Buy a SPIA now (64 years old and retiring) Or MYGA and buy in 5 years?

[Tahoe Ray]

well, anyone interested in indexed should at least read this:
[EXTERNAL LINK] - The Complicated Risks and Rewards of Indexed Annuities | FINRA.org.

And this:
https://www.kiplinger.com/article/r...know-before-getting-annuity-income-rider.html

I'm not saying they are not good products. They provide good commissions, can be pretty complicated, and should be understood though.

You have to have an agent who knows what they're doing. Comp is irrelevant if the product fits your needs.

They're the worst products to write because we (as agents) get paid once. Even with renewal options, the pot you're paid on is decreasing.

I'd much rather roll your Clear Spring (which interestingly enough pays me more than a 5 year FIA) every few years and get paid over and over again.

Fee only advisors will feed you a whole line of BS about how "they're on your side" and "they only make money when you do"

Last time I checked, if I make 7% one time on a 10 year FIA with lifetime income that I'll never get paid on again is paltry compared the investment advisor charging you 1-1.5%yr on your assets. Sound like a pretty good deal for them...

 

[Allen Trent]

Last time I checked, if I make 7% one time on a 10 year FIA with lifetime income that I'll never get paid on again is paltry compared the investment advisor charging you 1-1.5%yr on your assets. Sound like a pretty good deal for them...

Nice try. As a fiduciary, they deserve to earn 200-400% more over a 20 year period than high cost commissioned agents because the products a fiduciary offers are low cost.......wait, what?

 

[AnnuityGuy63]

well, anyone interested in indexed should at least read this:
[EXTERNAL LINK] - The Complicated Risks and Rewards of Indexed Annuities | FINRA.org.

And this:
[EXTERNAL LINK] - What to Know Before Purchasing an Annuity Income Rider

I'm not saying they are not good products. They provide good commissions, can be pretty complicated, and should be understood though.

Not really that difficult to understand...
1. Income Annuities give a GUARANTEED INCOME- WOW THAT WAS REALLY CONFUSING.
2. Good Commissions? Because everyone works for free now a days especially the stock brokers that get paid whether you make money or get crushed in the market.

3. please forgive the above sarcasm- my passive aggressiveness gets the better of me when I read BS like the OP statement above.

 

[Allen Trent]

Not really that difficult to understand...
1. Income Annuities give a GUARANTEED INCOME- WOW THAT WAS REALLY CONFUSING.
2. Good Commissions? Because everyone works for free now a days especially the stock brokers that get paid whether you make money or get crushed in the market.

3. please forgive the above sarcasm- my passive aggressiveness gets the better of me when I read BS like the OP statement above.

I wish I could choose more than one emoji as I want to like this but also show angry emoji so I can appear passive aggressive to the post.....LOL

 

[davephx]

You have to have an agent who knows what they're doing. Comp is irrelevant if the product fits your needs.

They're the worst products to write because we (as agents) get paid once. Even with renewal options, the pot you're paid on is decreasing.

I'd much rather roll your Clear Spring (which interestingly enough pays me more than a 5 year FIA) every few years and get paid over and over again.

Fee only advisors will feed you a whole line of BS about how "they're on your side" and "they only make money when you do"

Last time I checked, if I make 7% one time on a 10 year FIA with lifetime income that I'll never get paid on again is paltry compared the investment advisor charging you 1-1.5%yr on your assets. Sound like a pretty good deal for them...

I am interested in your concept. I have a CPA background, but long ago, I forgot how to calculate the pure interest rate return on a SPIA.

I had never heard of Clear Spring but see it used to be Guggenheim, which I know from the securities side and it is A-rated, which is good for me if at least an A-

I am not an annuity expert, so excuse my perhaps dumb question.

Are you saying that, for example, their Highlander 7 product with a Fixed Account Guaranteed Minimum Interest Rate of 1.00%, which ignores their current 4% with the bonus that can change anytime beats, say, a current good SPIA because you are not using principal? And the 1% beats the internal internal interest rate on the SPIA?

