Episode Transcript
[00:00:00] Hello and welcome everybody to the Annuity Straight Talk podcast, episode number 183. I am your host. My name is Brian Anderson, founder and creator of annuitystraighttalk.com.
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[00:00:26] Kind of a lazy day here in Northwest Montana and enjoying something. Ready to tackle a topic, get back to business, because I did talk about leisure and fishing and hunting and all that stuff.
[00:00:42] But I'm going to share my screen if you want to book an appointment with me.
[00:00:47] Top right corner of any page on annuitystraighttalk.com today I want to talk about the best fixed index annuities for growth.
[00:00:56] Huge topic because there's a lot of guys out there bragging about how great these things are. No market losses, all the upside in the world, man, you can beat the market. You could do this. You can do that, right?
[00:01:08] There will be considerable debate about this topic, so I will give you all the reasons why. I recommend a certain path if you're looking at this, because I've done it for a lot of years.
[00:01:20] My goal is to only sell you an index annuity if that's what you want, and you decide, given all the inputs, that's what you want.
[00:01:28] And yes, I do sell annuities, and that's how I make my living. But I'm not going to do it at your expense. I'm not looking for a commission.
[00:01:35] The way I say to a lot of people is, you're going to buy it from me. You're going to get full disclosure, the top and the bottom, projections and all that stuff. And the last thing I want is for us to have a contentious discussion three or four years down the road. I'd rather we do that now. And if you really don't like me, go somewhere else. So if you look at two different fixed index annuities, for the most part, you will not find anything different. So the deciding factor comes down to what you, who you want to advise you. A lot of agents are going to go with what's easy to sell.
[00:02:09] They're influenced by someone else, they're influenced by compensation, whatever it is, they're gonna pick something easy and they're gonna say, oh, if the market goes down, you don't lose, the market goes up, you win.
[00:02:21] And that's pretty generic, but if you really want to use these things, then you can go through a deciding factor. I've already done that. I'M just trying to help you guys. You can believe me or not believe me if you want to.
[00:02:32] As a consumer, you gotta decide what's most important to you. And realize that most advisors don't work very hard to study the available products.
[00:02:42] So I did. I studied them telling you what I think. If you don't believe me, go study them yourself.
[00:02:48] So when your focus is safe accumulation of assets, all you really want is to make sure that the money is secure and you can get the highest return possible.
[00:02:59] So that makes sense, given that you would want to first focus on a really solid company. When it goes from there, then you can get into a debate about indexes and how they perform and what their projections are and historical performance.
[00:03:14] And that's all based in the past, but the future is guaranteed only to be different.
[00:03:20] And what do you want to trust?
[00:03:22] Sound reasoning. Okay.
[00:03:25] Most salespeople like to show you a projection, but are never going to be able to explain how your contract might perform differently. I hear from people all the time.
[00:03:35] I saw this illustration and it looked really good.
[00:03:39] And the contract didn't work out like that, and the guy couldn't explain it so well. You got to understand interest rates and you got to understand market conditions and all that stuff. You understand why I bring guys like John Ballmer on the podcast to talk about market timing. It's for my benefit as well as yours, because I want someone that has an eye on that.
[00:04:01] So you need a variety of options that work in various market conditions and someone who understands what that is.
[00:04:08] Now, whatever is the best is a matter of opinion. But there's a list of things to consider so that your opinion, when you get done with all this, you want to make sure it's based on something reliable. If one does well, they'll all do well, assuming that they all have the same options.
[00:04:28] That's what I've always said. It's like if you're buying it for the right purpose and you have the right thing. I was like, ah, if one does well, I'll do well.
[00:04:35] And that's when I go back to the company and the guy who you're working with, is he gonna be there at a meeting today with a client?
[00:04:42] And I stick around and do reviews for people every year and we talk about what the indexes could do. They ask me, what do you think might do best in the next year? It's like, this is overvalued. That's like, I don't know.
[00:04:57] It's something I think that I try to tell them where the value might be based on what's going forward. So the first fixed index annuity I sold was based on a comparison of about 150 available products at the time. Now there's close to a thousand, maybe even more.
[00:05:16] All I did is go down the list and I looked at competitive value and took a shot at a contract with a solid company. A it's like, hey, their cost basis is lower, the commission might be a little bit lower. I don't want people to focus on that too much.
