Anyone Up for a Variable Annuity Question?

[adamhawley]

CALTCAgent: he did leave that part of the suitability form blank for me to complete, along with my ssl and dl. But, he did complete the risk tolerance potion, putting my risk right in the middle. Safer that way I suppose.

 

[iceco1d]

Interesting statement. I'm not familiar with their VAs. Could you elaborate a little?

I know someone who writes a ton of VAs but with either PRU, JN or Snoopy. Lately it has been PRU.

Sure. Their base contract (the B share) has a 90 bps M&E charge and a 6 year surrender period. There are lots of investment options available, and depending on which rider(s) you select, you can go 75 - 80% equity if you want.

Their GLWB rider was a 8% ratchet, with a doubling (if no withdrawals) after 10 years (at any age). Income ranged from 4 - 7% depending on when you started (and was competitive). Cost was under 1% last I checked (but I think they have changed the income brackets recently, and maybe the cost went up, not sure).

They also had a 10 year GMAB rider for about 50 bps (but the costs have gone up there too).

People usually sling JNL, Pru, and Metlife because the commissions are higher (The B share Ohio Nat product only pays .7% up front, and a .7% trail, while the JNL/Pru/Met contracts pay 2% up front and a 1% trail). M&E on those contracts are all over 1.20% (compared to Ohio Nat of .90%).

Selling points for...

JNL: No limits on equity exposure (can go 100% stocks). Availability of a combined LB/DB rider (income for life, and then original deposit paid to beneficiaries as long as $1 is left in the contract at death)...which I think is a good sell, but almost never practical in the real world. Also that you can select your ratchet (from 5 - 7%), based on what you want to pay for the rider.

Pru: They are still selling their "Highest Daily" b.s. Has come down from 7% to 5%, and have lowered their age-based income brackets over time also. Pru can move 100% of your account to bonds according to their formula without your permission (otherwise you can go 80% stocks).

Metlife: They used to be strong with the enhanced DB, but now they are pushing a combined LB/DB rider (which as I stated about JNL, I think is total garbage in real life).

I think Pacific Life is the 2nd strongest VA company out there (75% stocks are OK, 5% income for life at 59.5, still have a 10 year GMAB, good investment choices, 6 year surrender and lower M&E than JNL/Met/Pru). But again, commissions are lower than the main players, so I think they get less play from brokers (1.5% up front with a 1.0% trail on the B-share).

In any case, hope that helps.
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twenty characters

I'd love to hear of a better company, and your reasoning. Of course, a well thought out emoticon reply is always thought provoking.

 

[scagnt83]

A VA with an income rider is an oxymoron.

If you need that money guaranteed, then market exposure should be minimal.

And why pay 3%-4% just for the guarantee?

You can get a better Rider on an IA at a much lower cost.
And after 3%-4% fees, (using your 8% market return theory...), then returns on the CSV will be around IA returns anyways...

The most logical theory would be to try to capture a "step up" from a large year or two... but that has rarely happened for people, and once income is turned on it very likely will never stepup.

So why pay 4% in fees when you could just pay 0.5%?
Half the people who do VAs these days only do so for the rider...

 

[iceco1d]

A VA with an income rider is an oxymoron.

If you need that money guaranteed, then market exposure should be minimal.

And why pay 3%-4% just for the guarantee?

You can get a better Rider on an IA at a much lower cost.
And after 3%-4% fees, (using your 8% market return theory...), then returns on the CSV will be around IA returns anyways...

The most logical theory would be to try to capture a "step up" from a large year or two... but that has rarely happened for people, and once income is turned on it very likely will never stepup.

So why pay 4% in fees when you could just pay 0.5%?
Half the people who do VAs these days only do so for the rider...

Reading comprehension really isn't your bag, is it?

#1 - My original post was that "Ohio National has the best VARIABLE ANNUITY product on the market." So therefore, I already carved out variable annuities from other types, and then make a comment as to which VARIABLE product was best.