Or are you talking about their regular non-indexed annuity with an income rider? I don't see that they have one from my fast review. Or, does the current high rate of 5.45% on the upcoming 7-year offset the rate internal to an SPIA even if it goes down to 1%?

When interest rates were low, I tried to avoid MVAs, but today, with relatively high rates, it is less of a concern and might be a benefit if anyone needed to take out early - which I have never had a client do.

I just ran an illustration using CANNEX software for age 77 male certain 5 yrs (single, no heirs, so doesn't care after he dies) and Life only, and somehow the 5 years certain was greater than life only?? On $100k, the top company was just over $900/month (Nationwide) vs $891 for life only (Global Atlantic, which, as I recall, has terrible reviews for servicing).

I sold a few indexed many years ago, but I don't like how they can change almost everything. Pre about 2008 or so, I liked variable annuities where you could be aggressive in sub-account choice but had some great guarantees like locking in certain guaranteed returns or high water marks. That was too good, so the policies changed drastically, and I have not recommended them since.

I admit my ignorance since I do very little insurance business other than now fixed 5-year annuities to lock in good rates (have clients at 5%-5.5% as part of a diversified investment portfolio. I have been on the securities side for over 40 years, owned a broker-dealer in the past, and am a FINRA Registered Principal, OSJ, CFP, etc.

 

[scagnt83]

I am interested in your concept. I have a CPA background, but long ago, I forgot how to calculate the pure interest rate return on a SPIA.

I had never heard of Clear Spring but see it used to be Guggenheim, which I know from the securities side and it is A-rated, which is good for me if at least an A-

I am not an annuity expert, so excuse my perhaps dumb question.

Are you saying that, for example, their Highlander 7 product with a Fixed Account Guaranteed Minimum Interest Rate of 1.00%, which ignores their current 4% with the bonus that can change anytime beats, say, a current good SPIA because you are not using principal? And the 1% beats the internal internal interest rate on the SPIA?

Or are you talking about their regular non-indexed annuity with an income rider? I don't see that they have one from my fast review. Or, does the current high rate of 5.45% on the upcoming 7-year offset the rate internal to an SPIA even if it goes down to 1%?

When interest rates were low, I tried to avoid MVAs, but today, with relatively high rates, it is less of a concern and might be a benefit if anyone needed to take out early - which I have never had a client do.

I just ran an illustration using CANNEX software for age 77 male certain 5 yrs (single, no heirs, so doesn't care after he dies) and Life only, and somehow the 5 years certain was greater than life only?? On $100k, the top company was just over $900/month (Nationwide) vs $891 for life only (Global Atlantic, which, as I recall, has terrible reviews for servicing).

I sold a few indexed many years ago, but I don't like how they can change almost everything. Pre about 2008 or so, I liked variable annuities where you could be aggressive in sub-account choice but had some great guarantees like locking in certain guaranteed returns or high water marks. That was too good, so the policies changed drastically, and I have not recommended them since.

I admit my ignorance since I do very little insurance business other than now fixed 5-year annuities to lock in good rates (have clients at 5%-5.5% as part of a diversified investment portfolio. I have been on the securities side for over 40 years, owned a broker-dealer in the past, and am a FINRA Registered Principal, OSJ, CFP, etc.

Ray was responding to a comment about Compensation and benefit to the Agent, not benefit to the client.

It was insinuated that FIAs with Income Riders pay unreasonable compensation to the Agent.

As Ray pointed out, a MYGA that pays 50% less, will compensate the Agent much more over time vs. the FIA.

Even a FIA with a trail comp option, pays much less than most other choices. ESPECIALLY managed money with a 50bps-100bps wrap fee.

---

When it comes to SPIA vs. FIA for income, these days, FIAs win in almost every scenario, if you are only considering the payout amount. That is on a Guaranteed basis, not using Indexed Returns.

