Annuity Assets Under Management

[Franz Kafka]

So I guess I'm curious to get feedback from some more annuity-centric producers, so I can figure out a good way to tailor my practice moving forward.

I'm just wondering if there are guys out there (on this board) with $5MM, $10MM, $15MM (or more) in fixed/indexed annuities on the books, and if they'd be willing to share "how life is."

As a primarily securities guy, having $5MM in fixed annuities, $5MM in indexed annuities, makes me a bit nervous. Maybe that's unjustified (and I hope it is).

If I could put $10MM in fixed/indexed annuities over the next 18 months, I'd have about $75K in trails (based on products I currently use) coming in, not tied to my b/d, which frankly would be awesome.

I've read this several times but am still not clear what it is that you're asking. Do you know what it is that you're asking? I assume your B/D is aware and cool with you selling FIAs?

 

[iceco1d]

I've read this several times but am still not clear what it is that you're asking. Do you know what it is that you're asking? I assume your B/D is aware and cool with you selling FIAs?

B/D is fine with me selling FIAs, and I don't have to put them through the grid. I cannot sell a FIA with more than a 10 year surrender schedule, more than a 10% surrender charge, or one that forces annuitization (per my b/d, and per my E&O policy).

As for my ambiguous question, I think some of these questions might be more specific...

What is your total FIA assets under management?

Approximately what is your annual sales volume in FIAs?

What is your primary market for FIAs, and are they a focal point of your business?

How many FIA companies do you typically work with?

Do you find your FIA clients to be generally happy?

Anything else you care to share would be fine too. Thanks to everyone who participated in this thread already btw.

 

[VolAgent]

Prudential used to have really great GMAB riders (GRO and GRO II), but they are discontinued. Most GMABs are more expensive now, too.

The thing is, over a 10 year period, a VA (with a heavy equity focus) will outperform a FIA the overwhelming majority of the time. FIAs only look as good as they do because of the crappy market over the past 10 years. If you do a monte carlo simulation on 1,000 rolling 10 year periods, a VA with 70% equity exposure will win 85% of the time.

The problem with the income riders is that not everyone wants income from their money.

That aside, would you be willing to share (here or via PM) what portion of your book is in FIAs and other fixed annuities?

So again, if VAs are so great. Why is the best they can do is to guarantee a return of your money in 10 years? That always got me. A GMAB is basically a company saying, "We really don't expect this to do all that hot, so we'll let you pay an additional fee to have your principal returned in ten years."

 

[iceco1d]

So again, if VAs are so great. Why is the best they can do is to guarantee a return of your money in 10 years? That always got me. A GMAB is basically a company saying, "We really don't expect this to do all that hot, so we'll let you pay an additional fee to have your principal returned in ten years."

That's not what they are saying at all. They are protecting against a worse case scenario. You don't buy homeowners insurance expecting your house to burn down. You don't buy a GMAB rider expecting to lose money. You buy them both, just in case that happens, that you're protected.

I'm not interested in getting into an argument about the pros and cons of variable annuities. If you don't like them, don't sell them. If you can't sell them, you probably have a biased opinion on the subject.

 

[VolAgent]

That's not what they are saying at all. They are protecting against a worse case scenario. You don't buy homeowners insurance expecting your house to burn down. You don't buy a GMAB rider expecting to lose money. You buy them both, just in case that happens, that you're protected.

I'm not interested in getting into an argument about the pros and cons of variable annuities. If you don't like them, don't sell them. If you can't sell them, you probably have a biased opinion on the subject.

Man, who feed you that line, your GA, B/D, or wholesaler?

I formed that opinion about the GMAB while sitting in the MassMutual GA's office filling out my paperwork. Drinking the kool-aid, I still thought it was a crappy rider. Overnight that office went from doing several million a year with Mass and their GMIB to several million a year with John Hancock and Jackson.

IMO, there are only three ways to buy a VA. No riders, with a GMIB or with a GMWB. Buying one with a GMAB is just plain stupid. If I seriously think I need insurance to get me back to where I started in the equities market 10 years ago, I shouldn't put my money into it to begin with.

 

[iceco1d]

Man, who feed you that line, your GA, B/D, or wholesaler?

I formed that opinion about the GMAB while sitting in the MassMutual GA's office filling out my paperwork. Drinking the kool-aid, I still thought it was a crappy rider. Overnight that office went from doing several million a year with Mass and their GMIB to several million a year with John Hancock and Jackson.

IMO, there are only three ways to buy a VA. No riders, with a GMIB or with a GMWB. Buying one with a GMAB is just plain stupid. If I seriously think I need insurance to get me back to where I started in the equities market 10 years ago, I shouldn't put my money into it to begin with.

Less than 20% of my book is variable annuities (of all types). I can appreciate the ASSumptions you've made about me and where my opinion on variable annuities came from, but I'm not really interested in that debate.

I would like to hear from anyone who would be willing to share their experience(s) selling FIAs though. Anyone?

 

[VolAgent]

Less than 20% of my book is variable annuities (of all types). I can appreciate the ASSumptions you've made about me and where my opinion on variable annuities came from, but I'm not really interested in that debate.

I would like to hear from anyone who would be willing to share their experience(s) selling FIAs though. Anyone?

Wow, sort of like the assumption you made huh? Kettle, meet pot.

 

[iceco1d]

I made no assumptions. I asked some genuine questions directed at those doing significant FIA business. You are trying to engage me in some type of variable annuity GMAB debate and/or internet shlong measuring contest. Again, I'm not interested in that.

 

[xrx1109]

What VA's ae used for is the GMIB guaranteed minimum income benefit. PRU and MET have the most market share. They will guarantee 5% income for life on the principal investment plus any gains as long as the contract owner does not blow up the contract.

PRU's will lock all gains in daily and keep that figure as the income benefit base. in additional VA's with the GMIB rider the income base will increase by a guarnteed percentage each year withdrawals are not taken.

And there are now death benefits being thrown in also. VA's and indexed universal life are becoming very similar type products.

 

[VolAgent]

What VA's ae used for is the GMIB guaranteed minimum income benefit. PRU and MET have the most market share. They will guarantee 5% income for life on the principal investment plus any gains as long as the contract owner does not blow up the contract.

PRU's will lock all gains in daily and keep that figure as the income benefit base. in additional VA's with the GMIB rider the income base will increase by a guarnteed percentage each year withdrawals are not taken.

And there are now death benefits being thrown in also. VA's and indexed universal life are becoming very similar type products.

I liked Met's. I understand they made some changes, but it was a very strong contract with the GMIB and death benefit rider. The fees were high of course, but you got a lot for it.

Of course, you can get almost everything regarding riders with a FIA now. Give up a lot of upside potential, but no market risk to principal either. That said, if you buy an annuity with income rider, you better not even have a thought of cashing out. And that is the same whether VA or FIA.