Episode Transcript
[00:00:00] Speaker A: Hello and welcome everyone to the Annuity Straight Talk podcast. Episode number 166.
My name is Brian Anderson, coming to you from Northwest Montana. Beautiful sunny winter day. Just got back from seeing my dad. He's getting ready to leave for a year on a mission trip, which is pretty cool for him, stepping outside the box. So I want to spend as much time with him as I can. If you enjoy listening to this, please like subscribe or comment on any of your favorite podcast platforms or on YouTube. You can do it on the website. Every post has got something written along with it. I'll follow along with the newsletter today I want to schedule a call. It's the top right corner of any page on annuitystraighttalk.com I'll show that to you when I pop up the webpage. And looking forward to sharing this with you. Kind of had my eye on this for a bit and I'm not trying to really pick a fight with anyone, but I want to talk about the fiduciary standard. A lot of people throw it around. It's a tricky one to talk about. Everybody's looking for it. So I got to say from the get go, there is a legal definition for a fiduciary, but there are a lot of people out there that claim they are, or maybe say, certified as a financial fiduciary. This is leading up to that great story I have to tell you come off last week where I've seen some definite fraud in the insurance industry by a couple people that were said to be fiduciaries. That's what kind of really got me fired up. And then a couple of phone calls in the past week, totally unrelated, and I started looking at it, thinking, man, it's got to be. Got to talk about it. But I could say it doesn't exist. But specific situations it is required. In sophisticated types of trust, estate and tax planning, a fiduciary is required to oversee everything. And a lot of times that's with direction from the grantor, specific, specific written instructions. But that's kind of a different scope as far as the technicalities of a fiduciary that's required in certain service capacities. But when it comes to financial advisors, it's a whole different story. And it's pretty simple. When you're creating a financial plan, who besides you can say what's really in your best interest? So I'm not picking on the term because I don't like it. And this is probably a call to everyone in the financial services industry. Do the best you can do better than you're doing right now. If you know you're doing it, then I'm obviously not talking to you. This is not generally about every single one of them, but it does happen. Over the years, hundreds of people have come to me saying some fiduciary made a recommendation that seemed to make very little sense. And I think a lot of it's like they claim they're a fiduciary, so you don't question what they say. Well, of course this is good. I'm a fiduciary. I have to do what's in your best interest. And the reason people call is because they've been proposed something that doesn't make sense, and they got to figure it out.
So that's where I come in. Help them try to understand things. And right near the end, I'm going to tell you about a specific example with a couple of clients who ran into it recently. A great example of this is Fisher Investments. I watched a commercial last night, and again, I'm not picking on them. A lot of people like what they do. The market's been really good for the past few years. So obviously anybody invested in the market's gonna think, hey, these guys are great, right? I've showed cases in the past where they seem to think that it's in a client's best interest to be 100% invested in the stock market. If you have more than $500,000 in a portfolio, you be the judge. I don't think that's appropriate. It's certainly not in everyone's best interest. So the suitability standard is less stringent and simply requires that a recommendation is merely suitable for the consumer. Now, in my experience, whether proposed by someone that's adhering to the fiduciary or suitability standard, it's really just a suitability standard that's applied in about 99% of proposals, maybe 95. And that's whether a fiduciary pitched it or not. So an example of this is if you need to come up with some extra monthly income in retirement, an annuity is suitable for you. That's one way way to do it. If you have a bunch of money and coming up with the additional income is not a problem. Full investment in the stock market might be suitable for you, but there's a lot of people that have a whole bunch of money, no problem meeting their income needs in retirement. They don't want all the risk of the stock market. While it could be considered suitable, your best interests are determined by Only you, somebody who can use an annuity that's suitable needs to also understand that you could do it with bond interest and dividend stocks and laddered CDs. There's a lot of different ways to create a retirement plan. You need to understand and have someone who's going to show you all those options. So you decide what's in your best interest. We can. And like this isn't to argue about proper allocations. Everybody is different. I've met some people that said I don't mind 100% in the stock market. I know it's going to come back. I don't need the money. If it goes down a little bit, it'll come back. So you kind of decide what your blend of safe versus risk would be. Some would go, I know people that do all safe money. All safe money and people who have no safe money. So in that example of extra monthly income, an investment guy will sell stocks and bonds and insurance guy is going to sell an annuity. Both are biased and only you can decide which is truly best. So I hit the CFPs and again I'm going to say not all CFPs, but whether you're a CFP or fiduciary, it's not just some blanket statements that don't question what I say because it's in your best interest. That's a ridiculous claim and it doesn't hold water. And I'm not talking about specifically any bad advisors. When I am able to share that story down the road, I might mention them by name and point out exactly what they did wrong. They would know they did it wrong if they are as good as they say they are. But there are a lot of people who will take CFP's word. I mean, CFPs have to go by the fiduciary standard, but a lot of people take those guys word for it. And I've seen tons and tons of them where they end up with plans or products that are barely suitable and definitely don't meet the fiduciary standard. The problem is how can you know if something is in your best interest if you don't understand it? You put a lot of trust in these people at your own peril. And this wouldn't be a topic unless I'd seen it too many times to count. Well, he says he's fiduciary, so it has to be a good idea, right? Yeah, not always.
