Close Friend who Came into Some Money

[scagnt83]

my internal for annuities sent me some info an ATHENE 5yr FIA. It uses 1 yr ptp S&P with a 3.5% spread. I liked it for the most part, but I wonder if we could do better on the spread.....

That does not use the normal S&P 500. It uses the S&P 500 5% Risk Control... which has returned CONSIDERABLY less than the normal S&P 500.

I tried to get behind selling this product earlier this year. It sounded great until I really dug into the numbers... and that was when it had a 2.5% spread...

I am actually surprised that an IMO is pushing it, kudos to them in a way because there is only a tiny margin on that comp.


Look at AGs Power Protector 7 that uses a Merrill Lynch Index. 3% 2 year spread. Historical lookbacks have a low of 3% and high of 8%.

AE has a nice 6 year product called the choice 6. 1.75% spread on a dividend index. Much better returns than the normal S&P 500 5% RC.


Also, remember that he will have a 10% penalty if he accesses the money before age 59.5 since its in an annuity.
If he wants access before then you should look at ML-CDs or referring him to a registered rep.

 

[DWPCL]

AE has a nice 6 year product called the choice 6. 1.75% spread on a dividend index. Much better returns than the normal S&P 500 5% RC.

.

AE uses the same 5% RC index dont they?

 

[scagnt83]

AE uses the same 5% RC index dont they?

No. They are very different.

AE uses the S&P 500 Dividend Aristocrats 5% Risk Control. Which is a Total Return index (means it includes dividends). It is made up of at least 25 companies that have increased dividends consistently each year over the past 25 years. And it has performed much better than the normal S&P 500 5% RC.

Here are the annualized returns:

S&P 500 5% RC: 1y- 3.20% 3y- 3.94% 5y- 3.52% 10y- 1.80%

S&P 500 DA 5% RC: 1y- 6.24% 3y- 7.23% 5y- 5.88% 10y- 5.60%


When you consider that the Athene product has a 3% spread, it is looking at returning basically 1%-2% over that 5 years.

AE has a 1.75% (6y product) spread, so it is looking at 3.5%-6%

 

[aclaro]

Since its non - qualified money, you can MEC a life policy to get better caps. It will work just like an annuity but a lot more upside potential.

If he is going to draw income eventually focus on that and show how the life policy works when max funded generating tax free income versus a MEC 1035 into an income stream.