Episode Transcript
[00:00:00] Hello and welcome everybody to the Annuity Straight Talk podcast, episode number 202. It's me again, Brian Anderson, founder of this website and host of the podcast. I've been here for all of them. 202. That's a lot.
[00:00:13] And we're going to keep going because we got a lot of good information. Please, like subscribe or comment on any of your favorite podcast platforms or on YouTube. Schedule a call with me, top right corner of any page on annuitystraighttalk.com I will answer your questions. Make retirement planning as easy as possible. Whether I get any business out of it or not don't matter to me. I'm here to tell the truth and give my opinion where necessary. I'm back inside.
[00:00:38] Early November. Kind of crummy weather. We've had some beautiful days, but it's just not that warm out there. I think it's time to hang it up. Maybe I'll run down to the lake for a winter episode if it's a beautiful sunny day, but I don't know. Sounds awfully cold. So I'm not going to today. I'm going to talk about something I've talked about a lot before. And I find it necessary to do this because no matter what I say, I continue to get questions about it. Just like every single day, new people hit my website who have never thought about it, never learned about it, have a long ways to go to figure it out. There are still guys out there shucking these products to more people than are necessary. I want to make a disclaimer before I begin. I do not dislike the products.
[00:01:21] It's not to trash on the products. It's that in 99% of all examples, they are misrepresented as to what they can do.
[00:01:30] So yeah, we gotta go back. I made a check. It's been four months since I said anything about Allianz and I've probably Talked to about 50 people since then at the very least. Gonna share my screen. Visual aid. Give me a newsletter. We're gonna follow that along. You can go read it in just a few minutes if you want, but you're gonna get a few more details here, so perhaps both if it's really close to home. Okay. So on average, I have a conversation about these products probably at least two, three times a week, sometimes more.
[00:01:56] No matter what the typical customer experience is with the 2 2, 2 or the benefit control agents are still selling this like crazy. It's time the industry wakes up. It'd be great if they were sold in only the situations where they were appropriate. I've showed people an alternative to this that is objectively better, has more growth potential. The point is to grow. And I think it's a great product, but I've only sold it a handful of times because it's for those specific situations. Sadly, the industry is probably going to continue down the same path. So I'm here to remind everybody they're going to do exactly what they were built to do. You are going to get safety, get a little bit of growth and have the option for guaranteed income. At some point you are not going to get double digit performance and gigantic inflation adjustments. You've got to set conservative expectations. Those who believe in the incredible hype will almost certainly be disappointed. I got one such example. The day I saw it, I was like, oh man, I, that's tough. I talked to another guy about it the other day that's had it for five years. It's actually gone backwards. Cause they had allocation fees shooting for even bigger performance. No doubt illustrated to look exceptional, right? His account's gone backwards and he said, oh, those guys should be in jail. It's like, nah, I don't know. I mean, I've showed you the website. The website explains it perfectly. The company has covered their bases. Okay, that's compensation model and the distribution. That's the problem.
[00:03:15] So far. Too often I've seen somebody count on the crazy numbers from the illustration. When it doesn't work out, it puts them in a financial bind. I've seen some people, I've never done it to anyone myself, but I've seen some people put a substantial portion, if not all of their retirement money into it with grand expectations. And it really puts them in a tough position. So take my word for it, I see it all the time. We put some ads out on these products years ago just to educate people because there were some really gross misrepresentations in the early days, less of it now, but you still see it on a regular basis.
[00:03:46] When I talk to people, most are surprised. Like if someone's evaluating it, they're surprised to hear that the hypothetical income numbers are not guaranteed. Oh, they told me it was guaranteed income. It indicates that the salesman didn't even explain the contract to them. And I've said this before, that some people will actually argue with me. Well, he didn't say that. That's not what he said. He told me something else. I get calls years down the road. Oops, should have listened to you.
[00:04:10] Most of the focus goes to the bonus. We know it's not real money. We've talked about that in lots of other places. The search bar on the newsletter. Just type in Allianz. You'll get it all of them. But few understand how it really works when they start.
