Episode Transcript
[00:00:00] Hello and welcome everybody to the Annuity Straight Talk podcast. Episode number 214.
[00:00:06] I'm your host. My name is Brian Anderson, founder and creator of annuitystraighttalk.com answering all of your questions about retirement. Just past the 23 year mark anniversary, so I'm going to start saying almost 24 years. Maybe in a few months I'll use that. Please like subscribe or comment on any of your favorite podcast platforms or on YouTube. Got some good episodes coming up, new developments. We're going to hear from a client next week and new developments. Got some software coming out that's going to help everybody conceptualize the use of annuities in retirement. Very excited about developments. In case you guys were wondering if I ever actually work on anything anymore because it takes a lot to run this and continue improving so that it evolves to be a cutting edge tool and resource for everyone. Go and share it with your friends. If you want to know anyone else's opinion, advisors, friends, people that could use it, people that might have a different opinion, I'd love to hear from everybody. I'm going to share my screen and talk about this podcast today. And it's one last kind of negative thing actually as far as sales tactics. And then we're going to try to do some really positive stuff going up. But catchy title for you all. God doesn't sell annuities. Imagine that. And if you take offense to this and you're, I don't know, come on, it's this is, this happens all the time. So you have to know. The guy who made the appointment that I'm going to talk about started off saying, well, first of all, Brian, are you a Christian man?
[00:01:26] So I'll give you guys the answer I gave him. I said, yeah, but it, that doesn't have any relevance to the advice I give. My credibility or the relevance of what I might tell you has no bearing on any financial decisions you make.
[00:01:40] If I say I'm a Christian, that does not make me a Christian. I believe it's what we do and how we act and behave. Everybody got their own definition. But try to be a good person essentially.
[00:01:52] And I'm pretty sure God doesn't care about maximum profitability of your retirement assets. If anyone uses religion for credibility in this business, you can almost guarantee you're about to get screwed. It's kind of same thing as fiduciary. It's I, well, pray about it, right? Pray about it. It's, don't think about all the features of this, just pray and see if you get a good feeling. No, you still need it. You. Yeah, you still need to understand what you're doing. Okay. So last year I ran an episode about a fraud case in Arizona involving annuities. This one this week is not quite the same. I met a couple who had been abused by greedy agents. It had cost them over $100,000 in retirement savings. Three, four years into it, they had $129,000 less than they started with because they'd surrendered so many contracts and gone into new ones. Those guys had a full paper trail of all financial transactions going back to the beginning of their annuity journey. And it was very easy to prove that fraud existed, but it was difficult to get the regulators to notice and even harder when the agents involved because they pushed back with their own defense.
[00:02:53] Now, the process, that process had a happy ending. I did not update everybody. I was just relieved because it was very stressful for me and for the clients involved. I didn't sell them anything. They didn't buy anything. I didn't do it to get an annuity. I didn't take a penny from them. They offered to pay me at the end of it. I said, I cannot take it because it defeats the purpose of trying to do the right thing.
[00:03:11] But we got it resolved.
[00:03:13] They were even refunded the premiums for their last annuity purchase without paying surrender charges. It was a really good deal. So we put the right kind of pressure in the right places. That was difficult to say the least. And I was even threatened with a lawsuit. Didn't bother me, but it shook the resolve of the people I was trying to help.
[00:03:29] Not everyone would have been able to do what they did. They were very tough and held it together for six or so months until we could finalize things. If they had shown the slightest hint of weakness, it would not have happened.
[00:03:39] I'm not telling you to come fight and go fight.
[00:03:42] Just do everything you can so you're not in a position where you have to. Right. I ran into another couple a few weeks ago. What I'm going to talk about today.
[00:03:51] And it's not going to have the same happy ending. It's not quite as egregious, but it's still going to cost him a lot of money. They don't even know they're being scammed about it. And that's the problem. This happens all the time.
[00:04:01] I'm going to explain the story and let you guys know that you might see it. And probably a lot of you have the annuity business Is getting better, but there are still bad actors out there that do a lot of business. So the new couple is in Texas. The wife received a sizable inheritance from her parents a little over two years ago. The couple was split about what to do. One wanted maximum growth, the other one had safety. It's the wife's money. I told the guy, hey, you know what, maybe it's hers. Let her kind of have the final say. I mean, I guess any of you married folks, most of you might agree that, yeah, there's certain decisions in life where one person has the upper hand and that's okay. They compromised, bought two fixed index annuities, sizable amount, $1.5 million. So two years have gone by and they got their first interest credit. They went on two year resets. One of them is up about 9%, a little over 9, and the other is yielded close to 19.
[00:04:50] So nothing to complain about, right? Really good blended yield. The 9 could be better, but it's not bad. 19 is incredible. It's awesome. For an index annuity. Locked in, guaranteed. Okay, okay. They should be extremely happy with the results. And only eight years to the end of the surrender schedule. Now, the agent who sold it comes in and claims that he has a better product and that they should surrender their initial contracts. He said there's a new product that will provide much more benefit than what they currently have and it's worthwhile to take a bonus on a new contract that's going to cover the surrender charges.
[00:05:18] The surrender charges would actually equal about all of the earnings. So they'd give up two years of earnings and replace it with a bonus.
