Two Year Point 2 Point VS. 1 Year?? Thoughts Please

[0b1kanobee]

As was pointed out, the 11.5 is equivalent to 5.75 per year. Can you find an annual point to point of with a cap of 5.75? Then why would you make the client wait two year before crediting the account?
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Are you restricted to certain carriers?

The client might choose to wait if the client thinks the market will be UP in two years VS. stagnant over the next year or so is the first thing that comes to mind.

If you could go back in time and buy stocks, say 30 years ago and wait 15 years to sell or 30 years to sell, what would you pick? Your lengthening the time frame for returns.

Statistically over the past 20 years, if your reset was every two years vs. every year and you get double the cap, you should generate a higher return. This was what the chart showed me. It wasn't astronomical but enough to write home about.

The only carriers I can't write are captive ones and Midland. Not allowed to write Midland because the owner of the agency says they give or their agents do a bad name or have in the past.

 

[Norwayguy]

The client might choose to wait if the client thinks the market will be UP in two years VS. stagnant over the next year or so is the first thing that comes to mind.

If you could go back in time and buy stocks, say 30 years ago and wait 15 years to sell or 30 years to sell, what would you pick? Your lengthening the time frame for returns.

Statistically over the past 20 years, if your reset was every two years vs. every year and you get double the cap, you should generate a higher return. This was what the chart showed me. It wasn't astronomical but enough to write home about.

The only carriers I can't write are captive ones and Midland. Not allowed to write Midland because the owner of the agency says they give or their agents do a bad name or have in the past.

Do you write North American?

 

[padthaiforlunch]

The client might choose to wait if the client thinks the market will be UP in two years VS. stagnant over the next year or so is the first thing that comes to mind.

If your client is so smart about the market, then why do they want an annuity? Most of my clients are looking to me for direction on crediting method.

If you could go back in time and buy stocks, say 30 years ago and wait 15 years to sell or 30 years to sell, what would you pick? Your lengthening the time frame for returns.

Very poor argument. we're not selling stock, we're locking in gains. Might as well suggest a 10 year point-to-point based upon what you're saying.

Statistically over the past 20 years, if your reset was every two years vs. every year and you get double the cap, you should generate a higher return. This was what the chart showed me. It wasn't astronomical but enough to write home about.

Statistically? Are you running monte carlo simulations here? Did you look at a rolling 20 years starting with each moth of the year? You don't know what the market is going to do. PAST IS NOT A PREDICTOR of future results.

If you plan to make the client wait two years to maybe earn interest, the two year should be MORE than twice the one-year.

The only carriers I can't write are captive ones and Midland. Not allowed to write Midland because the owner of the agency says they give or their agents do a bad name or have in the past.

Friend, you're drinking kool-aid. Midland is one of the strongest annuity carriers in the market. They do not have a bad name. Midland has direct contracting with agents, so your boss can't use them and get an override on you.

 

[0b1kanobee]

If your client is so smart about the market, then why do they want an annuity? Most of my clients are looking to me for direction on crediting method.

Well every case is different as you are aware and some clients have different goals. One of the last clients I was working with comes from a very analytical profession. This person wants the annuity for the income rider along with the other benefits. As a matter of fact, they want two annuities after much review amongst other things for their retirement needs. They like the idea of a guarantee and a second pension. I don't know how smart they are about the market but they have done well and will be doing a V/A as one of the annuities. Just because you are smart at the market or seem to be or even think you are doesn't mean you should stay in it even though some of the monies will still be allocated there with some managed accounts and such.
This particular person did, much like everyone else look to me as far as the crediting method but in the end, I'm sure they will have or at least think they have made the descision of how they want it. When you are working with someone who has much more money than you and they have done well for themselves (and they know it), sometimes you want them to at least think they made some of the choices. This business is a juggle between doing what is best for the client and being relatively well sales oriented at the same time.
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Very poor argument. we're not selling stock, we're locking in gains. Might as well suggest a 10 year point-to-point based upon what you're saying.

I'm not aware of any 10 year PTP. Obviously I must not be explaining it like the rep explained it to me. I must admit, it was very late at night and we had 4 individual appointment that day and a seminar which had just ended along with a two hour ride home. I have been meaning to have him send me the charts and information which he showed me.
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Midland has direct contracting with agents, so your boss can't use them and get an override on you.

I must admit, I don't know much about them and don't care to because I never run across them. Only meet one agent that did EVERYTHING with them and he was a real creep and I'm not the only one of the three who was sitting in his office who thought so.

JN also does direct contracting, yet the agency I satellite out of has them. In fact they have every med sup and every company they want for the services they provide.

