Anyone Heard of AXA?

[scagnt83]

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.

Good points as well.

What are your thoughts on Jefferson vs. Vanguard for VAs?

 

[sman]

Good points as well.

What are your thoughts on Jefferson vs. Vanguard for VAs?

I know this wasn't directed at me, but I'd choose Jefferson. The higher the balance, the lower the overall expense. Vanguard has a 10bps admin fee and 0.195% M&E charge. Jefferson is a flat $20 per month. So on a $200,000 account, you're paying 12 bps. And the Jefferson VA has more investment options than any VA I've ever seen. Of course, this could be a bad thing as well (some people struggle with too many options). And as far is expense ratios on the sub accounts, there are plenty of low cost options with Jefferson.

Just my two cents.

 

[Tahoe Ray]

I know this wasn't directed at me, but I'd choose Jefferson. The higher the balance, the lower the overall expense. Vanguard has a 10bps admin fee and 0.195% M&E charge. Jefferson is a flat $20 per month. So on a $200,000 account, you're paying 12 bps. And the Jefferson VA has more investment options than any VA I've ever seen. Of course, this could be a bad thing as well (some people struggle with too many options). And as far is expense ratios on the sub accounts, there are plenty of low cost options with Jefferson.

Just my two cents.

What he said.

 

[VolAgent]

Just my .02 cents.

Putting this guy into another VA is how you end up having an awkward conversation with your client in a few years. Or having an even more awkward one with compliance if the market tanks and he sees the account value plummet.

Just based on what he has said on here, I get the feeling he is more than willing to give up some of the upside for the downside protection of a FIA. Maybe even a MYGA versus another VA.

Again, just my .02 cents.

 

[FBN]

If your willing to accept market risk, the low cost VAs are the way to go imo. If you see a market correction coming (very likely since the S&P is at all time highs) then you should consider an uncapped FIA or MYGA.

 

[scagnt83]

Just my .02 cents.

Putting this guy into another VA is how you end up having an awkward conversation with your client in a few years. Or having an even more awkward one with compliance if the market tanks and he sees the account value plummet.

Just based on what he has said on here, I get the feeling he is more than willing to give up some of the upside for the downside protection of a FIA. Maybe even a MYGA versus another VA.

Again, just my .02 cents.

I would have to agree. It all depends on the risk tolerance. If this guy doesnt want market risk then he shouldnt take it on, at least not with most of the funds.

I have plenty of IAs on the books that have performed very strong over the years. Many have beat what a AAA fund would have returned. And every single one of them beat what a CD would have returned.

So on average, depending on the parameters of the current Cap/Spread/PR/whatever; from my experience people can expect between a 3% and 6% average return over the long run.

Most stock brokers claim the market will do 8% over the long run. But the downside is a possible negative return/loss of principle.

Even if we say the low side of the market return usually is around 2% or 3%..... you have to ask yourself this:

"Would you rather have 3%-8% returns, but with the possible risk of a -5% return?"
or
"Would you rather have 2%-6%, but with the risk of a 0% return."


I once put a 30 year old into an IA because he was dead set against both the market and bonds. He was going to put it in a 5 year CD at 1% before I spoke to him. He said that if he could just get a 3% return he would be happy... so far he has averaged 6% and is extremely happy.

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

If you do not want market risk I would think twice about taking it on.

Just because one person would do something, or even the majority, does not mean it is right for your situation. It is your money, trust your gut.

Also, not to give financial advice or anything, but some friendly advice lets call it....
Personally, I am taking money out of the market right now. I have clients taking money out of the market right now. I know CFPs that are taking profits right now left and right.
The S&P just hit an all time high... again... for like a 10th time....
This is an artificial market propped up by free money from the Fed... and the gravy train is quickly slowing down.

The peak is not when you want to invest, you want to invest at the dip.

What I am trying to say is that if you do want to invest in the market, personally, if I were you, I would wait for the market to make the correction that most likely will occur in the next year or two.

You have a very long timeline to invest. There is no need to jump in on the peak of a bull market.

Honestly, if I had $200k that I was looking to put to work for retirement (and I had a 25 year timeline) I would probably have it in cash or bonds at the moment... or at least most of it. Wait for the market to crash, then jump in at the bottom and just buy cheap index funds.


But if that $200k is all of your retirement savings, then why not split it up? Diversify your risk.

Put half in an IA, and half in a new VA. (or 60/40 or whatever you feel comfortable with)

You dont have to put it all in just one financial product, or all in one risk profile.

 

[KRobby]

If you see a market correction coming (very likely since the S&P is at all time highs)

All time highs doesn't really mean much, except to the media, since it's a cumulative measurement.

If I save 1 cent every year, every year is an 'all-time high'.

The S&P 500 index is up 2.82% ytd.

 

[scagnt83]

All time highs doesn't really mean much, except to the media, since it's a cumulative measurement.

If I save 1 cent every year, every year is an 'all-time high'.

The S&P 500 index is up 2.82% ytd.

So the 5.5 month return is 2.82%.... so what?? The 17 month return is 32.42%. History matters.

 

[KRobby]

History matters.

Of course it does. 'All-time high' does not. Reading comprehension.

 

[scagnt83]

Of course it does. 'All-time high' does not. Reading comprehension.

You go ahead and stick $200k in the market right now. Im sure it will do just fine. And "all time highs" are a part of history. History comprehension.

Im not saying that the market has peaked, but very few experts think that the bull will be raging much longer. If you look at history when "new highs" are being created this often, most of the time it has been followed by a large drop. JMO based on the facts... 5 years from now May 2014 will not be a point in the chart that you would point at and say "I should have gotten in there"...