Annuities For Dummies With Kerry Pechter

Episode 101 August 18, 2023 00:38:21
Annuities For Dummies With Kerry Pechter
Annuity Straight Talk
Annuities For Dummies With Kerry Pechter

Aug 18 2023 | 00:38:21


Show Notes

Welcome to the Annuity Straight Talk podcast, episode 101! Dive into the world of annuities with Bryan Anderson, the founder of, as he chats with Kerry Pechter of the Retirement Income Journal. Discover their unique Montana connection, the evolution of annuities over the years, and the significance of the "Bermuda Triangle" in the insurance industry.

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Episode Transcript

Speaker 0 00:00:00 <silence> Speaker 1 00:00:05 This is Annuity Straight Talk. Since 2008, your host Brian Anderson, has helped clients nationwide navigate the complex market for annuities With Brian's assistance, hundreds of clients have achieved a profitable and secure retirement. I would know, because Brian has answered many of my questions concerning annuities and retirement planning, so that you can benefit as well. Let's get started. Here's Brian. Speaker 2 00:00:48 Hello and welcome everyone to the Annuity Straight Talk podcast, episode number 100 N one. My name is Brian Anderson, founder and creator of Annuity straight I am pleased to announce an honored guest, a good friend of mine who I've known for several, several years, uh, given me an opportunity to kind of harden my knowledge of the annuity business and retirement financial services in general. Coming to us from Pennsylvania, Kerry Ter of the Retirement Income Journal. Hello, Kerry. Speaker 3 00:01:16 Hello, Brian. It's great to be, I can see Montana behind you, and that makes my soul feel better. Speaker 2 00:01:23 So you have, like, we had an interesting meeting, a chance meeting probably 12 or 13 years ago. Uh, but you had a Montana connection. Why don't you tell everybody how we know each other and where that started? Speaker 3 00:01:33 Many years ago, I was a reporter on the Billings Gazette in Billings, Montana, and it was a defining period in my career, and I, I learned, I learned the, kind of the Montana point of view, and later, many years later when I was publishing Retirement Income Journal and we started a series on a retirement entrepreneurs, and I was looking around for subjects around the country, I was looking for people who were entrepreneurs in the retirement business. And I came across annuity, straight Talk and across Bryant. And I knew, I was fascinated that there was a fellow up in my old state who was an entrepreneur in this area. And so I got to talking to him and, and we, we ended up, uh, getting together one time in, in, in Montana. And, and I was out for a, for a reunion with various people. And we got together up in the northwest, went fishing and spent quite a lot of time talking about annuities. And the occasion for this particular conversation is I published Annuities for Dummies in 2008, and just this last year updated the original version of Annuities for Dummies. And it's been, it's now on, it, it it became available through Amazon, Barnes and Noble and other outlets online and in stores, uh, as of July 20th. Speaker 2 00:02:56 Okay, that's great. So second edition of Annuities for Dummies. And I told you before, I've had a lot of people ask me, where can I learn something off your website? That's a good straight shot. And I always told people, go buy a copy of, you have Annuities for Dummies. I know the guy who wrote it, and I thought that was really cool that you had it. And, um, there's a little play on the whole dummies series of books, but all in all, they are very educational for whatever topic you're looking at. Right. Speaker 3 00:03:23 Um, oh yeah. People rely on them. Speaker 2 00:03:27 Yeah. And so it was, it was interesting you came back to me to, for a couple of ideas on that, and I was happy to know that you, you settled it. So, and what do you, what do you wanna talk about or what did you add to the latest edition? Speaker 3 00:03:40 What, what was new about the book was so many things have solved annuity business since 2008. The mix of products out there, the design of specific products, the arrival of new products, the disappearance of many annuity issuers from the annuity scene, the entry of a lot of new players in the annuity business. And so many things have changed in terms of also regulations. There have been fights over state and federal regulation of annuities over, over that time. So there was a tremendous amount to, to put in there, especially, I I took a pretty deep dive into exactly how different kinds of products work. And maybe we'll get into that a little bit. What is the same about the book is that, uh, I wanted to make clear first that this, that this is not a book. This is a book that talks about annuities in the context of retirement planning. Speaker 3 00:04:35 It's a book about where they fit into retirement income and especially retirement income planning, the income part. And, uh, so within that, within that context, the other thing that's the same as my approach to, uh, annuities, they, in a lot of it books on annuities, you're going to see, well, here's annuities. And we have several kinds. We have the, either we have fixed, we have variable, we have immediate, we have deferred, and then they would go into various kinds of deferred