Are you saying there is NO WAY to establish hierarchy with Midland?
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Do you write North American?

No.

ING, LSW, JN, Great American, Symetra

I use Great American the most right now because it is a great company for one but at the moment nobody out there can touch their income rider most of the time depending on client's age and a couple of other factors. I know this because I have a couple of FMOs I can talk to and have them run the numbers. Lately, nobody can touch it.

 

[padthaiforlunch]

4 appointments, a seminar and a 2 hour ride home! You are working hard.

Midland rollup is 8%. You can't judge a carrier by one creep in the field. There are enough of them on this board to scare folks away from the biz, but everyday another newby starts a thread about how to get started.

 

[Norwayguy]

I'm not aware of any 10 year PTP. Obviously I must not be explaining it like the rep explained it to me. I must admit, it was very late at night and we had 4 individual appointment that day and a seminar which had just ended along with a two hour ride home. I have been meaning to have him send me the charts and information which he showed me.
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Anico has a 7 and 10 year pt2pt...The only reason to sell them, in my opion, is if you push hard on no moving parts...once the policy is issued the carrier can not change participation rate...While we all know with annual reset designs the carriers are always changing the limitiing factors of the crediting method be it a participation rate, cap, spread or god help us a combination of those factors.

 

[0b1kanobee]

Anico has a 7 and 10 year pt2pt...The only reason to sell them, in my opion, is if you push hard on no moving parts...once the policy is issued the carrier can not change participation rate...While we all know with annual reset designs the carriers are always changing the limitiing factors of the crediting method be it a participation rate, cap, spread or god help us a combination of those factors.

Do you mean the Anico Value Lock? I was talking to one of my mentors about it and I'm really not sure how much he knows about it but he seemed to know the basics or maybe enough to be dangerous lol, I'm not exactly sure. Anyway, he kept saying "how do you know when to lock?" "Clearly in the seventh year would be the best time but when the 7th year or that time frame comes around and its not the best time and you wait longer or wish you would of done it sooner, you could look like a real ***". He was saying things like that. But his emphasis was clearly on knowing when to lock and getting the timing wrong and how terrible that could be.

 

[padthaiforlunch]

"Clearly in the seventh year would be the best time

Not sure if it makes sense to apply duration to an annuity. With the Value Lock 10, if the client doesn't make a lock, then the annuity is effectively a 10 yr PtP.

Has your mentor compared a 2 yr Ptp against a 1 yr monthly averaging?

 

[0b1kanobee]

Not sure if it makes sense to apply duration to an annuity. With the Value Lock 10, if the client doesn't make a lock, then the annuity is effectively a 10 yr PtP.

He was specifically applying it to the Value Lock product not to any other annuity. The way he thinks the product works, is once you 'lock', the rest of the years you only get a declared rate or the minimum perhaps I guess. So if you lock too early, you might shoot yourself in the foot. Lock too late and you might miss the boat all together. Lock in a good year and a much better year comes along and then the client is upset. Now granted, this is based on how we think the product works. Below I have asked for some simple clarification. If you don't feel like explaining, it's ok, I do have an FMO who could splain it to me I guess.

LET ME ASK:
1) Once you 'lock', what how does that work for everything that has happened before within the product? How about an easy example without making it too complicated?

2) Going forward once you 'lock', how does the product or account work? Perhaps a follow up example based on the prior example?
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Has your mentor compared a 2 yr Ptp against a 1 yr monthly averaging?

I seriously doubt it. Not because he doesn't want to but he just hasn't had the time. Sometimes they sit down and take the products and turn them inside and out and run some scenario but not lately that I know of and I have never been invited into those discussions (different group/sector of the agency).

 

[scagnt83]

LET ME ASK:
1) Once you 'lock', what how does that work for everything that has happened before within the product? How about an easy example without making it too complicated?

2) Going forward once you 'lock', how does the product or account work? Perhaps a follow up example based on the prior example?

I recently started a thread about this product.


It seems complicated at first, but its not once you get it.


After the lock:
They take the year you lock in, and pro-rate the locked gain to the year you are in; the remainder of the gain is distributed evenly through the remaining years, along with a 2% rate.

Ex:
In year 6 you lock in a gain of $100K.
$60K is credited to your account immediately.
The remaining $40K is paid in four $10K yearly installments, along with a 2% compounding rate that is credited to the policy value.

If you choose not to lock it in, it treats the end of the 10th year as the lock in date.


Also, I think it uses monthly averaging, not yearly p2p.



I still dont know what to think about the policy.... I would like to see multiple 10 year historical scenarios... I want to like it...