Seminar
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[quote=Moraen]Did you not read the part about “What if I only charged a one time fee of $50 for setting up a bond portfolio”? Who is better now?
The difference between you and I is that I have that flexibility. Can you simply charge someone $50 for buying a bond? Even better, several hundred thousand dollars?
Bio - I know your seminars are different because of the product. But my main question would be is how do you drive people to them.
The economic forum we did a few months back was a tremendous success, but when you have “big” names coming, people listen. And it wasn’t product driven.
Anybody else feel free to answer.[/quote]
I know I’d listen to big name Senators, Congressmen, economics professors, Ken Lay, Bernie Madoff, whoever is running Merril Lynch these days, guys on CNBC.
[quote=buyandhold]
[quote=Moraen]Did you not read the part about “What if I only charged a one time fee of $50 for setting up a bond portfolio”? Who is better now?
The difference between you and I is that I have that flexibility. Can you simply charge someone $50 for buying a bond? Even better, several hundred thousand dollars?
Bio - I know your seminars are different because of the product. But my main question would be is how do you drive people to them.
The economic forum we did a few months back was a tremendous success, but when you have “big” names coming, people listen. And it wasn’t product driven.
Anybody else feel free to answer.[/quote]I know I’d listen to big name Senators, Congressmen, economics professors, Ken Lay, Bernie Madoff, whoever is running Merril Lynch these days, guys on CNBC.[/quote]
Lol. The goal wasn’t to get Edward Jones advisors at the thing.
We did 6 seminars this fall. Mailed out about 2,000 invites per semianr. Response rate fairly tepid at about 0.6%. This is about 1/2 of what I experienced 5 years ago. Spent about $12k all in. So far we've opened a $400k, $1.3mill and $300k relationships all fee based at 1.25% avg. $2 mill @1.25% = $25,000 in additional revenue. Also have about 5-6 solid prospects in the pipeline from the seminars. I wouldn't call this a crushing success, but it is profitable so we'll continue into 2010 and try to put on 10-15. Topic is key to getting people in the doors.. People are interested in hearing about a different way to manage their funds. The typical wirehouse asset allocation story will not fly. That approach created a painful experience for them twice in the past 10 years. In Bio's case the EIA is a perfect product approach to today's environment. Hence his terrific response rate of over 1%! Other product approaches will work as well. For example, a technical trading approach (a la Dorsey Wright) might be a good draw. But remember once at the semianr the primary issue they are evaluating is you. Do you seem genuine, trustworthy, intelligent, etc. Do you understand that managing money is not just an academic, cooly intellectual excercise but is about real people and their fears and dreams? So do not bring anyone else along to speak. It needs to be all about you.Lets drop the attacks on each other’s firms, distribution channels, product preferences, etc., and get back to the topic at hand. Seminars. Anyone have anything else productive to add?
BIO If the market is going to nosedive for a couple of years, all the great insurance companies that your selling for them indexed Annuities will go bankrupt And your clients will take a 100% loss, They are betting on the market going up, So in reality long term there is no greater risk to be in the market direct or indexed funds, So you might as well get all the benefits of the market instead of having all the limitations from the indexed Annuities.
We did 6 seminars this fall. Mailed out about 2,000 invites per semianr. Response rate fairly tepid at about 0.6%. This is about 1/2 of what I experienced 5 years ago. Spent about $12k all in. So far we've opened a $400k, $1.3mill and $300k relationships all fee based at 1.25% avg. $2 mill @1.25% = $25,000 in additional revenue. Also have about 5-6 solid prospects in the pipeline from the seminars. I wouldn't call this a crushing success, but it is profitable so we'll continue into 2010 and try to put on 10-15. Topic is key to getting people in the doors.. People are interested in hearing about a different way to manage their funds. The typical wirehouse asset allocation story will not fly. That approach created a painful experience for them twice in the past 10 years. In Bio's case the EIA is a perfect product approach to today's environment. Hence his terrific response rate of over 1%! Other product approaches will work as well. For example, a technical trading approach (a la Dorsey Wright) might be a good draw. But remember once at the semianr the primary issue they are evaluating is you. Do you seem genuine, trustworthy, intelligent, etc. Do you understand that managing money is not just an academic, cooly intellectual excercise but is about real people and their fears and dreams? So do not bring anyone else along to speak. It needs to be all about you. [/quote] That seems to be a great response rate especially only mailing 2,000.. I did one last year, sent 5000 and my response rate was about 0.25%... Do you design your own or are you using a company...[quote=iceco1d]Lets drop the attacks on each other’s firms, distribution channels, product preferences, etc., and get back to the topic at hand. Seminars. Anyone have anything else productive to add?
This is interesting stuff. I guess I completely misunderstood how EIA's work. Thank god I didn't have clients in indexed annuities last year. I should just go back to selling used cars. That way, if the polar ice caps start melting, there will be no danger of the Brooklyn Bridge falling.BIO If the market is going to nosedive for a couple of years, all the great insurance companies that your selling for them indexed Annuities will go bankrupt And your clients will take a 100% loss, They are betting on the market going up, So in reality long term there is no greater risk to be in the market direct or indexed funds, So you might as well get all the benefits of the market instead of having all the limitations from the indexed Annuities.