or various kinds of fixed. And I learned when I was at Vanguard, and this was when Vanguard was still selling annuities, I that, that this was not the appropriate way to, this was a very confusing way to lead people into the forest of information about annuities. And I realized that I had to take each product in isolation and talk about who it's for, what it does, how it works, what are its pros and cons. Speaker 3 00:05:33 And so you're not gonna, you're not gonna get confused in this book about similarities and differences products because in each product chapter you just, you find out about that product on its own. And then the other big thing that's in the book that was in the first book was expanded greatly, is an explanation of the entire process that you go through in researching, uh, annuities, in talking to annuity distributors, talking to agents, and talking to advisors and help you, you find your way through the thicket because people don't know that certain kinds of advisors only sell certain kinds of annuities and other kinds of advisors sell other kinds of annuities. And that you're not going to see the entire world of annuities. Uh, you're gonna only see a piece of the world of annuities depending on who you go to. Speaker 2 00:06:28 And that, that's been one, one issue. And I've tried to, and of course I, like, I don't sell variable annuities, but I advise on them. I know a fair bit about 'em. And a lot of people come to me and I tell 'em, it's like, yeah, I think that's probably the, the best path for you go and do it. Or they're gonna have to have somebody else to do it. 'cause I don't take that. Uh, so I, I try to make sure that annuity Stray Talk doesn't fall short in giving, uh, uh, a fair representation of all types of contracts, whether that, whether I can buy it or not. Mm-hmm. <affirmative>, even last week, there was a brokerage product for an index annuity that I could have sold. I, that was not available to me, but I told the guy based on what he wanted, yep. Speaker 2 00:07:03 You're gonna have to go find somebody else to get it for you because I can't do that. Mm-hmm. <affirmative>. Uh, but that is certainly the case. And so I am limited in some ways, but you know, not as much as, you know, people that say, Hey, pick one company, one product or an investment advisor who says, well, the company's only gonna let me sell variable annuities. That's all I got. Mm-hmm. <affirmative>. Right. And that does happen. So, and you said something about, you know, new products coming, old products going away. And one thing I've noticed in a lot of information that I've read, 'cause I continue to look at the, at, at the internet and see what everybody else is putting out, there's a lot of information that is based on products that no longer exist. The Speaker 3 00:07:39 New products. Speaker 2 00:07:41 Yeah. Like old products that just aren't around anymore, that people are still talking about. Speaker 3 00:07:47 The, the biggest mystery in terms of old products that are still around would be the variable annuity with the lifetime withdrawal benefit. And this product was cropped way back during the depth or in the years after the financial crisis. But now I see that product is, is some of the author offers that, that were available under that product. On the income side, uh, like the lifetime withdrawal benefit is our coming back. And particularly with the rollups that you get the automatic increases. And I think those are available on fixed index annuities too. Speaker 2 00:08:27 Yes, they are. Yeah. I guess mo more or less what I was talking about is there used to be a type of period, certain product or a lifetime income, more of a s SPIA that had an indexed uh, payment to it. And I used to see those in small part they were around and I haven't seen them use as much anymore, where you'd get a fixed payment that could potentially be for growth payment or additional payments, uh, based on an index return. There were a couple of niche products that were maybe 10, 12, 15 years ago that used to be out there and don't, uh, to my knowledge, don't exist anymore. Speaker 3 00:09:03 You mean where you had an option inside the product to allocate part of your premium to an indexed Speaker 2 00:09:10 Well, where just the payment itself was indexed to, uh, either an interest rate or, um, I know specifically a product that was indexed to interest rates for payments to, for a specific period of time. Mm-hmm. <affirmative>. So the payments, if the interest rates rose, your payments would go up. And there were a couple of products, I know Allianz Guardian had one. Yes. Uh, that's where I got my start with the insurance business was payments to 'em. And then Allianz had one that was indexed to, you could pick an index linked payment where it's a period, certain payment stream or a lifetime payment stream, and they'd arbitrarily index that payment to, uh, you know, an external index. If the index goes up, you can receive an increase in payments. But it's a really weird niche thing that I haven't really seen in a long time. Didn't seen it and I heard it, I heard it mentioned, uh, you know, last couple weeks, Speaker 3 00:09:55 The insurance companies have to protect themselves against people leaving when interest rates go up. So they tried a number of different paths to do that. The index annuity was