Why I think FINRA is behind it

[Crabcake Johnny]

Agreed. However, let's say a HSA was a better choice for my client than a PPO plan.

Now let's say I made a $10,000 commission off the HSA and only $500 off the PPO.

Take it to the next step. My client goes to use the HSA and bitches when he starts getting bills - claims I never really went over how an HSA works.

So he files a complaint and it's exposed that I made $9,500 more. Now the general public doesn't understand and I look like a commission whore.

 

[URDRWHO]

On the HSA example I agree because you added the caveat of choosing the wrong product.

You aren't comparing equal sides if the $50,000 commission isn't the wrong product.

I have a very wealthy relative. We don't do business together and I am fine with it because he is rather anal. He is 77 years old and in good health. He could take $500,000, place it in a 10% bonus FIA, with a 10 year surrender and not blink an eye. He could make me beneficiary.

In today's current economic climate could he make a safe, guaranteed $50,000 in the first year? He could maybe buy some Zero Coups, hope for the best because their prices fluctuate a lot; maybe find some Muni's, a Fund but could they guarantee him 10%? It is possible but he would probably assume more risk. Plus if he died there is that probate thing with securities and me as beneficiary would find it nice to get the $$$ right away. Me as beneficiary is just a hypothetical.

The above person just lost $450,000 in a closed end mutual fund that was a mortgage fund. The Fund Manager said, "We hope to have your principal back in 2 years but you definitely will not get any income from the fund." I like the word the manager used..."hope".

So, if relative would have bought an FIA, without the risk to principal, an agent someplace would have made $50,000 commission, would my relative have been hurt?

Is the same argument going on over in mutual fund land over which is better, the A,B,C share prices? I would wager most people don't know if their mutual fund has a 12b1 charge or even their funds expense ratio. I'd like to see Dateline do a story where they interview mutual fund owners and ask, "does your fund have high or low expense charges, does it have a 12b1? Things like that and I bet a lot of people wouldn't know.

Suitability is an interesting animal. Is there many - if any things that will satisfy at all times, in all future changing situations or future expectations? I've never approached a 77 year old about buying an FIA and don't know if my example makes the cut. I'd have to think about it but on the surface it makes sense. Someone on the list may have more valid reasons for a 77 year old to own an FIA, maybe yes ..maybe no. At least he wouldn't be out $450,000. If it were me...I would cry, To him, it was his play around, fun money income.

I know my wealth transfer tome mentions the use of annuities.

All that I can say is, if you are ever sued ...get very good representation. The plaintiff's attorney is most likely well skilled enough to make a Mother Teresa look like scum.

Agreed. However, let's say a HSA was a better choice for my client than a PPO plan.

Now let's say I made a $10,000 commission off the HSA and only $500 off the PPO.

Take it to the next step. My client goes to use the HSA and bitches when he starts getting bills - claims I never really went over how an HSA works.

So he files a complaint and it's exposed that I made $9,500 more. Now the general public doesn't understand and I look like a commission whore.

 

[Crabcake Johnny]

Well there's going to have to be some type of answer as all the baby boomers head into retirement and everyone is living longer and longer.

My father's generation was told to have 15 years of retirement savings after retirement.

That's not gonna cut it and with my father at age 76 now he's worried. He's in perfect health and now thinking "**** - if I live into my late 80's or 90's I'm in trouble."

Remember, when my father was growing up you were supposed to drop dead on your 75th birthday.

 

[xrac]

Well there's going to have to be some type of answer as all the baby boomers head into retirement and everyone is living longer and longer.

My father's generation was told to have 15 years of retirement savings after retirement.

That's not gonna cut it and with my father at age 76 now he's worried. He's in perfect health and now thinking "**** - if I live into my late 80's or 90's I'm in trouble."

Remember, when my father was growing up you were supposed to drop dead on your 75th birthday.

I honestly think that the answer for the majority of the baby boomers is to never retire or delay retirement until a much later date than the 55-65 age we have considered to be appropriate. That is if they are in good health. Now maybe they take a less demanding job or go to only part time status. If they do that it eliminates a lot of the problem of depleting savings and depending upon upon a perhaps tottering social security. I know two guys one who is about 66 a CPA and the other is 71 and was chief financial officer for a small manufacturing plant. They both work as parts delivery drivers for O'Reilly Auto Parts. It is work that is not physically or mentally demanding. It gets them out of the house, keeps them in contact with other people, and supplements retirement income.

According to recent survey results I have seen the majority of baby boomers are unprepared and make unrealistic assumptions. For example the majority believe they will be able to take a 10% withdrawal rate in retirement while most experts believe that 3-5% is the realistic.

http://www.metlife.com/FileAssets/MMI/MMIStudiesRetirementIQ.pdf

 

[Crabcake Johnny]

Great post.

When I sold cars we used "DX drivers" - people needed to bring requested cars to dealerships. A Toyota dealership might not have that particular car, but another dealership does - so they swap.

The dealerships love hiring retired people since they are dependable and unlikely to abuse the cars.

Pays well too. If you know anyone bored, retired and in need of some spare cash, tell them to hit a few dealerships and ask if they need DX drivers.

 

[bobson]

Now let's say I made ... $500 off the PPO.

$500 off a simple health insurance plan? Whoever pays that is really screwing the customer. If the commission was only $75.00 think of how much of a better program it could be for the insured.

 

[URDRWHO]

Most men that I knew who retire and stopped working did not last long. They died rather quickly. Total retirement is deadly to men and perhaps the reason there are a lot of widows roaming the hills.

I honestly think that the answer for the majority of the baby boomers is to never retire or delay retirement until a much later date than the 55-65 age we have considered to be appropriate. That is if they are in good health. Now maybe they take a less demanding job or go to only part time status. If they do that it eliminates a lot of the problem of depleting savings and depending upon upon a perhaps tottering social security. I know two guys one who is about 66 a CPA and the other is 71 and was chief financial officer for a small manufacturing plant. They both work as parts delivery drivers for O'Reilly Auto Parts. It is work that is not physically or mentally demanding. It gets them out of the house, keeps them in contact with other people, and supplements retirement income.

According to recent survey results I have seen the majority of baby boomers are unprepared and make unrealistic assumptions. For example the majority believe they will be able to take a 10% withdrawal rate in retirement while most experts believe that 3-5% is the realistic.

http://www.metlife.com/FileAssets/MMI/MMIStudiesRetirementIQ.pdf

 

[URDRWHO]

Could also knock off the 5% renewal. Even better, sell it without agents. Oh but wait that idea is already taken by the Feds upcoming plans.

$500 off a simple health insurance plan? Whoever pays that is really screwing the customer. If the commission was only $75.00 think of how much of a better program it could be for the insured.

 

[JMO Fan]

I thought this thread was about FINRA/EIA/SEC. I'd love to discuss HSAs, etc. But please, start a thread in the Health section.

 

[URDRWHO]

Swerved a bit off original topic.

I thought this thread was about FINRA/EIA/SEC. I'd love to discuss HSAs, etc. But please, start a thread in the Health section.