[00:05:32] But the result of that was that it worked out. And over time, a lot of the myths about index annuities were dispelled in my own mind because I didn't trust them any more than you do when I first started looking at them. You will never be able to change my mind. That what I found all those years ago after looking at the 150 products and finding one, not saying there weren't others, but the one I found was really good. You cannot convince me that it's not at all that, that it's not one of the best annuities for safety and upside growth potential lock money way, no fees, guaranteed. Market goes up, hey, cool, we got a yield.
[00:06:08] It's down. You don't have to worry about it. So every time that I find myself saying something a few dozen times during meetings, it indicates that it's worth a podcast episode. And this is where we are right now.
[00:06:21] So a lot of people ask, what products do you prefer and why?
[00:06:27] I choose based on the experience that I have. This is 22 going on, 23 years in the business.
[00:06:34] I like a financially strong company, good index options and a history of holding rates steady.
[00:06:40] That's one of the big concerns, is they're going to dump rates and they can do this and that. And what I've seen is like the companies that I choose to work with don't really do that.
[00:06:49] So there are other companies. It's not to say that I pick the only ones. There are other companies with similar products, but unless there's a material advantage to a different company, I have no reason to change what I've been doing for a long time.
[00:07:06] It's better for me to have large blocks of business at a couple of companies than it is to have a little bit of business at a ton of different companies.
[00:07:15] Better customer service, get to meet the people, spend more time.
[00:07:19] And I will say, between the companies that I'm going to mention, I know many of those people personally, so we get way better conversations. It's completely different Story. So the two companies I recommend with the utmost confidence are Midland national and Massmutual Ascend. Massmutual Ascend was formerly Great American Life. And that's where I started with them.
[00:07:40] Back in 2020, I think I did a newsletter. It wasn't a podcast about smart annuities.
[00:07:47] Massmutual is one of the big heavyweight mutual insurance companies.
[00:07:53] If you don't know the benefit of a mutual insurance company, then do a little bit of research or contact me. Top right corner of annuitystraighttalk.com and we'll talk about the power of a mutual insurance company as opposed to a stock company.
[00:08:11] Mutual Company is for the benefit of policy owners. Stock company stockholders. Now, it's not good or bad and you can find good things with both places. But MassMutual bought Great American. That's why I did the newsletter that was.
[00:08:31] I had sold a bunch of Great American contracts. They were all doing just fine. Everything was good, everybody was happy.
[00:08:37] And Massmutual bought Great American Life.
[00:08:40] And I think it was 2019 or 20. It's an old newsletter. It's on the website Smart Annuities. Hey, if Massmutual thinks it's a good deal, I guess I was right.
[00:08:51] So both of these companies come with a solid A rating and the best customer service in the industry.
[00:08:58] When you call someone and ask them for help or to do something for service, you can tell when they've got a smile on their face.
[00:09:06] You can tell when they're happy to be there.
[00:09:09] And there's a lot of companies that are not necessarily like that. So you gotta work a little harder. They might have good products, but it's harder to get there to do certain service things. I'm gonna highlight a product from each of the companies that I think are the best.
[00:09:24] If you disagree, that's fine. And I'm gonna let you know how it's different with the other products that at both companies. So Midland National Retire Vantage 10.
[00:09:32] I did a podcast on this in the very early days of doing a podcast. But they've got a competitive fixed interest rate and five different indexes to choose from. Total of 17 allocation options because they have both one and two year resets available.
[00:09:48] They use S&P 500, NASDAQ and a couple of blended indexes that have done really well when most of them haven't been.
[00:09:58] They've got a negative performance trigger on the S&P 500 if you want to bet against the market and a 10% annual free withdrawal.
[00:10:06] I want to go back to another newsletter. I Did that was talking about liquidity of annuities.
[00:10:13] And if you maximize the free withdrawal and that annuity didn't grow the entire time, you would have pulled 68% of it out of the contract by the end of the 10 year term.
[00:10:27] So you can use that to average back into the market. If you want to protect some assets, you can do a lot of different stuff with it. But the whole idea that they're not liquid is, I don't know, it's a matter of perspective. But it still has to work with your expectations. But still it's not that bad.
[00:10:43] So Midland national has similar products available with 5 and 8 year surrender terms.
[00:10:49] I'll touch on the difference in a bit, but I talked about their five year product last year.
[00:10:56] And the second company is the Massmutual Ascend. That's Great American Life. It's got the highest fixed rate in the industry and five additional indexes. All indexes are one year reset options for simplicity.
[00:11:11] Great to have more. But a lot of people wonder like a two year reset, you gotta wait two years to see if you made any money.
[00:11:18] One cool thing about this, Midland's got it in their five year, but you've got an S P500 cap lock option.