originally invented, I was told by one of its early marketers, uh, Bob McDonald, if you've ever heard that name at the old life U s A, which became Allianz. And he told me that index annuities were created because they weren't exposed to interest rate risk and disintermediation, lapsing of the contract when interest rates went up. And so that you got, you, you didn't have that problem losing customers. And then later there were indexed, there were certain products, and I forget exactly which ones, but they were indexed to the treasury rate. So that if, so that was another way of protecting against, against loss of business because the salesman or the agent could say, oh, you don't have to worry about interest rate risks. I know that's a big reason not to buy this product, but we're gonna take that worry off the table by saying, if rates go up, you know, you'll we'll have them go up. We'll, you, you, you'll get more money. Speaker 2 00:11:05 Right. Well, and some of that was a sentiment from like the early two thousands when rates were at an all time low. Yeah. Comparative to the late eighties and all that stuff. And everybody thought, I mean, when I started in the business, I've told this story, I started in the business and guys in the office were absolutely, uh, like head, like they were just, they were elated about the fact that you could get a 6% 30 year mortgage. And that was in 2003. Now everybody's disgusted by a 6% mortgage. 'cause we had 'em so low for so long. So back in 2003, you could send, sell a product index to the treasury because people always had the sentiment the rates would rise, but it took 20 years to do it. So anyway, not to, not to go off of that too much, but, you know, but that's an important distinction to say, like, you know, some of these things come and go based on marking conditions. Right. So Yes. Um, but all, all, all in all, you like the book itself kind of explains everything that's available today, and that's what's the major difference between Now in 2008, yes. Speaker 3 00:12:07 We didn't have registered index length annuities, uh, at that, at that time. But what, uh, the big difference here, let's talk about the fixed annuity for a second, because I know that's because you're, you sell fixed products and our men fixed products. And when I first wrote the Annuities for Dummies, the fixed index annuity was a, was called a Wild West product. The, it was very controversial. It was so controversial that certain broker dealers would, certain distributors would not sell it. Some did not want to have it widely known that they sold it. The, a lot of the companies that were selling the product were not a rated. And, and they didn't really have to be a rated in, in a sense because the pro the product wasn't that risky. But, uh, and it was mainly sold by, by independent agents, lots working for the I M os. Speaker 3 00:13:06 Well, it was very controversial at the time and became extremely controversial when there was a fight over it with the S E C and, but now the indexed annuity is the, is the meat of the batting order for the biggest, some of the biggest life insures. And it's the upselling product. So what we have to like, that's an interesting, that would be, that's something that's interesting to talk about, I is that the evolution of why that happened and how the products have changed and what the, the whole world has come around to take these things are not controversial anymore. They are, they are, uh, bread and butter. Speaker 2 00:13:49 Yeah. They're more mainstream. And you know this because you, you followed me for a long time. I haven't always sold these things. We spent a lot of time in structured settlements. I started the website as a MIGA guy, a fixed, uh, it was kind of like changing interest rates, changing environment kind of forced me to do different things, become creative about what I was doing. And so, yeah, I, you know, I think you'd understand all the elements of that because you've watched what we've been doing for, and it's been, it, it's been fun because I, I mean, I have to be able to adapt and change. And I always like interested when I hear, well, this guy's been doing it for 40 years and he knows this and that. I said, well, if he's done it for 40 years, he's likely made some mistakes. Right. <laugh>, I mean, uh, financial products come and go all the time, you know, think about in a universal life in the eighties and all, um, things that went upside down for people. But, but to have that in context, it's fine. So anyway, so one of the new products in the past few years, you mentioned it, is the registered index, linked annuities, uh, structured products, buffered products, whatever you wanna call 'em. Um, where do you see those fitting in and what do you think the value, the value is there? Speaker 3 00:14:55 Well, you want me to talk specifically about the registered index linked annuity? Yeah, Speaker 2 00:15:00 Yeah. I mean, it's kind of one of the new things since the last edition, right? Yes. Speaker 3 00:15:04 Yes. And it's a similar to a, the reason that it's a purity regulated product and not a state regulated product is that it's, you can lose money on it. And because the downside buffer is not zero as it is, the downside limit is not zero as on f i a, the you can lose 10, 20% of your money. You could, even if you don't understand the