#2 - The Ohio National product I mentioned can have an all-in income rider for less than 2.5% (and closer to 2.25%).

#3 - The long term average return on stocks is 10 - 14%, not 8%.

#4 - Income riders on VAs can make perfect sense. Some people would like to add a GUARANTEE to the portion of their assets that they WANT IN THE MARKET. And yes, it's OK to have money in the market, contrary to most of the FIA-only slingers I run into.

As a side note, it's sad to see people have such a misinformed view of various products. I'm not sure if it's misinformed, or if you convince yourself that products you don't have a license to sell are evil.

Either way, one-trick-pony product-pushers (like the "FIA solves all problems!" crowd) are precisely the reason regulators are cracking down on financial services and insurance salesmen. You have people making dimwitted arguments against products they don't understand and/or aren't allowed to sell to the detriment of their clients, and now we're collectively going to pay for that ignorance as an industry.

Thanks.

I can sit down with a client and sell them a VA, FA, FIA, SPIA, mutual fund, stock, bond, CD, term insurance, permanent insurance, LTC, disability insurance, or any other financial product on Earth. I have no reason to slam one product down a clients throat, I can pick from the universe of financial products and select the best combination (yes, COMBINATION) of products for them.

Can you say the same? Or do you just try and scare them about the big bad stock market and tell them how a FIA can solve all of their problems?

 

[scagnt83]

Reading comprehension really isn't your bag, is it?

#1 - My original post was that "Ohio National has the best VARIABLE ANNUITY product on the market." So therefore, I already carved out variable annuities from other types, and then make a comment as to which VARIABLE product was best.

#2 - The Ohio National product I mentioned can have an all-in income rider for less than 2.5% (and closer to 2.25%).

#3 - The long term average return on stocks is 10 - 14%, not 8%.

#4 - Income riders on VAs can make perfect sense. Some people would like to add a GUARANTEE to the portion of their assets that they WANT IN THE MARKET. And yes, it's OK to have money in the market, contrary to most of the FIA-only slingers I run into.

As a side note, it's sad to see people have such a misinformed view of various products. I'm not sure if it's misinformed, or if you convince yourself that products you don't have a license to sell are evil.

Either way, one-trick-pony product-pushers (like the "FIA solves all problems!" crowd) are precisely the reason regulators are cracking down on financial services and insurance salesmen. You have people making dimwitted arguments against products they don't understand and/or aren't allowed to sell to the detriment of their clients, and now we're collectively going to pay for that ignorance as an industry.

Thanks.

I can sit down with a client and sell them a VA, FA, FIA, SPIA, mutual fund, stock, bond, CD, term insurance, permanent insurance, LTC, disability insurance, or any other financial product on Earth. I have no reason to slam one product down a clients throat, I can pick from the universe of financial products and select the best combination (yes, COMBINATION) of products for them.

Can you say the same? Or do you just try and scare them about the big bad stock market and tell them how a FIA can solve all of their problems?

You ASSume. that everyone who has something contrary to your opinion is "uneducated" or "unlicensed" or "biased".


First,
You must think you are the only person in the world since you ASSumed my post was directed at just you....

Second,
I am not totally against VAs. I like them for certain situations... I just placed one the other day...
However,
(As I stated in my post)
I am not a fan of a VA w/ an income rider.
I feel that it makes the product too expensive for the equity portion of the contract to be of any real value.

If you want guarantees while being in the market then get fixed assets to guarantee original principle and have fun with the equities.

If you are too obtuse to understand my position on the subject then thats your own ignorance.


You are not the only RR around here... most people on here are or have been one...

And by the way, I have placed way more people in Equity based Qualified Plans than I have in IAs..... and that is currently where the majority of my income comes from... so I am the last person to say that people should run from the market.

I wish the world was as black and white as you seem to think it is.
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#3 - The long term average return on stocks is 10 - 14%, not 8%.

