I learned that trick at my mentors office.  Made my month a few times…ahhhh the Jones memories.  THe FA was trying to get her contest catagory…no doubt.

There might be some situations where that is appropriate, around tax or liquidity planning, but who sold her the annuity strategy?

What a joke… If someone at a real firm tried doing that, there would be an open office real quick once compliance found out…

So in no situation would you ever take penalty free distributions from an annuity and buy A shares, regardless of tax and liquidity considerations?

buying 30-40 year bonds with 3 points built in.  

And add intergenerational wealth planning considerations ( stepped up basis on equity A shares, Jones advisor did not " sell " the original annuity strategy, and so on.)

Just saying, let's not be pc and be quick to incriminate our peers, maybe you are right in this particular situation, it certainly has nothing to do with Ed Jones per se and everything to do with the specific case and advisors, pro and con.

[quote=GolFA]

And add intergenerational wealth planning considerations ( stepped up basis on equity A shares, Jones advisor did not " sell " the original annuity strategy, and so on.)

Just saying, let's not be pc and be quick to incriminate our peers, maybe you are right in this particular situation, it certainly has nothing to do with Ed Jones per se and everything to do with the specific case and advisors, pro and con.

Maybe you guys havent seen some of the crappy annuities out there. Lousy annuity with a client who still has growth goal - I can see that it could be appropriate - as a rescue. 

[quote=joedabrkr] [quote=GolFA]

And add intergenerational wealth planning considerations ( stepped up basis on equity A shares, Jones advisor did not " sell " the original annuity strategy, and so on.)

Just saying, let's not be pc and be quick to incriminate our peers, maybe you are right in this particular situation, it certainly has nothing to do with Ed Jones per se and everything to do with the specific case and advisors, pro and con.

I'm afraid I have to side with the crowd on this one.  If there were really "intergenerational wealth planning considerations" there would be better solutions, IMHO.....

1.) Annuitize and buy life insurance w/ heirs as beneficiaries

2.) Withdraw and gift withdrawals from heirs.

More options.

If the surrender is tax neutral or even taxed at a low enough rate, and there is no penalty, what you have is cash.

Why would you side with the crowd, especially if you are not a big fan of annuity strategies, maybe she has too much of this strategy, over a long enough period, the costs are lower while absorbing the tax deductions now, and so on. We really don't know much about this case to make a determination.

So I must divulge--The annuity was Hartford Leaders.  It was in an IRA.  It was a Jones sold product (4 years ago).  Does that change your opinion on the right thing to do for the client?

The client was 50 years old. 

Doesn't make anyone look good. :).

[quote=spikedkoolaid]

So I must divulge--The annuity was Hartford Leaders.  It was in an IRA.  It was a Jones sold product (4 years ago).  Does that change your opinion on the right thing to do for the client?

The client was 50 years old. 

[/quote]

I have to say given those facts , I gotta rip the "adviser". I can't imagine the positive side of that...................

[quote=Bache&co]

Maybe you guys havent seen some of the crappy annuities out there. Lousy annuity with a client who still has growth goal - I can see that it could be appropriate - as a rescue. 

[/quote]

You're so hot.

[quote=spikedkoolaid]

I couldn't resist--

I just transfered an account from EDJ and the client told me that the FA wanted her to take a 10% penalty free withdrawl out of an annuity and put it into mutual funds at 5.75% commission. 

I asked her if the FA suggested moving the money inside of the annuity to achieve the same objective.  She said, "no!"  I asked if she considered re-allocating the mutual funds through an exchange within the same family.  She said, "NO!"

All I could think about was the EDJ FA needed to make some money this month.  ABSURD!

[/quote]

Why weren't you smart enough to ask her why he said he wanted to do it? He may have had a good reason, instead of the silly little things that you thought of.

Tell me where I am wrong....

Assuming the client isn't going to use a living benefit (no one does), the death benefit is the same as the current cash value or you can take withdrawals dollar for dollar (not pro rata), and the client has a number of years before retirement or needing to use the money.....let's crunch some numbers.

Considering a 1.35% M&E and 0.15% administrative expense + any riders added to the contract, I show a break even point around 4 years or less (depending on riders) if moving to an A-share at full pop.  Move it to the same fund class C and save the client 0.75% annually.

Spiked, you sold this annuity 4 years ago to a client when at Jones.  If I came across this annuity and felt it was innappropriate, I would change the agent of record and blow out at 10% annually until the surrender penalty was over.

I thought Jones Hartford Leaders contracts were all A share annuities. The Jones invention. No surrender and might have reached breakpoints getting in. The 10% penelty free withdrawl doesnt make sense. Jones clones - arent all your annuities designed like A shares? 

"Tell me where I am wrong....

Assuming the client isn't going to use a living benefit (no one does),"

You're wrong.  People don't need to collect on a living benefit to use a living benefit.  The living benefits have a huge influence on how many clients invest.

[quote=Bache&co]I thought Jones Hartford Leaders contracts were all A share annuities. The Jones invention. No surrender and might have reached breakpoints getting in. The 10% penelty free withdrawl doesnt make sense. Jones clones - arent all your annuities designed like A shares? [/quote]

That's the way I remember it for Variable Annuities when at Jones.  In fact I sold several A share Hartford Leaders for over 100K to get the breakpoint and tax deferral.

Sounds like the OP has some of his facts wrong?