buffer prop, which lose even more than that, it's not very likely. But they are simpler products in the sense that you get a simp, you usually get linked to the s and p 500 or the ss and p price index for SS and P 500 price index with the rla, because they don't have to. Speaker 3 00:15:56 It's a more straightforward product really. It's basically, it's a structured product and a structured, it's a, it's like a structured note and a structured note is a very simple thing that's been available mainly only to high, high net worth clients on the security side. And it's just a question, it's a, it's, you take a certain amount of money to the options people and you buy an option that says that you can, you, whatever the market returns, you can only get up to say 8%. And if the market goes down, you can't lose more than 10%. And so these were very carefully customized products at one time for high net worth investors. And these were very, these, you see, these were customized products for high net worth investors. And what you had basically with the RI o or even the, or the fixed index annuity is you have a structured note that's now built by an insurance company and has tax advantages, but otherwise it's like the, uh, it's a pair of options like the old structured notes. So you, uh, these, they're fine to invest in as long as you understand exactly what you're, you're getting into. Speaker 2 00:17:17 Well, that's the, that's the case with any type of annuity, right? Uh, as long as you understand the contract. And that's again, what the book tries to do, where you can sit down and you can read about it and understand all the elements of those contracts. Yeah. Speaker 3 00:17:28 Yeah. Speaker 2 00:17:30 You also go into more of, you know, you talk about the book being part of, in the context of retirement. Okay. And you have something called m t nesters in your book. Uh, tell us a little bit more about that. Speaker 3 00:17:45 I invented a couple, a retired couple, and then normals, the mt nesters M period, T period, K N E s t o R. And yeah, Speaker 2 00:17:56 I should have had a visual Speaker 3 00:17:58 <laugh>, but, and the empty nesters are my typical family. And so we go, we have a number of case histories in the book that, that show. What I did was, in the course of writing my publishing retirement income journal, I would take a real life couple whom I had met who were willing to share their, uh, financial numbers with me. And then I would take that case history and I would farm it out to different advisors who I knew who were, what I call ambidextrous advisors, who were adept at mixing investments and insurance in, in clever ways. Synergist, I Speaker 2 00:18:35 Think, I think I I participated in at least one of those, did I not? Yeah, Speaker 3 00:18:39 I think you did. Okay. And so, and the idea was how to help them set up safe max maximum safe income in their retirement. So the emptiness, so what you find in the new addition of annuities for Dummies that you didn't see in the earlier one, is that we have a number of these case histories where I get some of the best people in the field to provide a recommendations for them. And I'm hoping that those will be particularly, uh, educational for the readers. Speaker 2 00:19:07 Okay. And I, I, and I will say something about that, about the people, you know, like your Rolodex is deep, right? You have one thing, you know, for anybody listening to this, I'm, I kind of run, I, I put out information that's consumer facing. Uh, Carrie was always writing for the professional side of the business. Now I get a lot a number of questions about your work, Carrie, because it's very good to, for one. But I also know a lot of consumers, and you know this as well, consumers will come and subscribe to your, uh, journal as well. Uh, the, you know, kind of the people that really like to do the research, really dig into it and get all of that. So that one thing where, uh, you know, some consumers get it, but for the most part, through that you've developed a, a very good network of solid people, uh, throughout the industry, right? Speaker 3 00:19:55 Yes. One thing that I've done as a reporter, uh, through and beautiful, uh, is to cross pollinate, move from one silo in the industry to another and providing people with a broader view of the industry. A lot of people are in their own silos, just particular product, particular kind of company, and a particular kind of advice channel. And, and I have gone to hundreds of conferences and talked to people all over in government, in, uh, the 4 0 1 K system in social security, in the, uh, broker dealer channel in academic and in the law. And I've tried to cover as broad a field as I could and then try to connect the dots and make a sensible picture out of all of it so that, because otherwise I would never be able to understand like what the secure act or the secure 2.0 means, really out of context. It's my job to, to see the big picture and show how each particular channel or topic fits in with everything else. Speaker 2 00:21:00 Well, it's been an invaluable resource in my career 'cause it's always one thing I've been able to pay attention to. And, you know, in order to do an effective job for, uh, the consumer, I have to know kind of some of those changes and see what's, so I'll tell in front of everybody, say thank you for everything