Because of this, SPIA sales have dropped drastically over the past decade.
Why get a SPIA when a FIA Rider provides a higher guaranteed income?... plus emergency liquidity.... plus enhanced income for LTC needs.... plus a DB for 10-15 years after income starts... plus the ability to pause/stop/decrease payments.

Lots of benefits over a SPIA. But SPIAs have better inflation options. And they have the tax advantage for NQ funds.

 

[davephx]

Ray was responding to a comment about Compensation and benefit to the Agent, not benefit to the client.

It was insinuated that FIAs with Income Riders pay unreasonable compensation to the Agent.

As Ray pointed out, a MYGA that pays 50% less, will compensate the Agent much more over time vs. the FIA.

Even a FIA with a trail comp option, pays much less than most other choices. ESPECIALLY managed money with a 50bps-100bps wrap fee.

---

When it comes to SPIA vs. FIA for income, these days, FIAs win in almost every scenario, if you are only considering the payout amount. That is on a Guaranteed basis, not using Indexed Returns.

Because of this, SPIA sales have dropped drastically over the past decade.
Why get a SPIA when a FIA Rider provides a higher guaranteed income?... plus emergency liquidity.... plus enhanced income for LTC needs.... plus a DB for 10-15 years after income starts... plus the ability to pause/stop/decrease payments.

Lots of benefits over a SPIA. But SPIAs have better inflation options. And they have the tax advantage for NQ funds.

Good explanation. When I read "Can't Beat," etc., I came up with a fiduciary attitude as I never considered commission differences, but if I can find the best product and earn more, I don't object!

I am not fee-only, which is the most expensive way to get investment advice on the securities side, if not an active trader. I give fiduciary-based advice as a CFP/RIA but implement it on the insurance or brokerage side using mostly breakpoints for A-share mutual funds with positive Alpha vs Beta (performance for risk) and never indexes or ETFs.

 

[scagnt83]

Good explanation. When I read "Can't Beat," etc., I came up with a fiduciary attitude as I never considered commission differences, but if I can find the best product and earn more, I don't object!

I am not fee-only, which is the most expensive way to get investment advice on the securities side, if not an active trader. I give fiduciary-based advice as a CFP/RIA but implement it on the insurance or brokerage side using mostly breakpoints for A-share mutual funds with positive Alpha vs Beta (performance for risk) and never indexes or ETFs.

I understand. Its easy to get lost in the back and forth on here sometimes.

I see less and less 1% fees out there in the AUM world. It seems the new "norm" is 1% "all in". Which of course is pushing Advisors towards ETFs and Managed Accounts that use ETFs.

I feel there is a lot of wisdom in the old school approach of a solid A Share Mutual Fund. If need be, you can easily charge an annual planning fee they cut a check for... or the new trend is a "monthly subscription".

 

[MedicareMutt]

Not true.

Indexed products have guaranteed income options. You don't need to have stacking and/or multipliers (Allianz) to get your income 100% guaranteed.

Athene and Corebridge will both destroy an income annuity (SPIA/DIA) in many cases on a guaranteed basis. The only factor is for NQ money and taxes, but even then the math is pretty equal.

Best way to learn about annuities?

 

[Tahoe Ray]

Best way to learn about annuities?

The best way, sell them for 20+ years.

The second best way is to get with an upline focused on annuities who is willing to train you.

Develop client profiles that fit the products you have. For clients looking for rate/CD alternatives, Multi-year Guaranteed Annuities (MYGA) are super easy to start with.

Clients that need immediate income, Single-premium Immediate Annuities (SPIAs) are really easy to understand as well.

You can do a lot of this research online. The tough part is finding the prospects that fit your profiles.

I have dozens of client profiles. It makes it really easy to know exactly how I'm going to position a particular product. Once you have the profile created, you find the best products for that profile.

So the products are fluid (can change depending on market conditions, carrier appetite, etc.) but the profiles remain the same (because the 65 yo looking for immediate income from their 401k rollover is the same this year or 5 years from now).

Good luck.