[00:11:25] So you never have to worry. You want to stick the money in there, they're never going to change the cap. And then it's just playing the odds. No fee, safe money, solid company, you got us.
[00:11:37] That's a perfect hedge against the market, to be honest with you. That's why I'm going to probably start pushing the Legend seven more than anything else.
[00:11:45] Got a lot of people that like it right now. Legend 7 also has the S&P 500 US Real Estate and Gold Index for diversity, 10% annual free withdrawal. And they have similar products available with three and five year surrender terms. So you can go really short with that company down to three years.
[00:12:06] Roll the dice for three years with an index annuity, pretty good. So now everybody's going to ask why did I recommend the longest surrender terms offered by each company? And the reason is simple.
[00:12:19] This is not a recommendation first and foremost.
[00:12:24] And everybody's going to choose something differently depending on their personal circumstances. Second, the longer you go on surrender term, the more index options you have.
[00:12:34] And so like talking about the longest ones is the best way to highlight what all is possible.
[00:12:41] If you take a shorter term with either company, you're going to have some of those index options trimmed off. So you might go with say Midland national and their 10 year products going to have everything available and their eight year product is going to have three quarters of that maybe minus some two year options. Maybe an index is different. And then you go down that are five year product, they've only got one year options and it's a lot different.
[00:13:09] So if the five year. And you want something short term because you don't trust it. Oh, I just want to try this out.
[00:13:16] Go with a five year. All right. And in the podcast last year about Midland, the five year guarantees rates won't drop. So that's cool too. So that's the reason why I told you like at the longest term, most options available, you go down. It's going to be a little bit different than what I explained.
[00:13:33] But this is all very general information as well, so it's not specific. And I had done something on Midland three or four years ago.
[00:13:42] I don't want to put rates in here. Everybody's gonna ask, what are the rates? What are they? Now I want this to stand the test of time because I've seen these companies over lots and lots of years and these are really good products with companies that are committed to delivering value because they want the business.
[00:14:00] So if you're seriously considering a fixed index annuity for safe accumulation, do your homework.
[00:14:07] You have to first look and determine that a multi year guaranteed fixed annuity isn't more appealing because that's the building block of an index annuity.
[00:14:19] I'm going to have to put some more podcasts in here in the newsletter if you want to look at it and go to the website because there's a lot of things that relate to this that will sharpen your understanding of how you do it.
[00:14:31] The multi year guaranteed annuity is the building block of an index annuity. And many find the simplicity desirable.
[00:14:41] Now index annuities do pay higher commissions. I like to sell them, but not at your expense. And a lot of agents and wholesalers skip this step because they want to make the most money. So that goes. Don't just jump to an index annuity. That's something I did. I remember driving across the country. I was going from Kansas to Arizona a few years ago, hunting trip, and I thought about that. Wow, that's crazy. But don't just jump to an index annuity. A lot of you guys will disregard this and go back to Omega, that's fine. Now I want to make a lot of money too, but not at your cost. If you get an index annuity for me, it's because that's what you want and you knew what the trade off was good products, really fun, fun to play with, fun to test the deal. You're not going to lose money, you don't pay fees.
[00:15:28] So I think it's great. This is a simple list and that's the way it should be. You can meet with a dozen other professionals and you won't find anything much different than what is listed.
[00:15:39] Relationships are important as well. So if you have an advisor who is showing you something similar, then don't be afraid to run it by me.
[00:15:47] Prudential, Pacific Life, Lincoln and a few others.
[00:15:51] There's some good companies that have very similar contracts. And again, I already did business somewhere else, so I'm fine doing it one place or another.
[00:16:01] Like take it.
[00:16:03] I'll take the large blocks in one place. I get better service and all that stuff. It's better for you if you work with me. But there, yeah, there are a few companies that are solid with similar options.
[00:16:14] There's absolutely nothing wrong with those. But I'm loyal to the companies that got me here and made it work. So complete your due diligence, but don't make it unnecessarily complicated.
[00:16:25] I'm here to help if you want to make sure it is done right. Okay guys, this has been episode 183. I certainly appreciate your continued loyalty to this podcast.
[00:16:38] I am here to help you navigate the market, do sophisticated retirement planning, make sure you have all the leverage in the world to be as efficient as possible so that you can go and do everything you wanted to do in retirement.
[00:16:55] Top right corner of any page on annuitystraighttalk.com, you can schedule a call with me. As far as the podcast goes, like subscribe or comment on any of your favorite podcast platforms or on YouTube. I appreciate you guys stopping by. I will be back next week with episode number 184. Have a great night. Okay, bye.