[00:04:24] There's some people that do and some people that buy it for the right purpose. And those people are fine. I'm not picking on anybody. Far too many cases. It's dinner, seminar, bait and nothing more. I've said this a lot. You got 30 people in a room.
[00:04:37] It used to be rubber chicken dinners. Now they take you to some pretty nice steakhouses. Wow. 40% free money and a great steak at Ruth's. Chris, Great way to bastardize an incredible steakhouse.
[00:04:47] Give them a bad name. I hope not, because everybody should enjoy something like that at least once in their life. I do it every time I go to a city that's got one. But there's no chance that all 30 of you require the same solution in retirement. So there's even less chance that this one product is going to work for everybody in the room. But that's what they're selling. And they'll say, well, there's other ones that'll do it. I like this one, though. Of course they do. So about a month ago, when I thought about this, I got a call from a lady in Arizona. No dependence, late 50s, wants to maximize income in five years. A local agent down there who seems to be a jack of all trades, kind of oh, that do a little this, a little that. Real well known in the community, does a lot of stuff. I'm going to say right now, I do annuities. That's what I specialize in. I don't have other sources of income. I don't have side gigs, side jobs. You cannot be a true professional unless you focus solely on one profession. For this lady who wanted maximum income, I don't need to leave anything to anyone. I just want to get the most out of my IRA when I retire. And the local agent said, hey, this is my favorite.
[00:05:46] This is my favorite annuity. So she gives her the Allianz ABC first red flag. It does not matter what my favorite annuity is. That is irrelevant. Who cares what my favorite annuity is? It's important to get the one that works the best for you. I sold last year 15, 16 different companies. This year, probably a dozen different ones. We sell income riders, we sell GLWBs, we sell SPIAs, we sell MyGas, we sell FIAs for growth and accumulation. Okay?
[00:06:11] It all comes down to what you want. Yes, I have ones that I really like, but who cares what I think? I'm going to give you the information, so you pick what you like. And I think you're doing something wrong. I'll tell you. No, no, no, that's not going to work. Right.
[00:06:23] So I found that Nationwide would pay her guaranteed income that substantially exceeded the hypothetical projection from Allianz. And as luck would have it, just the day before, I met with another lady who bought the same product from Allianz almost four years ago. We got one lady in Arizona who's thinking about it. We got another lady who already bought it. Hey, I'm trying to get out of it, talk to hundreds of those people. How do I get out of this?
[00:06:46] So when you make an appointment, you get a chance to write, hey, what are your goals for this appointment? And she said, looking for best annuity options for 125 to 150,000.
[00:06:55] I have two annuities with alliance for 300 and am astounded at the difference between what was projected and what will be reality. I mean, she bought it four years ago. I was saying this four years ago.
[00:07:07] Careful, don't do it.
[00:07:08] Sounds like her experience is about what I tell people to expect.
[00:07:12] Now she's looking to buy another annuity, and it sounds like it won't be another Allianz, but who knows? Nate, who's been helping me with appointments, when we've been able to get like, a lot of the time slots we have are popular so people can talk to someone and at least get the idea shared. We'll figure out. Nate took this one and the lady was kind enough to send along statements to explain her point.
[00:07:30] Now, she had two contracts. They both did about the same thing. We'll look at just one.
[00:07:34] So there's a graphic on the website, on the newsletter that shows the portion of her statement that relates to annuity values. So very impressive. The protected income value grown by 2.32%. So that's the giant bonus up front, plus additional interest credits. That's the number they use to calculate their income, only going at 2.32%. For payouts that start really low, go with a guaranteed contract that, you know, increases 8, 9%, 10% guaranteed every year. Right.
[00:08:01] So 2.32% growth in the income value over four years, that certainly would not get. If she's saying she's astounded at the difference of projection versus reality, that's the first indicator.