So last year I sold. There's a recent the recent story of clients. This point they've been customers, but I mean, maybe we'll work more together in the future. But I sold them an immediate annuity. They needed a quick, easy income bridge for seven years. They actually came up with the idea and they called me and said, what do you think? Does this make sense? And it did. We looked at the numbers, we looked at everything they had going on. Their Social Security, maybe a little bit, a few more working years, other investments, deferred compensation, all that stuff. I said, yeah, this does make a lot of sense. So I did notice they also had a lot of other assets, but they didn't engage me to talk about those. So we never got into it. I'm not out for just a pitch. I'm here to create a service. If you ask about one thing right now, they've recently opened up the door. We might be talking about that a little bit more, but I'm not sure. We closed the deal. Their short term income plan was in place and last week they called because they were searching for other retirement help, maybe some investment management. And they found a fiduciary who made them a pitch. This fiduciary wanted management of their sizable 401k but suggested they put half of it in a registered index linked annuity. You guys probably want me to. And I guess I probably can address those products specifically. I just stayed away from them. It's like a fixed indexed annuity, but you can lose money in some situations and most of them come with contract fees. So I'm not a big fan of the products because if you look at the math between a balance of an index annuity or a myga with proper portfolio placement in securities with risk, you can do about the same thing and cut your fees dramatically. So that's why I've kind of figured I'm going to stay away from even though kind of interesting products in some ways, but as a standalone deal, I don't think they really blend with the portfolio. Yeah, because you can lose money. So how, like how can you consider it truly safe money if you can lose? That's just not the way I work and not what I'm looking for. Most of the people would agree with me, although they are becoming more popular. So I'm not afraid. If you understand the product and you want to buy one, I'm not going to stand in your way as long as you understand what you're getting to. But the problem in this case is these guys had no clue what it even was. What is it even? We don't really get it. They couldn't figure out why this in Particular had been proposed. And so I had to try to figure out, well, what did you tell them? What did you say? They didn't get enough information from this fiduciary, so they called the only other annuity guy they knew. So my only question was, hey, why do you want it? And they said, well, we don't really know. Should we be safe? And maybe we should have more safety. I'm not sure. And that's where I get into the point where I don't try to push people one way or the other. If we ever did do an additional business, I'd want them to stand solid on their goals and define what those are. And that could just be simple as risk tolerance. Yeah. And this guy was a fiduciary, so it had to be legit. Right. It was a large chunk of money, so they were right to request a second opinion. And when they couldn't clearly define the goals this annuity was going to help them reach, I determined this to be nowhere near their best interest because they might end up at that point, but just throwing a product in, hey, I'm a fiduciary. I got to do this the right way, all that stuff. Well, the right way is to start with the basics and the building blocks and explain them up to that point where they would choose that process. Right. Or that strategy. And this kind of thing happens more than you can possibly imagine. And if they had jumped on that fiduciary recommendation with faith and trust in that, they're going to get three, four years down the road, might have a big surprise and think, hey, what the heck are we doing right now? It's not in your best interest to be confused with a lack of confidence.
So people ask me all the time whether I'm a fiduciary. The only thing I can say is that I try to be, but it's not a badge I'm desperate to wear. You be the judge.
Education creates confidence. I push for that very aggressively. Options are extremely important, and I don't mean just different products or different companies. You got to start with strategies. With just about everybody I meet, we got to first talk about finding goals. We look at how the plan works without annuities, then how it's different with an annuity, whether safety or income, if someone decides to take the annuity. So with or without the annuities. Also talks about the different options and how they would look if you decided not to use an annuity. Say you want to use bonds or CDs or dividend stocks, and that's fine. We got to go through all of that stuff. If you decide to take the annuity route, I'll typically show them two or three different ways of getting it done.
Spia GLWB with income rider, without income rider. Depends on how much they have, what they want to allocate, what makes them comfortable. And I have a hard time pitching people. A lot of people just do. Or they're so conditioned to seeing the sales pitch that they don't want to look at three options. They'd rather see my option and then go meet with four or five other people. And the vast majority get thoroughly confused after that. So I show you several different ways to do it with or without annuities. So the result is that everyone who works with me learns a lot along the way and gets to make the final decision about replace placing retirement funds. You decide where it goes. Now you guys can decide whether that's a fiduciary approach, but that's kind of my thought. So within the financial services community, between journalists and advocates and all that stuff, several people have pushed to have the fiduciary standard apply to all sales and transactions and find if they want to do that. If I got assigned something because all it is, it's a matter of opinion, I gotta sign something, say in my opinion this is in their best interest. Well, that's no different than the suitability standard. And just as many mistakes are made there or shortcuts are taken or lack of research on the advisor's part to really know what the other options are. Or just quick like I said, trying to get the quick hit. Hey, here's a bunch of money. I'm going to put this here, put this there. It's in your best interest. I'm a fiduciary. Take it. When it comes to your retirement money, the only true fiduciary is you. So yes, they do exist for the sophisticated planning cases where it's a requirement to have it as have a fiduciary as part of it. And then when it comes boils all down to it, you're the fiduciary and that's all there is to it. That's why I'm never going to claim to be, but I'm going to tell you what my process is and you can decide if that works for you. I appreciate you guys joining me for episode 166. Again, share it with your friends like subscribe or comment on any of your favorite podcast platforms or on YouTube. Getting a lot of subscribers. It's popular Hopefully I can keep the topics interesting. I plan to do so, but if you want to make an appointment with me Top right corner of any page on annuitystraighttalk.com it says schedule a call. I will call you name, phone number, time zone time and some notes about what you want to talk about. Simple and easy. I'll be back next week for 167. Thanks so much for joining me guys. You have a great day. Okay, bye.
[00:13:13] Speaker B: You have been listening to Annuity Straight Talk.
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