you've done, because it's, it's a unique perspective to be, to keep such objectivity at the forefront and simply talk about all the, all the topics that matter to people without a stake in it for yourself, just to share the information. So thank you. Speaker 3 00:21:30 I tha I appreciate that. I don't have any particular stake, but I do have a strong point of view. So I can't say that I, I can't really be accused of being a hundred percent objective. I come, my background is from, after being a newspaper reporter for quite a few years, then I became a magazine writer in the business area. And then I spent nine years at the Vanguard Group where I, my job was basically to explain the variable annuities and the index income annuities that we sold to our customer base, the millions of people who worked with Vanguard. And during that period, that's when I learned what worked and what didn't work, more or less in terms of explaining annuities to people and explaining the different types of annuities. And each type of annuity does a different job for different people in different situations. That's the key, right? Speaker 2 00:22:29 No, that is true. Well, and then some of my latest stuff, it said, you have to want an annuity and you gotta start with a goal first, right? Um, whatever something, whatever an annuity can do for you has to be one of the first things you want. But you have to define a goal. A lot of times when I run into people, the biggest problem is somebody has thrown them or pitched them an annuity and they haven't even decided whether they even want one to begin with. So starting with the basics, if you're willing to do the research, that book is a great place to start and say, yeah, I kind of do want an annuity, or I want one or two features, benefits, whatever it would be is the first place to go for a lot of people. So, well, I guess I wouldn't, yeah, Speaker 3 00:23:06 Go ahead. Lemme give you an example of, of myself. I was nearing retirement and I desperately did not want to get caught up in a recessionary period. I didn't wanna retire into a stock market crash where I might be in the position of having to sell stock depressed stocks for living expenses. So one of the things you can do with an annuity is to protect yourself from that sort of risk. So what I did was I bought a period certain annuity that would pay me an income from the time I retired for the next 10 years. 10 years. And this is, it didn't solve my, it solved one of the risks associated with retirement, which is sequence, which is what we call sequence of return risk. The danger of retiring into a recession. Because what that's, as I approached, uh, retirement, that's exactly what happened. Speaker 3 00:24:00 We had a market crash for a while there. And, and so it doesn't address other issues. It doesn't, uh, it's a term, it's a period of certain annuity with a level payment. So it does not address inflation risk. It, you'd have to go somewhere else for that risk. It doesn't address longevity risk. I would have to buy a income annuity that started whenever I wanted to start to take the longevity risk off the table, or a guaranteed lifetime withdrawal benefit. Or I would want, would, if I didn't want to invest in, if I was too nervous about investing in stocks, I might buy a fixed index annuity and get some exposure to the equity markets without, without fear. But my particular concern was the sequence of return risk and the period certain annuity. So I took, my wife took part of her 4 0 1 k and I took part of my 4 0 1 k and we bought the period certain annuity. Speaker 2 00:24:59 Okay. And that's something that we've done with a lot of people. And you know, this in the past, um, it's been, you know, to free up investments for the long run to cover that inflation risk, to get outsized growth, but take, you know, the near term, uh, you know, eliminate sequence or returns risk to provide for that income for a period of time. And then you've got plenty of years for planning for the back end of that and a lot of different ways to do it. So, no, very good stuff. So you, you covered my last question. Care Ter owns an annuity, right? <laugh>? Speaker 3 00:25:29 Yes. A lot of people were bothering me about that. They said, oh, if you're gonna write about this stuff, then people always wanna ask the doctor what would the doctor recommend? And, and then, and so I wanted to, and so we went ahead and we, we bought the period certain annuity, several years in advance of retirement. And that process is, you have to first decide what you're trying to accomplish. And that is, that's a very diff that's a process in itself, especially when you have to come to a decision that, that both you and your spouse in many cases agree on. And what, what are we trying to accomplish? What are, what kind of retirement are we trying to finance? What are we trying to solve for? What kind of risk are we trying to take out off the table? Because otherwise it would keep us stuff at night. And so once you do that, you then you can say, what, what products or services are going to solve that problem for me? And then, then you come to an insurance product and the idea of an insurance product is that you transfer a certain kind of risk, sues pull someone else. And because it's cheaper to do that than to handle that risk yourself. Absolutely. Speaker 2 00:26:41 