As a side note, it's sad to see people have such a misinformed view of various products. I'm not sure if it's misinformed, or if you convince yourself that products you don't have a license to sell are evil.

Either way, one-trick-pony product-pushers (like the "FIA solves all problems!" crowd) are precisely the reason regulators are cracking down on financial services and insurance salesmen. You have people making dimwitted arguments against products they don't understand and/or aren't allowed to sell to the detriment of their clients, and now we're collectively going to pay for that ignorance as an industry.

Will you send me a VA proposal with "expect 10%-14% returns" on it?
Hopefully you know better...

I dont dislike the market.

But to turn the tables on you here... brokers who spout outrageous gibberish such as "the market averages 14%" is what shines a bad light on RRs.


I got the 8% number from you in another post.
Although, come to think of it, you said that was worst case...
But you failed to answer the question about what happens to that 8% over 30 years if you extend it out just two years...

I will save you the research I know you wont do, and tell you that your worst case scenario drops to around 5%...


You see, math can be manipulated to back up about any argument you want to make about the market. Good or bad.
Which is why you should take everyone and anyone with a grain of salt.

My biggest gripe with the market is that too many seniors are way too overexposed to it. 2008 proved that.
Now, way too many are sitting on the sidelines because of that... its a real catch-22.



But seriously though Ice,
You are not living up to your screen name.
You discuss things in a professional manner for about two posts, and then as soon as a difference of opinion arises you resort to schoolyard tactics of name calling and blatantly ignoring anything other than your own opinion (even facts).

I have tried to engage you in a professional academic like discussion about various subjects multiple times on here. But you ignore facts, make false accusations, and fail to even attempt to consider a contrary view.

You seriously need to take a chill pill.


And the sad thing is that I actually agree with you that ON has good VAs....

 

[iceco1d]

But seriously though Ice,
You are not living up to your screen name.
You discuss things in a professional manner for about two posts, and then as soon as a difference of opinion arises you resort to schoolyard tactics of name calling and blatantly ignoring anything other than your own opinion (even facts).

I have tried to engage you in a professional academic like discussion about various subjects multiple times on here. But you ignore facts, make false accusations, and fail to even attempt to consider a contrary view.

You seriously need to take a chill pill.


And the sad thing is that I actually agree with you that ON has good VAs....

Sorry, I have very little patience and don't take well to mockery. I don't spend enough time on this forum to forge strong opinions about anyone and don't recall having a discussion with you about anything in the past.

All I recall reading on this forum is "blah, blah, blah the stock market is evil, blah, blah, blah indexed annuities for safe money/retirement income/legacy assets/education planning/you name it blah, blah, blah evil mutual funds/stocks/bonds/variable annuities/anything market related, blah, blah, blah."

Re-reading posts now...how should I take statements about 4% all-in fees, when my commentary was specifically about Ohio Nat? What should I ASSume about your comments? Wasn't it you in the other thread about income riders from big mutuals? How can I ASSume from your commentary that you multi-licensed, give well rounded advice, and are educated on a variety of products, your initial commentary directed at me proves completely the opposite?

 

[BNTRS]

Why are such a repugnant little prick?

ONL is not the best VA on the market, get over it. It's good, in fact it's really good, but claiming it's the best (or really claiming anything is the best) is only something fools do.

You're depiction of JNL is hugely disingenuous. Their DB rider is just that...a rider. It is not inextricably tied to their GMWB rider.

On top of that JNL does not charge off the high water mark.

They guarantee their fees for 5 years after issue.

They not only allow the contract owner complete control over where their money is invested, but they also have one of the most comprehensive offerings when it comes to investment choices inside their annuity, including extremely low fee funds developed by S&P.

