Episode Transcript
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 00:00:49 Hello and welcome everyone to the annuity straight talk podcast, episode number 54. My name is Brian Anderson, founder and creator of annuity straight talk. And I'm a little bit nervous about this one today. Cuz I got a peanut gallery somebody's watching me. I had, uh, this person proofread the newsletter first and tell me whether it was adequate or not. And I started reading it myself again and I realized there's a lot of information unpack here and I hope you guys get the message, but I'm gonna do my best. So again, we're gonna talk about why insurance companies are really busy right now. First time users, first time annuity buyers would look at it and say, man, this takes forever. But I would say more than half of the annuities I've sold this year are two people who have bought annuities before. They're either rolling annuities they've had for a while or they are buying a new one, a different one, another one.
Speaker 2 00:01:51 So for any of you, haven't used them. You gotta realize there are a lot of people out there that do like annuities and they do find, and it's your money. You still have the money. You're not giving it away a lot of ways to own. 'em a lot of ways to use 'em so, but I wanna talk about why that's the case and what's going on these days. So let me share the screen and you can follow along with the newsletter and we'll walk through it. How about that? Okay. So again, people who haven't ever bought an annuity before will think, yeah, this process takes a while and things are happening pretty slowly at insurance companies right now. But that is because there's so much happening all at once. Interest rates have come up over the past few months and people are flocking to insurance products.
Speaker 2 00:02:34 I can tell you for the past 10, 12 years, everybody says, oh, as soon as I can get 4%, 5% in all the way. I know a lot of people waiting. I'm not doing anything until 5%. I could probably do a separate episode on the cost to wait if you want 4% or if you want 5% and you can get four and a quarter four and a half now take it cuz you wait six months, then 5% will not make up for the lost interest. That kind of thing. There's a time period. I'm not saying it's six months, but it's something like that. But we've had more than 10 years since rates were this good. And it's not like they're all that great or anything really impressive right now. They're really good with respect to where they have been for a long time when rates rise consistently as they have for the past three or four months, what it does is it widens the spread for insurance companies.
Speaker 2 00:03:22 The insurance companies make more money and they have lots of options for how they spend that extra money. You of course, as a consumer, want a stronger yield or a higher income payment. And that's usually the first thing to change with the company. And that's true for a lot of the companies who focus on creating competitive products that offer more than any other company, the business is competitive. And so the first thing most companies do is try to create the better product. And they all look out for what the other companies are doing as well. Other companies maybe are gonna try to expand their sales force. They're gonna put more money into marketing. They're gonna increase commissions no matter what it is, whether they're trying to increase yield or commissions or expand marketing, it's all costing money. And you know, and there are, as far as commission goes, there are still a lot of agents that will only sell the highest the product that pays them the most.
Speaker 2 00:04:20 So when it comes to increasing rates and a lot of people jumping in and either expanding marketing tactics or better products or higher commissions that make agents more aggressive, that influx of additional business also has to be processed. So it takes a lot of backroom staff. I went a few weeks ago to one of the insurance companies was invited there to look over the operations. It's amazing how many people it takes to make that thing run. And when you have right now, some companies are say 25, 30, 40%, maybe double 50% more than what they've done in the past. They need extra people. They've gotta higher people train people. When you hire a new employee that is not up to speed like an old employee, it costs you more money to get them going. All of it costs more time and money. So the insurance company has to budget.
Speaker 2 00:05:12 I've heard of one popular company that heard from one internal broker that is receiving more than a thousand new applications for annuities every single day. Now what this, all this money moving into safe assets. It either proves strength of a company from the bottom up or it exposes a weak spot in the system. Some companies have handled it well, others have struggled much of what I've experienced has reinforced my, the selection I made of the companies. I prefer to send new business to, with all these rates coming up, I've had, I've become contracted with a few companies that I have not done business in the past. They're new to me. And so far all the experiences have been just fine. What I like to point out. And a lot of people don't understand this is contract service in the coming years is my big question with all these companies, taking all this business right now, you know, because every single year that policy has to be touched.
Speaker 2 00:06:14 The agents should work with it. If it's an index annuity, you gotta make allocation changes. You need back off a staff for that all sorts of things that this could lead to in coming years. It's not just what happens right now. So I feel pretty good about what I've done over the past several years because my top companies have all been running smoothly annuity applications. I would say for my average carrier and I use about three to four on average, kind of my top companies. And this year it's been seven or eight. So added a few. The top ones used to process an application in a day or two, meaning it would go through suitability and all that stuff would be approved. It was a day or two. Now it takes three, maybe four. If you're using an IRA, an application has to be processed before the insurance company will send transfer paperwork to the seeding custodian, say, maybe you have fidelity or a TD Ameritrade or your 401k, your employer.
Speaker 2 00:07:10 Then we have to like the biggest weight when you do an IRA, an annuity from a 401k to an IRA or IRA, whatever it is is the longest part of the process is to wait for that the seeding company to send the money over. So typically it takes the longest time to do. And typically kinda like to tell people what to expect when they start. So what should take seven to 10 days on an average basis is taking many companies more than three weeks to complete. I fortunately do not have to deal with that because again, I chose great companies. Maybe I get to Glo gloat a little bit right now, much of the processing time. Obviously it can be explained by an influx of business, maybe new training, they need extra staff and all that stuff, but sometimes it exposes inadequacy at the company level.
Speaker 2 00:08:01 And to me, I think that's a good indicator that you should skip the company who displays that for. And instead choose one that operates more efficiently, no matter how good the product is, the extra benefit is not necessarily worth the complex contract service over the life of the contract. If you own something for three years, five years, 10 years or lifetime, and you have to deal with that company on a consistent basis, it could be a real headache for you when you absolutely do not want to. And that's one part of the annuities that should be simple and easy and carefree customer service is incredibly important and that is coming out now more than ever because everyone is so busy. So the worst story I have this year was dealing with, I typically don't name insurance companies and I'm not trying to disparage them for credit rating or any other issue, I suppose, but I'm just so frustrated with this specific example was with bright house life.