[00:05:25] Now, the agent steered them right the first time so they were inclined to trust him. But the husband was at least skeptical enough to call me. Still putting the requirement on that, oh, I'm only going to work with a Christian guy, right? Who's a Christian here. So there are certain reasons and scenarios where it makes sense to surrender an annuity. You can type that into the search bar surrender. And there's a bunch of podcasts on surrender charges, surrendering contracts, when it's good, when it's not good, all that stuff. If that's your concern, you can go find it. This one does not meet the transaction criteria that I would say for surrendering an annuity. There's no chance the agent is doing anything more than abusing trust and looking to make money all over again. But he prayed before meetings and told these guys he's a God fearing man. Okay? Now most people surrender an annuity because of Poor performance, undisclosed product features, more growth potential, or changes in financial goals. It's only appropriate to go into another annuity if the new contract fixes the problem you had with the previous previous one. And you also have to really want to be in annuities. But if you've got a problem with the current annuity and you don't want annuities, then just pay the surrender charges, get out and go do something else. It has to make your life better. You have to prove that it makes it better. If one of these issues arises in the first two years of owning a contract, that's usually a death sentence for the agent and the annuity. If you buy an annuity that has poor performance, undisclosed features, or your goals change substantially, it's not likely that another annuity is going to solve the problem. Okay? There's no reason to replace it if it doesn't make your life better. So do you guys know that an agent retroactively loses his commission if a contract is canceled in the first year? You buy an annuity. For me, that's one of the reasons we do so much work upfront. Keep it because I'd rather not make the money in the first place and then make it and then have to pay it back in six months or eight months. He also has to pay back a portion in a lot of cases if it's canceled in the second year. With many companies it's prorated, maybe all of it in the first year, 50 or 75% in the second year. Some may go into the third year. That's why I consider this fraud. He waited for just the right time to churn the contract, get a fresh commission. For less than reputable agents, the two year mark is a big opportunity for them. Hey, you trust me. We both go to church, we pray before the meetings, make sure that we're guided the right way. God is not guiding me or anyone else into advising you in finances. No way. Between the contract that was already owned and the new contract that was proposed, we can use common sense to determine if swapping is a good deal. The current contract issued in 2023 has good rates. Has as proven by solid performance in the early years. The new contract has a bonus which inherently comes with lower rates. We talked about bonus annuities. If you get something up front, they're going to reduce the backside. Okay. It's not bad. It's just the way it is. There's nothing free. You're going to give it up in one way or the other. Why? This is a Bad deal is because all the gains would be wiped out and replaced with a bonus and lower rates. So they'd have, let's say they had the same amount of money, but they'd have lower rates going forward. It's not going to be good now. Even if the first company had cut rates on the current contract, there's no reason to switch because no one would have the confidence that the new company won't do the same thing because they could. Replacing a good contract is nothing but agent greed. And last I checked, that is one of the seven deadly sins. Is it not so clear cut case? I don't know what they do. I had one call with them. Sounds like they were really just real comfortable with this guy. He was just going to walk them into a new sports car, right, for himself.
[00:08:48] They were going to start from ground zero with the same amount of money, less potential going forward. That's the only way I see it. That is fraud. That's a lie and it's not going to work. Okay, so next week we're going to get more positive. I'm going to run some stories from a client who wants to tell his story. He volunteered to do a podcast because he spent a lot of time getting into his annuity. I'm going to show you what happens when things are done the right way. We're going to record it early next week and it could be a couple of different episodes depending on how long we go.
[00:09:15] But I'm not going to really direct it except ask questions and talk to him. I'm really going to let him have the floor and you guys are going to get to see it. So when he was researching annuities, he talked to several people and large companies.
[00:09:27] He feels like the annuity industry has gained a lot of credibility and converted several antagonists. While I agree in several areas that it has, there's still plenty of crooks and idiots out there. So you can't relax and just take anyone's word for it. You have to verify what you've been told. So back early in my career, I learned this lesson right away. I was an early agent. I went to church growing up my whole life.
[00:09:49] And one of the biggest business guys in my hometown was a member of church. We were friends with the family. All this stuff, I thought, hey, this guy, I'll take a meeting with me, I'll probably get some business out of it, right? And sure, he gave me a meeting, but he sat me down, he looked me in the eye and he said, faith and business don't Mix. Brian Yes, I share faith with your family, but I also run a business and I have to make objective decisions about that separately.
[00:10:12] I didn't get a big chunk of business from him. I've got a great relationship with him. He's a wonderful guy. We're friends to this day, but I understood that lesson early, so I never wore that on my sleeve. It's not really who I am. Anyway, you have to verify what you've been told no matter what, and that's why I'm here. Call it out. Set the record straight. If you're getting the run around with advice that doesn't make sense, then take your time going through the information on this site. If you pray about it, you're not going to get an answer from the good Lord above. I'm sorry you have to do some work and put a little more effort into it than that. I will fix it all for you and get you going in the right direction. Thanks so much for joining me for 214 Share with friends. Like subscribe or comment. Follow us on YouTube or any of your podcast platforms. Whatever you want to do to get the information and let me know what you think. I'll be back next week with episode 215. We're going to get some really good ones coming up. A lot of great information. Thanks so much for being with me guys and you have a great day. Okay, bye.
