pain.

-How about long term care insurance?  Even the Suze Orman's of the world think it's a must-have (I think?).  But even the states are sponsoring "partnership" programs to help motivate their residents to buy LTCi.  What a great product!  And what a HUGE market to sell it to!  Become a LTCi pro.  You can make a nice buck to get you over your hurdles, do your clients a service with your state's blessing!


Started to vomit here.

[quote=iceco1d]How about 529 plans?  Do you know they can be used to remove money from a grandparent's estate, but it leaves the grandparent (or parent) in control of the money if they needed it (but it's doubtful they would need it, since they have estate tax issues, they probably have several million in net worth). 

How about pension maximization and target teachers and state employees?  Pension max frequently works out better for the client (if they are healthy and not really old), so you get a nice insurance sale (that by virtue of having it, makes YOU, AND the CLIENT more money than leaving the spousal protection to the state).  The insurance bolsters your up front commission to get you over your hurdles, and you can invest the pension rollover + 403B or 457 money however YOU think is the most ethical (whether it's commission mutual funds, advisory solutions, variable annuities, or individual stocks or bonds, or you can sit on the money in brokered CDs and/or fixed annuities).

The point is, you can run your practice HOWEVER you want, and you can do it ehtically and help a lot of people.  To do so, you need to meet enough people, and have enough arrows in your quiver, that you can help them no matter what you think about the economy.

Good luck. 

[/quote] But I made it through the whole thing

Jul 10, 2010 3:54 pm


I hope your clients are happy to park their money for the next 18 years at 5%.  Interest rate risk alone on long-term bonds are scary enough to drive me away.


Agreed.  Two problems here that are being ignored.  Long-dated bonds will drop like a rock when interest rates finally increase and I'm not sure how people feel comfortable buying individual bonds given the problems with credit ratings.  I tend to go with a manager who watches this stuff every day.  Plus, they have much better inventory and execution capabilities to find shorter-duration bonds at better interest rates.  Just my opinion.

Jul 10, 2010 8:05 pm

I have said and heard the interest rate thing for a while now. It could be a couple years before rates are high enough to make that much difference anyway. With the flucuation in rates and the dollar, bond traders are probably killing it right now. I just knew the 10 year would be over 4 by now and hell it was under 3 the other day.

Jul 13, 2010 12:25 am


I have said and heard the interest rate thing for a while now. It could be a couple years before rates are high enough to make that much difference anyway. With the flucuation in rates and the dollar, bond traders are probably killing it right now. I just knew the 10 year would be over 4 by now and hell it was under 3 the other day.


agreed, ND and it's something that we'll see coming for sure when it does happen.  My point and this is just a personal preference, is that I tend to use managed money for the fixed income side of the portfolio, whether it be a mutual fund or SMA with a shop like Lord Abbett, BlackRock, PIMCO, etc.  Those guys certainly know a heck of a lot more about the respective credit ratings and risk of each issue and they have much better capabilities to evaluate them constantly and pull from their inventory.  

I often speak up loudly about NOT pitching product to a cold prospect (whom, you seemingly know NOTHING about), but for a decent, high quality bond, perhaps not a bad way to start a conversation.  I would still err on the side of finding like bonds through a manager who practices in that space.  

Jul 13, 2010 4:58 pm

Navet, your problem isn't with bonds, your problem really is how you define yourself in this industry. We either sell investments, or we provide added value as advisors, and solve problems for clients. Spend a few days in seclusion, and define who you are. Then, run your business based on that conclusion.

I run a business of solving problems, and product is only used as a means to the end. Bonds for example, are all about the income, not part of the gain/loss element of a portfolio. Still, there are ways to reduce risk in portfolios that are mostly fixed income. ORNAX for example is high beta muni, FKTIX is low beta muni. Buy ORNAX in down markets, buy FKTIX in frothy markets...

Navet, we all share the frustrations you have about the integrity of our industry, it's a sign of the times. If you're a believer in contrarian thought, these could very well be the beginning of good times ahead. Personally, I think the next 5 yrs are going to be obnoxiously difficult for even seasoned advisors. If you're even half convinced you should be doing something else, you probably should cut this experiment short.

Jul 13, 2010 6:30 pm

"Crappy" is a very misleading term, by the way.

Premium bonds are not crappy. Nor are BBB rated bonds. They each have their purpose.

Nov 11, 2011 7:53 pm


One more point on ORNAX. Investors in this fund aren't looking to meet a certain performance goal. Having an investment that's top of it's class in performance is comforting. However, if most or all of that performance comes from gains it does the income buyer little good. This fund is all about one thing; Income! That's it, period! In that way it differs little from a muni bond itself. That the bond goes up and down in value with the market/economic cycle is of little concern to the holder. It's all about the coupon payment. There will be times during that cycle that the bond may be top of the class, other times, bottom. So what! As long as it pays that coupon. And, as well all know, performance is a game. A game you can't win, which is why you never recco based on performance.

This is the difference in the way this fund is managed. While almost everyone of it's peers is playing to the quarterly report, these guys are only after one thing; Income. And they are good at it! But, looking nice and shiny for the quarterly comparos? Not what these guys are about. And they could care less.

Navet, you're right, this insight isn't available at Jones. Nor is it available anywhere else. Remember what i said about understanding the investment? My insight comes from doing just that. You can do the same. Find an investemnt and apply this standard: Say to client "If there is any question you can ask me about this investment that i can't answer, i won't put it in your portfolio." To do that, start by reading the prospectus. Then interview wholesalers and managers. This ain't rocket science. It just takes an honest effort to understand what you are doing. The more you understand the more confidence you will gain.


Excellent post.

Also, it's obvious that the fund is 1-star rated based on its performance in 2008 when it was down over 48% in returns and also appearing risky. Just how volatile was it for the income buyers? Lets see.

It paid out:

$.056 per share Jan 2008-April 2008, and

$.057 per share May 2008-Dec 2008. 

In other words, the income buyer didn't experience the risk in relation to their primary goal. You don't lose shares when value decreases.

Great post BG.