Speaker 2 00:09:02 So about five years ago, MetLife separated their life insurance and annuity business. They spun off annuities to a new company called bright house life. I never really liked the name and I always call them MetLife anyway, but I've, I've learned since that it's actually not MetLife. MetLife owns 20% of the company. It's not at all MetLife. There's a rumor that life insurance is a lot more financially stable and you get better ratings for having consistent revenue streams from life insurance. And I think the annuity division was maybe dragging down business. So they spent off bright life. So MetLife is much higher rated than bright house life is, but MetLife branded it well enough that a lot of people believe the new company is the same thing that included me. But I did a little digging cuz I had to understand why in the hell did they change the name?
Speaker 2 00:09:51 I don't get it. So one client I worked with since 2015 wanted a bright house fixed annuity. The bright house annuity was paying 0.05% more than the company that I preferred, but okay. I, Hey, I thought it was MetLife. Oh, whatever. Yeah. That's great. Uh, let me see, uh, see what I can do and I go, let's go get it. So I submitted the application for this contract on June 23rd and the contract was issued on July 11th. So it took almost three weeks, not a big deal, but that's because we also handled the transfer paperwork on our own. And by that, I mean, I'm gonna explain that real quick. It's not in the newsletter specifically, but this was an IRA. And if we have the new company send transfer paperwork to the old insurance company, a lot of these insurance companies are gonna drag their feet and releasing the funds.
Speaker 2 00:10:44 I had another one earlier this year where the company that's has to give up the money said, oh, we have 30 days from the day we receive the paperwork and they take all 30 days because they get to use the money and collect interest on it over time. So I figured out that, Hey, just surrender the contract. You're gonna get the money in two or three days. And you have a 60 day rollover period for an IRA. So you'll be just fine, uh, where you don't have to pay taxes. So instead they'd get the surrender check written out to them. They sign it over to the insurance company and it happens a lot more quickly. So we handle the transfer ourselves. What I said before about transfers taking the most time. That's not why this contract took three weeks to issue. It took a long time because of whatever bright house has going on internally.
Speaker 2 00:11:34 The biggest problem is that now, like I'm recording this within spitting distance at the end of August. And I do not have a contract in hand to send to the client. They sent it to the wrong address first. And then they said they sent one to the customer, the client, and then neither of those showed up and now they're sending it to the new one. We wait every single day. Hey, where is it? It's not here yet. We're still waiting. So it'd been sent twice, three times incorrect location. If it was sent at all, every time we call for an update, the call is routed to a call center in another country. And I do not want to speak ill of any other country. There are a lot of wonderful people all over the world, but it is nice to speak English as a first language when you call for a major financial decision.
Speaker 2 00:12:33 So we're still waiting on that one. An identical situation happened with another client that I've also worked with since 2015. So each of these people actually bought the same exact annuity. Seven years ago, came surrender free. They both wanted to transfer it to a new fixed annuity. In each case, the money came from the same company, but was sent to different companies for the fixed annuity. First one to bright house. The second one actually went to Midland national with this application. It was submitted on July 16th and I delivered the contract to the, to the client on July 26th, same surrender process to speed things up a company with good processing, keeps their eye on the ball, stays sharp through the process. We had a 10 day window between when the application was submitted and the client had a brand new annuity and got started when several hundred thousand dollars is involved.
Speaker 2 00:13:34 I'm sure you would agree that efficiency is fairly important. So I am glad that so many people are getting into annuities to protect money. It's a great product. This is a very good time to do it. The fact that more than half of the sales I've had this year are people that are buying another annuity. Anybody who's nervous about it, ask me why, why do they want them? Do they know something you don't? Are they more comfortable? Have they learned something I'm willing to educate everyone who comes in and take the time you need that is needed for each person to understand the opportunity. And again, like last week when I talked about the widow who had one option, that seemed the easiest and simplest option, she hasn't done it yet because Hey, I've never heard of this before. Well, educate yourself, spread the word. Think about it. Use your best judgment.
Speaker 2 00:14:32 You don't always get the highest rate with the best contract. But the difference is often negligible. I am almost 20 years into the business and I have learned a thing or two. There's a reason why I don't go with the highest rates. And when I make a recommendation to go with one company or another, go ahead and challenge me. I'll tell you exactly why it is never for my best interest. It is often for yours and for simplicity and ease of use over time. So when insurance companies are really busy, the intangible things become very, very obvious. Anyhow, thank you for letting me rant about this right now. I urge you all to be patient in getting the deals that you want because things are not operating. If this is your first time, they do not operate this way all the time. It is not normal for things to take this long.
Speaker 2 00:15:26 If you pick the right companies, then you'll have a more normal experience, but it is not the fault of an insurance company that has to hire 50 new people to do something that they've got. Another a hundred people that have been doing it for 10 years, takes time, be patient. It's a good product. So this has been episode 54. My name is Brian Anderson, annuity straight talk.com. Schedule a call top right corner of any page on the website. You can schedule a call with me the number, if you wanna just call directly is (800) 438-5121. I'm around. If you need me, you can subscribe to the YouTube channel or your favorite podcast platform to be notified when these, these episodes come out. And I appreciate you stopping by. Thank you so much for your time and attention. I will see you next week for episode 55. Okay, bye.
Speaker 1 00:16:32 An annuity straight talk. The preceding information is for information and educational purposes does not represent tax legal or investment. The views expressed by on this and do not necessarily reflect the talk, no information presented to should be acted upon without its important that contracts, the financial strength.