[00:08:13] So it's a long shot, a long ways away from the double digit projections. A lot of these agents illustrate. I'm guessing the guy said, hey, no big deal. That's why they start looking. Why are they talking to somebody else? Cash value is another story. A yield of 0.46%, less than half a percent since inception. Now, if she wants to change it, pursue future opportunities in a rising rate environment like has happened over the past four years, the more money she has, the better off she'll be with making that change. So it's limiting her future opportunities.
[00:08:43] So if you, anybody looking at this, considering this as part of a critical part of your retirement, wake up and pay attention to this. This is what people who have had it for five years say. If you want to just protect money and the cash flow option is a nice but not necessary, then go ahead, so long as you won't be hurt if it doesn't work out and there are better options. But I don't care because I've never illustrated like knock it out of the park numbers on these things. I just said, hey, listen, here's the expectation. It should do myga or better, right?
[00:09:10] So the lady that had the contract was looking for a healthy income stream. She wants to start another year, maybe now or in a year. So she had $300,000 locked up four years ago. And as it stands now, her income benefit will pay her about $18,200 per year for the rest of her life. It should be nearly twice that given her parameters. If she had a guaranteed contract.
[00:09:32] I mean, just think about that. That's a big difference. Big difference.
[00:09:36] Right now, Nationwide will guarantee right about 30,000 per year just a touch less.
[00:09:40] She can salvage something good out of it. No idea what she's going to do. Salespeople favorable to the ABC will brag about the increasing income that boosts payments every year by the amount of index growth. But with performance like she's had, this nice lady is going to have to live to probably at least 150 years old before the inflation adjustment even catches the Nationwide payment.
[00:10:01] How's she going to get more money? Take the highest income stream you can get. Enjoy it. Okay? True inflation adjustments happen in a different way. Buy the most efficient income stream you can and put the extra money into other investments to grow. When you need to adjust spending, it will be there for you. Don't count on a hypothetical from an insurance company. Now, I told all of this to the lady in Arizona who was thinking about doing it. She said I need to make a decision quick. I've been on this for a while. I never heard from her. Again, okay. Now, I don't know if she bought something from the accountant, bookkeeper, real estate agent, annuity salesperson and bake sale chairman. Right. But I can tell you she didn't do business with me. So what if I didn't make it a little bit this time? I'm not the ones who will suffer the most because of it.
[00:10:41] What she is likely to lose is multiples of anything I would have made right now. Again, I know a few people are perfectly satisfied with their alliance contract. They put conservative expectations on it and allocated a relatively small portion of overall assets to the contracts. All of them are fairly young. A lot of people have started that I know that are okay with it. Started in their, you know, early to mid-50s. They've got a good long run before they even need to retire. If it's a small part of their assets and they're saving a lot of money, it's going to make relatively little difference. We still like to maximize every portion of it, you know, but they can make changes if it doesn't work out for them. So anyone who counts on the income in the future should pursue the highest guarantee on the market.
[00:11:18] That's the best deal, whether it's a spiad GLWB off an FIA or otherwise. Right? So you'll save the money up front and open up planning opportunities in the future. It's very simple to do things right, but you got to deal with the sales pressure from the people who are desperate to make sales. I'm not desperate. You can always do what you want with your money. Doesn't matter to me. But I'll give it a shot. And you won't be able to say that I didn't warn you. Okay, guys, back on the aggressive path for episode two. 02. If you've got, and I would love to, if someone has one there, hey, I'm happy with it. This is what it's done. That's okay. I'll take a look at that. I'll explain. I'll even show some of the numbers and tell everybody, hey, here's where it works if you guys want me to do that. So, like subscribe or comment on any of your favorite podcast platforms or on YouTube. Schedule a call, top right corner. If you're looking at the video, I'm going to scroll all the way back up. You can see schedule a call for all the English speaking people in the audience. Thank you guys for joining me. I really appreciate it. I will be back next week with episode number 203. You guys have a great day. Okay, bye.
