Celebrity Financial Advisors

[SportsNut]

I agree with the naysayers on the VA. The only time that one ever made sense was for a mkt timer... since the funds are inside the envelope of the annuity, one can switch from fund to fund w/o encountering cap gains. But I haven't used VA's for nearly 20 yrs... VA's have been widely misrepresented over the years.

Yes, Rukeyser was great. Saw him in person many years ago... This could be the reason that my wife and I ended up together, as it was one of our early dates. She was quite impressed with my interest in financial education as well as being very impressed with Louis himself.

Sonny Block (deceased 1998) was always one of my favs until he went off-tilt in 1995; securities fraud. Entertaining but apparently not all-that. He did give good advice publicly... until he couldn't resist the temptation of recommending fraudulent investments that he had a principal interest in. Many of his listeners, primarily elderly, suffered financial loss. What a shame.

So bottom line is, Caveat Emptor when listening to any of these talking heads... The temptation to become a shill is great, and in Sonny's case, overwhelming.

 

[Newby]

The people I run into with Variable Annuities only have a guarantee on their principle NOT thier interest which can amount to hundreds of thousands of dollars at risk IF they are in a 10-year annuity with a lot invested.

Not hearing many good stories about variable annuities these days. I'm just happy I'm not in that business.

 

[padthaiforlunch]

I miss Rukeyser. That was a great show.

Sportsnut: Tell us more about the early date. You had her over to watch the show?

 

[sman]

Nevermind. I will explain to all the folks I meet with VA's that have lost their asses that if they look hard enough in the fine print they will find a guarantee. Perhaps there are some new ones that offer guarantees and if you could give examples instead of vague comments, we could learn from your wisdom.

Patch and Mr. Bill,

VA's do have lifetime income benefits without annuitization. It is an additional rider just like you are seeing on the FIA's these days. The VA brought it to the market first and most every VA carrier has some form of it. For example, Pac Life has a guarantee of 5% income a year for life regardless of what the market does with a step up feature for the income bucket. In addition, they will credit 10% per year to the income bucket until you start taking distributions. So in essence, your account could double. A person who deposits $250k could have a guaranteed income of $25k per year after 10 years. This particular feature (the 10% credit) has now been modified for new contracts since the massive market correction. Also, their money is not tied up. As a matter of fact, Pac Life has a zero surrender charge product that you can use.

Nonetheless, for the person that wants a guaranteed income and an opportunity to invest in the market, the VA can be a nice risk management tool. Just as the FIA can be.

I'm not here defending the VA or stating a person should use a VA instead of a FIA. Just pointing out that the information being posted by some of you isn't entirley accurate.

 

[patch36]

I understand that some of the new VA's have the income rider, but that can't really be considered a guarantee of interest or principal unless you take the lifetime income option. Also, as an heir you don't get the value of the income account, but rather the accumulation account or what is left of the original investment, whichever is less. I don't see this as a positive unless you know you are going to take the income option and you are going to live a long time when you first buy into this product. Where is the guarantee? Unless of course you live long enough to draw it out as an income stream...which is soooo close to being annuitization, except you can stop at any time and take whatever happens to be left in the accumulation account, which may be a lot less than you originally invested...unless of course, you die.

What am I missing and why should I have sold all my clients VA's rather than the FIA's that I did sell them?

 

[sman]

I understand that some of the new VA's have the income rider, but that can't really be considered a guarantee of interest or principal unless you take the lifetime income option. Also, as an heir you don't get the value of the income account, but rather the accumulation account or what is left of the original investment, whichever is less. I don't see this as a positive unless you know you are going to take the income option and you are going to live a long time when you first buy into this product. Where is the guarantee? Unless of course you live long enough to draw it out as an income stream...which is soooo close to being annuitization, except you can stop at any time and take whatever happens to be left in the accumulation account, which may be a lot less than you originally invested...unless of course, you die.

What am I missing and why should I have sold all my clients VA's rather than the FIA's that I did sell them?

Please tell me where I said you should have sold VA's instead of FIA's. I was simply pointing out that VA's do have income features that don't require annuitization as you claimed. Nothing more, nothing less.

 

[patch36]

You didn't and no offense was intended. I know you can take an income stream OR annuitize. I should have used the word OR instead of AND in my original post. I was reacting to Stonewalls claim that there is so much misinformation about VA's and people are being hurt. They are being hurt because they are buying into the misinformation that VA's have real guarantees other than the return of principal at death OR a guaranteed income stream.

When I said 'Sorry. She is right on this one. The only guarantee with a VA is the death benefit if you die. The other guarantees you read about are if you annuitize and take an income stream, ect.' I should have used the work OR.

Again, I was not taking exception to what you said sman. I am familiar with the income riders for both products. I just don't like VA's because of all of the horrible situations I have seen people put into with them.

 

[sman]

No biggie patch. I completely understand. Hindsight being 20/20, I wish I would have put more clients in FIA's and less mutual funds and VA's. Fortunately for me (and the clients), not a single one is in a VA that didn't have a goal of providing income. And as for the mutual funds, I moved a lot to money market in early September so we avoided about a 20% drop. We still had a drop prior to September, but it hasn't been quite as painful and the phone isn't ringing off the hook.

 

[SportsNut]

I miss Rukeyser. That was a great show.

Sportsnut: Tell us more about the early date. You had her over to watch the show?

Pad: You must have me confused with some cheapskate, and my wife confused with someone who would settle for a date watching some financial advice on someones couch... Wasn't happening quite like that.

This was a live (on stage) performance, sponsored by the local ICFP chapter. Lou was great, very charming as usual but less structured than TV, and he was quite enjoyable. Jan 1988, if memory serves me correct. Nye onto 21 yrs ago.

Now YOU know...

 

[Franz Kafka]

Happy New Year and sincere thanks to everyone who so generously shared their expertise and knowledge to help a newby!

Re. Guaranteed Minimum Living Benefits - Income Benefit requires you to annuitize. Well, guess what .. that's why annuity was invented so you could annuitize. Annuitization is the BEST feature of an annuity.
Withdrawal Benefit doesn't require you to annuitize but if you withdraw more than what's allowed you're messing up the guaranteed bucket. If your actual contract value is really low compared to your income bucket, it works just like income benefit.
Accumulation Guarantee depending on the carrier guarantees your principal if you don't touch for 10 years and some guarantee double your principal if you don't touch for 20 years.
I don't sell VAs because it's the best option but because it's the ONLY OPTION for those who want to participate in the market but for some mysterious reasons don't want to lose any money either. All in all both FIA and VA with Guarantees are just an illusion designed to fill the needs of idiotic investors (aka the general public). They are idiotic because you CAN'T have both the high returns and safety of principal at the same time. Both FIA and VA with Guarantees will give you about the same as Fixed Annuity will give you (maybe less) but the idiots don't want low FA returns. They want bigger returns but don't want to lose any money either. Well re-arrange and shuffle and they get what they want - an illusion. Sell Fixed Annuities because 99.99% of population will go broke "trading" mutual funds but if they insist on something that doesn't exist (high returns with safety) sell them FIAs and VAs with Guarantees. It's still infinitely better than abandoning them in a mutual fund pit.