They make a dollar-for-dollar adjustment to benefit in the event of an over-withdrawal

A fixed bucket you can move in and out of pretty much as you wish


Speaking of Pru, if you're primary focus is on the income rider (and it must be if your pushing ONL--a model portfolio contract when using the GMWB rider--so hard) what's so terribly about Pru? Granted the investment options suck, and it can be a little expensive up front, but they drop a lot of fees once you are out of surrender and 5% compounded isn't such a terrible deal.

Now, most of your BS is just fine, you can sling products all you want (I used to be a tad too excited about a certain mutual companies 10 pay--still a wildly good product btw) so it's fine that you really like ONL's VA.

But when to make claims like this:

#3 - The long term average return on stocks is 10 - 14%, not 8%.

it points out the sort of intellectual fraud you really are. The number's have been crunched time and time again, and this claim is both unsubstantiated and false. The index used to measure U.S. stock market performance is the S&P 500, the numbers have been crunched many many times. The average is 10% the standard deviation is 15%. This number refers to the arithmetic mean of the S&P 500. The geometric mean of the S&P 500 is 8%.

There is no such thing as a long term average rate of return for the U.S. stock market (or any stock market for that matter). If you are willing to quibble over this claim, you'd better be ready to disprove Steady State Theory and since you've obviously already displayed a difficulty differentiating arithmetic and geometric means, I'm going to go out on a limb here and suggest you don't possess the mathematical knowledge to offer up a competing theory that would breathe life into such a concept as a long term average rate of return for an economy. My guess, you already have no idea where I'm going with this.

 

[iceco1d]

Why are such a repugnant little prick?

SCagnt - Is this where I'm supposed to continue being "professional?"

ONL is not the best VA on the market, get over it.

I've asked 3 times now. Please show me a stronger contract.

It's good, in fact it's really good, but claiming it's the best (or really claiming anything is the best) is only something fools do.

No, with VAs it's pretty simple. You can compare ratchets, withdrawal percentages, M&E costs, equity flexibility, investment breadth, and compare them. It's not subjective like "the best stock to buy." It's pretty simple.

You're depiction of JNL is hugely disingenuous. Their DB rider is just that...a rider. It is not inextricably tied to their GMWB rider.

It's not disingenuous. It's a combination of a GLWB rider and an Enhanced DB rider. Since the discussion is pertaining to GLWB riders (at this juncture), I mentioned it (mostly to be helpful, since it's sort of unique).

On top of that JNL does not charge off the high water mark.

Excuse me? You'll have to clarify what you're talking about here. You mean for the LB/DB rider? Or the regular GLWB? Please clarify, because this statement is far too general.

They guarantee their fees for 5 years after issue.

Whoopy.

They not only allow the contract owner complete control over where their money is invested, but they also have one of the most comprehensive offerings when it comes to investment choices inside their annuity, including extremely low fee funds developed by S&P.

As I read through this, I can see where the venom towards my Ohio Nat comment came from. You're a JNL pimp!

PS - I'm a STARS level producer for JNL. So thanks for the lesson, son.

They make a dollar-for-dollar adjustment to benefit in the event of an over-withdrawal

They aren't the only ones that do this. And this benefit applies to what? One in every 300 contract holders? Not enough to make them "the best." They are lenient when you make a mistake - wow.

A fixed bucket you can move in and out of pretty much as you wish

Again, I don't buy VAs for the fixed bucket. I buy them to provide guarantees to clients who want them on that portion of their risky assets. If I bought VAs for the fixed bucket, I'd only be buying Variflex for the 3% GMIR.

Speaking of Pru, if you're primary focus is on the income rider (and it must be if your pushing ONL--a model portfolio contract when using the GMWB rider--so hard) what's so terribly about Pru? Granted the investment options suck, and it can be a little expensive up front, but they drop a lot of fees once you are out of surrender and 5% compounded isn't such a terrible deal.

The discussion is about LB riders at this point, not DB riders. I already detailed the problems with Pru (investment limitations, they can move you to the AST bond portfolio at their discretion, and shitty withdrawals percentages for joint life contracts...the HD benefit just guarantees you'll ALWAYS be underwater, and they can bill the maximum rider fee everyday).

