EIUL and Mortgages

[djs]

Ask OJ about the advantages of an annuity over the advantages of a CD. He still has his annuities

Problem with this discussion is the time frame. 1 year CD's are 1 year CD's. Annuities shouldn't ever be considered for 1 year terms. It's an apples and oranges discussion.

If someone in their 40's is buying CD's for their retirement, they have to pay taxes on them as they go, usually resulting in significantly lower returns overall than a similar investment that is tax defferred, where you can invest what would have been paid in taxes along the way.

You're also comparing the 'guarantees' of an annuity against the 'todays' actuals for CD's. The guarantee of a cd is 0%. The guarantee of most annuities is much higher. Are CD's at this moment paying higher than an indexed annuity? Maybe. Are CD's at this moment paying higher than stock investments? Maybe. Will they tomorrow? History says no (when viewed in the long term).

The problem with annuities is that, like other products, people sell them for the commission, not for the need of the client. Annuities, done right, are very powerful tools for clients, if they are understood by both the agent and the client. Suzie listed in her article some reasons to not sell annuities (needing money soon), but agents should be doing the right thing for the client.

In all honesty, I think they need to change the way licenses to sell annuities work. Any true financial product should require some sort of 'financial' license, similar (if not the same as) the series 6/63 for variable stuff.

 

[James]

In all honesty, I think they need to change the way licenses to sell annuities work. Any true financial product should require some sort of 'financial' license, similar (if not the same as) the series 6/63 for variable stuff.

Yes more governmental regulations is always the answer. We all know that those who hold a 6/63 or even a 7 series license would never ever act outside of the interest of the client.

 

[djs]

Yes more governmental regulations is always the answer. We all know that those who hold a 6/63 or even a 7 series license would never ever act outside of the interest of the client.

Hmmm, I did say that wrong.... I just meant that people will sell what they have to sell. Since a lot of agents don't bother with their 6/63, they have limits of what is available when the client is wanting to do something with their money. I based this on reading the Suzie Orman article, and the agent who put money in a 10 year annuity for someone that was only going to live for a few months. My guess is, he was selling what he had, rather than the right thing for the client.

Of course, there was a lot of stuff left out of the article. A lot of annuity situations can be presented as absolutely a stupid thing to do, but, even in the Suzie article, there is a probably a LOT more to the story than was told.

Dan

 

[James]

Hmmm, I did say that wrong.... I just meant that people will sell what they have to sell. Since a lot of agents don't bother with their 6/63, they have limits of what is available when the client is wanting to do something with their money. I based this on reading the Suzie Orman article, and the agent who put money in a 10 year annuity for someone that was only going to live for a few months. My guess is, he was selling what he had, rather than the right thing for the client.

Of course, there was a lot of stuff left out of the article. A lot of annuity situations can be presented as absolutely a stupid thing to do, but, even in the Suzie article, there is a probably a LOT more to the story than was told.

Dan

No you didn't say nothing wrong, I was being comical and sarcastic, my natural demeanor. I really don't know why someone that only had a few months to live would be out talking to insurance agents? In fact I find that kind of hard to believe personally. Think about it, the Dr. tells you that you only have a few months to live, what is it you would do? Go out and talk to insurance agents about money? Or is it that insurance agents are now buying Hospice Leads. I think Suze is using stories that may not be all that true but I have not seen the article you are referencing.

Or I can always ask what would be the right place for someone to put money into if they only had a few months to live? Of course if this was a SPIA with no time certain I imagine the Insurance Carrier would jump all over that!

 

[djs]

But what was true in your statement was that government regulation doesn't make you truly qualified to sell anything!!!!

 

[somarco]

I'm not sure what the nursing home waiver is on that, but you can get all yoour money out in 5 yrs just like a CD.

You cant get money out of an immediate annuity.

 

[somarco]

Katt appears to be a fee only advisor. Some folks swear that those who work off a fee are less biased than those on commission.

Rubbish.

I have worked with many fee only advisors that are not only incompetent, but are just as biased as those who generate income off commissions. If anything, my opinion is that fee only advisors are mostly worthless.

They collect their fee regardless of the quality (or lack thereof) of their advice. They are paid to render an opinion. If the client takes their advice, and often they do not, the advisor gets paid. Sometimes they end up buying from the advisor, sometimes not. Since most products sold by agents & financial brokers include commissions built in, the client is paying double.

 

[James]

Katt is consider an authority on the workings of the Insurance Contract, I wouldn't debate that. Now the ability of the Fee Vs Commission being better, is a debate that will rage for some time. Yet it would be something for a Fee Only Advisor selling commission products, most contracts such as WL or UL one can dial down the commission all the way to zero, something most Fee Advisors state that they do, now in reality I don't know but it is what they say. That is why the Low Load UL's don't seem to make all that much sense, you can take the better UL's and simply dial down your commission via the target premium and super charge the front years of almost any UL or WL contract.

 

[senior-advisor-indiana]

You cant get money out of an immediate annuity.

The whole concept of an immediate annuity is so you can get money. money right now...hence "immediate". So yes somarco, you can get money outta an immediate annuity. Thats the only reason people buy them.

 

[somarco]

There are low load (and a few) true no load life & annuity products. Most have some commissions built in to them. This is especially true of NY based carriers where (unless the laws have changed) are required to pay a commission on every product.

Some fee advisors will offset their fee by the commission earned if the client opts to buy thru the advisor.

The problem with generalizations is, there are always exceptions to the rule. The fee only advisors I have witnessed operate within a comfort zone and do very little to stay on top of the latest product offerings. They find a carrier or product they like and tend to recommend it over & over again.

One can argue that commission sales people do likewise except for the fact if you are a one note Charlie eventually you will get your ears pinned back as new products and new carriers come on the market place creating a shift in their favor and away from the current hot number.