So you, you guys all hear, heard to hear first the advisor's advisor had as much trouble as all of you guys have <laugh> trying to figure out what you need in retirement. It's not an easy thing to do. I Speaker 3 00:26:55 Agree. No, and it's not, it's your first thing. You have to think about your own situation. Mm-hmm. Let's say you, as you're looking ahead to retirement, you think, how close am I to do I barely have enough money to cover my future expenses? Do I have a strong desire to leave most of my money to my children? Do I, am I particularly scared about living to a hundred because my grandmother did? And my grandmother did live, in fact to a hundred? And you have to go, you have to sit down and you have to actually think about this and think about the future. And that's, it's very hard to do that. It's very, it simply make an estimate of what your expenses are going to be in retirement. And these are all the issues that you have to think about before you, before you can buy anything. And you probably should think about them before you decide what kind of advisor you're gonna approach. Speaker 2 00:27:57 That is absolutely the case that who you work with is a big part of it as well. So, okay. So you No, I appreciate you sharing that story with us, and it's, it is great to have you on. I'd love to have you back. There is one other topic that I get questions a lot because you made a little bit of news by being the guy who wrote about this. And so I think kind of the last thing I wanna cover, and one thing, you know, I've talked about a lot about the safety of insurance companies over this and liquidation process and you know, people call it bankruptcies, but it's not really a bankruptcy. I want you to explain what you mean because I've had a few people say, Hey, when are you gonna talk more about this topic? And, and before I talked about, I had to ask you, because you're the expert, you spearheaded this probably three, four years ago, but you call it the Bermuda Triangle. Uh, why don't you tell us a little bit about that. Speaker 3 00:28:47 The, about 10 years ago or so, maybe a little bit before that, uh, certain private equity companies came to help insurance companies, life insurance companies get more out of their own investments because the low interest rate and the stock market crash had made it very hard for them to cover their liabilities. They were in trouble. A bunch of them actually even the annuity industry, 'cause they could not make ends meet. So the pri private equity companies, and these are the big, you might know them as buyout companies or, or, uh, private equity companies or private credit companies, but they're go by the name of Apollo or KR or, and they became famous in the 1980s as buyout firms. These, these for companies first began, uh, to get involved with helping the insurance companies invest better and then also to, and then they became, then they bought into, they took equity stakes in the insurance companies and then they started insurance companies of their own. Speaker 3 00:29:49 And so what they did, so ISIS to look at they were doing that was so special that made them become dominant in the insurance business. And what they had done, it appeared, was to sessionize the life insurance industry. And the life insurance industry, they noticed had already begun to be mainly the annuity business because it's been a grown decades now. Life insurance companies have been selling on the whole more annuities than life insurance. So they knew they were getting into the annuity business, the tax deferred annuity business. And see, they decided to rationalize this business kind of pulled it apart the way they would pull apart the companies that, the private, that they would do on leverage buyouts. And so they would, they took the, they took these functions that all used to be in one big building in New York for an insurance company or in Iowa, and they separated them. Speaker 3 00:30:48 They took the sales and the product, the product and distribution part, and they left that with the insurance company in the United States. Then they took the money that people paid there for their annuities with and sent that in metaphorically to Wall Street to have the asset managers concentrate on. And then they took the risk, which is this ineffable thing. It's the risk that they won't be able to pay you back when it comes time to pay you back. It's called their liability. They took, but it's not money. It's what they owe in the future in which they have to prepare to pay back and which they have to have reverse or anyway, they took the risk that they can't pay the money back to Bermuda where they use different accounting schemes. And they also, they didn't have to just go to Bermuda. They could go to Vermont where they could go to the Cayman Islands or they could go to a couple of other, now Iowas getting into this business and so as Connecticut in a bigger way. Speaker 3 00:31:54 Oh, but they, they would, they would create this triangular thing, okay? The sales is done by the US Life Insurance company, the management of the investor's money, the annuity buyer's money goes to Wall Street for sophisticated financial engineering. And the risk goes to somebody in Bermuda who can take that risk and value it at a less conservative, value it at a lower amount. So what they were able to do is