Somewhat off topic, but for those in this thread that lack an understanding of indexed annuities and how they perform, I’d recommend checking out this study. It shows that they have done what they are designed to do - give a higher rate of return that traditional fixed investments (CD’s, bonds, fixed annuities etc). They were never designed to beat the stock market, yet they have over the last 10 years. Still, they are not a substitute for market investments, rather a great retirement and income product.
http://fic.wharton.upenn.edu/fic/Policy%20page/RealWorldReturns.pdf As to how they are structured - they are based on the investment portfolio of the insurance company comprised mostly of high grade bonds. They use the same portfolio to pay fixed annuity yields. With an indexed annuity, instead of paying a fixed yield, they invest that yield in options on the index used by the annuity to calculate yield. This has produced a consistently higher return than other fixed asset classes. Like all other products, there are good ones and bad ones. It's our job as advisors to help our clients make good choices. The income riders are particularly strong compared to the VA riders too. For full disclosure - I'm a RR, former EJ and independent, that now does compliance both insurance and BD. My firm makes money off of both indexed annuity and securities sales. Both are great options, but it's all about suitability.How would buying calls hedge against principal being owed to the owner if the market were to explode ? If the market were to explode and the insurance companies are getting significantly less in revenue from a much lower account value, owning calls would only add to the loss.[quote=ambitious]BIO If the market is going to nosedive for a couple of years, all the great insurance companies that your selling for them indexed Annuities will go bankrupt And your clients will take a 100% loss, They are betting on the market going up, So in reality long term there is no greater risk to be in the market direct or indexed funds, So you might as well get all the benefits of the market instead of having all the limitations from the indexed Annuities.[/quote]
This has to be one of the dumbest posts ever. The insurance company hedges their obligations to the contract owners by buying index call options (plus Cap rates, participation rates, and margins). That easily covers them if the market explodes.
If the market goes down or stays stagnant, the remainder of the premium is invested VERY conservatively in the insurance company’s general account (which is all conservative fixed income). They can’t really be forced into liquidating the fixed income below face value, because they are protected again early surrenders of the contracts via surrender charges. They don’t need a high return on the general account, to pay the minimum guaranteed rates on the EIAs (which are lower than a similar plain vanilla fixed annuity).
And then, even if the impossible happened, you STILL have state guaranty associations backing probably $100K+ of principle, and any applicable reinsurance with other companies.
Seriously, dumbest post ever…or close to it.
Obviously that isn't a loss, but in order to being given that "right" they would have paid a huge premium to purchase that call unless they caught they absolute bottom (666) and even then with the VIX where it was the premium for those options would be outrageous. If the annuity issuer needs to protect themselves today with the S&P at 1100 for a collapse they are more likely to be purchasing puts, 900 strike and below. Purchasing in the money calls doesn't protect against a market collapse, which is their biggest risk.
[quote=BioFreeze] [quote=ManOnTheCouch]Somewhat off topic, but for those in this thread that lack an understanding of indexed annuities and how they perform, I’d recommend checking out this study. It shows that they have done what they are designed to do - give a higher rate of return that traditional fixed investments (CD’s, bonds, fixed annuities etc). They were never designed to beat the stock market, yet they have over the last 10 years. Still, they are not a substitute for market investments, rather a great retirement and income product.
http://fic.wharton.upenn.edu/fic/Policy%20page/RealWorldReturns.pdf As to how they are structured - they are based on the investment portfolio of the insurance company comprised mostly of high grade bonds. They use the same portfolio to pay fixed annuity yields. With an indexed annuity, instead of paying a fixed yield, they invest that yield in options on the index used by the annuity to calculate yield. This has produced a consistently higher return than other fixed asset classes. Like all other products, there are good ones and bad ones. It's our job as advisors to help our clients make good choices. The income riders are particularly strong compared to the VA riders too. For full disclosure - I'm a RR, former EJ and independent, that now does compliance both insurance and BD. My firm makes money off of both indexed annuity and securities sales. Both are great options, but it's all about suitability. [/quote]I agree with what you're saying, but for whom is it unsuitable to never lose money?
[/quote] Lack of liquidity, opportunity cost (for someone young with a longer time horizon missing potentially higher market returns), interest rate risk, and concentrating too much of a portfolio into one asset or company can all create an unsuitable sale.
OK. I didn't know they put 80% in a general account that was earning a profit no matter what. I assumed they were using options to hedge a majority of their risk and if that was the case they would be trying to keep the expenses low as possible, while betting the market will go north more often than south and using low delta put purchases as downside protection. I was also thrown off by your mention of a 700 call because the premium would have been outrageous and that strike has been in the money the entire year. Good stuff though, I learned something for sure.
An EIA isn’t a “glorified” fixed annuity. It is just a fixed annuity. It simply has a different crediting method than other fixed annuities. People buy them hoping that they can make more than other fixed annuities, but they may make less.
Anon, what is your reply to prospects and clients when the balk at AIG or any other company that took bailout money?
Client: “I’m balking. I don’t want to use this company because they took bailout money.”
Me: "Ok. We can use ABC company instead." Golf, it makes no difference to me. I just want to make sure that I help my client and get paid in the process.That's rich. Insurance companies never fail huh?
Liquidity? 10%/year and a penalty on the remaining 90%. Much better than losing money.
Opportunity Cost? Is it unsuitable to put people in mutual funds when oil/gas exploration can produce returns 20 times those of the stock market?
Interest rate risk? Only applies to investments that pay a rate of interest.
Over concentration? Only a problem with risky investments. When you put all of your eggs in a basket that doesn’t break eggs, you end up with all of your eggs.
You compliance f**ers say some pretty stupid sht.