Now, most of your BS is just fine, you can sling products all you want (I used to be a tad too excited about a certain mutual companies 10 pay--still a wildly good product btw) so it's fine that you really like ONL's VA.

I never claimed I even sold the Ohio Nat product, let alone sold it exclusively. READING COMPREHENSION.

But when to make claims like this:

it points out the sort of intellectual fraud you really are.
The number's have been crunched time and time again, and this claim is both unsubstantiated and false. The index used to measure U.S. stock market performance is the S&P 500, the numbers have been crunched many many times. The average is 10% the standard deviation is 15%. This number refers to the arithmetic mean of the S&P 500. The geometric mean of the S&P 500 is 8%.

READING COMPREHENSION ALERT: The "stock market" does not mean the S&P 500. It includes the S&P 400, S&P 600, MSCI EAFE, BRICs, the Middle East, Africa, microcaps, nanocaps, and on and on and on. Get your head out of your ass look around you.

There is no such thing as a long term average rate of return for the U.S. stock market (or any stock market for that matter). If you are willing to quibble over this claim, you'd better be ready to disprove Steady State Theory and since you've obviously already displayed a difficulty differentiating arithmetic and geometric means, I'm going to go out on a limb here and suggest you don't possess the mathematical knowledge to offer up a competing theory that would breathe life into such a concept as a long term average rate of return for an economy. My guess, you already have no idea where I'm going with this.

Yes, arithmetic returns vs. geometric returns is a very difficult concept, I can probably never grasp it. We can have this discussion once you stop using the S&P 500 as a proxy for the entire stock market.

Thanks for playing, genius.

 

[tntiquer]

Came here to try to learn.. Know very little about variable annuities.. However I do know how to spot an A$$ in the crowd and icecold you are it.

 

[BNTRS]

I'm quickly developing the opinion that I'm having this conversation with someone who is a tad shallow on depth of knowledge.

You're constant confusion on the db rider and the stand alone GMWB rider is simply that, confusion. It's not really a mission critical point to this conversation, so I'll leave it alone.

You're depiction that it's just a matter of GMWB numbers, charges, and "equity flexibility" (whatever that means) leaves your evaluation model with a lot of exogenous variables. There's more to it than that, and this is why it's difficult to simply declare one the best, and it's why I won't do it.

If you don't know what charging off the high water mark means, than you really have no business declaring any one product best in the industry.

I haven't sold JNL's VA in a while, I think this is when you'd say "Reading Comprehension," though I'm not sure you know exactly what that means, that or it's some ironic inside joke you have with yourself.

Speaking of reading comprehension, I really don't think you've done so well comprehending what I've detailed for either JNL or Pru, that or you're intentionally trying to confuse issues in hopes that you can trip up the conversation.

Again, I don't buy VAs for the fixed bucket. I buy them to provide guarantees to clients who want them on that portion of their risky assets.

So let me ask you this. If you have a client who is a few months away from a contract lock in on the roll up, and the stock market starts to decline, are you one of those who tells your clients "don't worry about it, it'll come back?" I've moved to the fix bucket for a short while and mitigated losses quite well. Or better yet, following on the sage advice that hogs get slaughtered, if I'm having a really good year, I can move to fix bucket until the lock in and then risk it from there. Most people don't appreciate the "it'll come back" crap they hear from most "advisers."

The S&P 500 doesn't mean the stock market? Heresy! I'm well aware of this, in fact I like to throw out little soft balls from time to time to test one's true proficiency with a subject. I opened the door wide and put a "come on in" sign over it, and yet you failed to truly seize the opportunity.

So, now I'll lead you along and explicitly ask for what I was hoping you'd be slick enough to provide with my allusion. Show me the methodology behind the numbers. Where are we finding 10-14% on "the stock market?" And then go one further and answer how we are finding 10-14% on the stock market.