buy various re plumbing of the life insurance business to cut their costs and increase the riskiness of their investments. And this has now become, is becoming the standard for large. And you can't really be competitive in this space, in the life annuity space unless you do this. And I am, and, and I'm fascinated by the project. So you might say what I mean, who care. A lot of people have said, who cares? Speaker 3 00:32:54 I don't wanna know how they make the sausage in the life insurance company. Why would this matter to me? And in fact, it sounds like a good thing because they're squeezing more returns out of the investments than the insurance companies could. And they're getting their, they're handling the insurance cheaper than they, than the insurance company could handle it by taking it to Bermuda. So the punchline for this is it matters. Now, some people think that it matters because these companies are taking risks that are not easy to measure and they might blow up, they might fail and people might not get their money back. I don't particularly believe that. That's kind of speculation. What, we have a lot of regulations when we have backup systems, and there's a lot of ways that we can keep insurance companies out of money. But what the per, and it's not, and it's not every, it's not every insurance company that's doing this. Speaker 3 00:33:47 Well, mutual companies are not doing it except there is one big mutual that's now doing it. So I can't say that all the mutuals will start doing it. It's not everybody's doing it. Not everybody has the, the, in the private equity companies are actually creating new insurance companies that just for this purpose. And so you're hearing more about those, the products of those companies. But what's important to me, especially when I'm writing for consumers, is that you have to understand that for the Bermuda Triangle, they only want to sell one kind of annuity. They only want to sell fixed annuities. And they particularly wanna sell fixed indexed in. And the I'm concerned that all the consumer is going to hear about is fixed index annuities, because that's the biggest play. So why do they, that's what's, that's what there's the greatest supply of in the marketplace right now. Speaker 3 00:34:57 And why is there a big supply of it? Why did they want to sell this particular kind of annuity product? They wanna sell it because the se these products are often have seven year and 10 year terms, which means that the insurance company can use that money and not have to worry about anyone asking for it back in generally before seven or 10 years is up. And so that means that they can invest it themselves for periods of seven to 10 years. And that's a very useful thing for them in their investment practices. So I just think people need to be aware. Why are you seeing so much about why is a person specializing? Why is there so big a supply? Why do I hear so much about this particular product? It's because it's the product that meshes best with the Bermuda Triangle strategy Speaker 2 00:36:00 I remember went dead. So this is Speaker 3 00:36:01 Very complicated. So I'm not sure I've made it clear. Speaker 2 00:36:05 No, it's okay. But I, again, we mentioned it, and again, it's not every company, but it's worth paying attention to. We had that you cover it in Annuities for Dummies in the latest edition, correct? Yes. Speaker 2 00:36:17 Okay. So what I want do, if you're willing to, we could come back and talk about this specifically and we can, uh, go into more detail if you would like to do that. I know you're retired, so you know, you don't necessarily want to be doing this all the time like I am. I'm semi, that's up to you. So semi-retired, you're still in the game, right? The advisor to all advisors, Carrie Ter. So, um, hey, Carrie, sorry about my video, but it's close to the end. So, um, everybody go grab a copy. Uh, annuities for Dummies. Um, I will possibly, maybe I should give a giveaway when I send the email out. Maybe I'll offer like the first, however many people, I'll give 'em a copy of it. But really good educational material. Uh, Carrie, I appreciate the professional and, uh, professional relationship and the friendship over the years. Hope you get to Montana again soon. So, uh, but thank you for joining us. Everybody. Go ahead and like, subscribe or comment on YouTube or your favorite podcast platforms. This is Brian Anderson for, for annuity stray, episode 1 0 1, annuities for Dummies with the man himself, Carey Hector. Thank you guys every, everybody for joining us. Have a great day. We'll see you next week for episode 1 0 2. Okay, bye. You Speaker 1 00:37:25 Have been listening to Annuity Stray Talk. The proceeding information is for informational and educational purposes only educational and does not represent tax, legal or investment advice. Reviews expressed by guests on this program are their own and do not necessarily reflect the views of annuity, straight talk or its partners. No information presented today should be acted upon without meeting with the qualified and licensed professional. It's important that you read all insurance contract disclosures carefully before making a purchase. Decision guarantees are based on the financial strength and claims paying ability of the insurance company.

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