Anyone Heard of AXA?

[sman]

I missed the part about the market tanking (I should have read this thread more thoroughly)...another part of that post mentions "decent return over the next 25 years regardless of the stock market, where do you put it?" Well, if we're talking regardless of the stock market: we have fixed rate annuities, bonds, the bank, gold, real estate, etc. Look for investments that have little stock market correlation, right? I just can't get behind an index annuity with a 25 year time horizon at such a young age...I start thinking riders 7-12 years out from retirement. Prior to that, I want my foot on the gas (just me). As far as BCA, I can see the attraction for accumulation but I'm probably not the best person to ask. I just really don't like any index product strictly from an accumulation standpoint at such a young age. There is just too much that can happen at the carrier level and they have too much control over how much money you make. I'm just not a fan...

Oh I'm with you. With a 25 year time horizon, I feel confident investing in the market would provide a higher return than an index annuity. I just wanted your thoughts on the BCA annuity.

 

[NWBenefitProvider]

Oh I'm with you. With a 25 year time horizon, I feel confident investing in the market would provide a higher return than an index annuity. I just wanted your thoughts on the BCA annuity.

So when you say investing in the market, are you thinking along the lines of a variable annuity and using the more aggressive subaccounts?

The reason I'm leaning towards the indexed / fixed side is to limit the downside risk. I already have plenty of exposure to the stock market and as a commissioned sales person, I want to prepare for market downturns, carrier changes, etc. I suppose the Nervous Nellie side of me wants a bit of the action.

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NWL Ultra Value 9. It has a 95% participation rate in the monthly average of the S&P 500, along with a 30bps spread.

Its historical lookbacks are by far the highest among all of the IA options on the market at the moment. (6% midpoint, 2% low, 11% high)

Can you explain the participation and bps in layman's terms? I'm guessing it means you can get 95% of whatever the index does, limited by the points spread?

 

[scagnt83]

I just can't get behind an index annuity with a 25 year time horizon at such a young age...I start thinking riders 7-12 years out from retirement. Prior to that, I want my foot on the gas (just me).

.... There is just too much that can happen at the carrier level and they have too much control over how much money you make. I'm just not a fan...

Just to play devils advocate; would it not depend on risk tolerance?

Most IAs are designed to perform similar to a Corporate AAA Bond fund. And if you look at the performance of most contracts that is about how it works out usually.

Is there no place for a corporate bond like return for a 25 year time horizon? Especially for someone who is risk adverse?

Also, I always tell people to remember that they have the 10% free withdrawal feature. So if caps start to reduce a lot you can have 50% of your money moved out within 5 years.

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Can you explain the participation and bps in layman's terms? I'm guessing it means you can get 95% of whatever the index does, limited by the points spread?

Participation Rate is the % of the gains that your account participates in.

In the case of the product I mentioned, the gains are based on the (monthly average), which is a rolling month end average over the course of your contract year.

So your account would receive 95% of the monthly average gains over your contact year. (minus the spread)

The spread is simply a subtraction from the gain. bps is just investment speak for 100th of a percent. So 30bps is 0.30%

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So when you say investing in the market, are you thinking along the lines of a variable annuity and using the more aggressive subaccounts?

There is not much reason to opt for the VA. All it will do is add un-needed fees.

Just allocate evenly between 7 or 8 major stock indexes with an etrade account if you want it in the market.

I just read a very interesting article that said mutual fund managers who are exceeding their benchmarks are at an all time low currently. Plus index investing is the cheapest way to go as far as fees go.

 

[sman]

There is not much reason to opt for the VA. All it will do is add un-needed fees. Just allocate evenly between 7 or 8 major stock indexes with an etrade account if you want it in the market. I

Problem is, the money is currently in a VA and is non-qualified. He's stuck with some type of annuity. That's why I recommended Jefferson National VA or Vanguard earlier. About the lowest fees you'll find in the VA universe. But since he doesn't want any market risk, that leaves fixed annuities (MYGA or index annuity).

 

[scagnt83]

Problem is, the money is currently in a VA and is non-qualified. He's stuck with some type of annuity. That's why I recommended Jefferson National VA or Vanguard earlier. About the lowest fees you'll find in the VA universe. But since he doesn't want any market risk, that leaves fixed annuities (MYGA or index annuity).

Ah. I forgot about that. After 4 pages I had forgot and was just generally speaking at that point... lol.


I agree that Jefferson and Vanguard are the best VA choices out there. Very low fees. Jefferson probably has better subaccount options.

 

[NWBenefitProvider]

You guys are awesome and really know your stuff. I wish I was able to contribute back. Hopefully sometime down the road.

Both of the most recent companies mentioned are VA's and would require a series 6 license, which I do not have. In order to participate in the compensation, what is considered a fair split if I know what I want, but just need someone else to write it? Or, if that is totally frowned upon in the annuity world, just say so.

Thanks again.

 

[Indy007]

You can't be compensated on securities sales, unless securities licensed. By stating you know what YOU want, but need a licensed rep to write, you are skating on thin ice with providing securities advice. You could bounce variable biz to a RR, and the RR could send insurance biz to you.

 

[NWBenefitProvider]

That makes sense. Don't want anyone getting in hot water. So I'll give up any comp with VA or settle on a fixed product.

 

[KRobby]

Are you guys writing these for yourselves too and what are you picking?

No.

So when you say investing in the market, are you thinking along the lines of a variable annuity and using the more aggressive subaccounts?

A diverse blend of municipal bonds and some individual stocks.

Fixed, Indexed and Variable annuities however are great for older people that typically make under 200k/yr and are conservative. Excellent to sell.
(Variable's though can be as risky as whatever you put in it.)

Good luck with your decision, it'll be interesting to see which direction you head.

 

[Tahoe Ray]

Just to play devils advocate; would it not depend on risk tolerance?

Most IAs are designed to perform similar to a Corporate AAA Bond fund. And if you look at the performance of most contracts that is about how it works out usually.

Is there no place for a corporate bond like return for a 25 year time horizon? Especially for someone who is risk adverse?

Also, I always tell people to remember that they have the 10% free withdrawal feature. So if caps start to reduce a lot you can have 50% of your money moved out within 5 years.

Fair point and I completely agree. But, if we're just talking about one investment (I know you can't really plan in a vacuum, but just for argument's sake), the VA is going to have that option (high grade corporates) too.

The 10% free out convo is fine if we're talking about cases like this (without a rider being absolutely necessary) but that is a harder argument with products that have income riders.

I like these products (as you know), I just have a healthy dose of skepticism in general.