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 everybody. And welcome to the annuity straight talk podcast, episode number 21. My name is Brian Anderson, founder and creator of all things, annuity straight talk. And today I have the pleasure of introducing to you. One of my newest affiliates out of the state of Utah, his name is Steve. Why don't you say hi to everyone? Steve.
Speaker 3 00:01:06 Hi, happy to be here, Brian.
Speaker 2 00:01:09 And you, uh, got ahold of, I guess we had a mutual connection through an insurance company that we both like, and uh, that's how we met each other. Is that sound fair?
Speaker 3 00:01:19 Yeah, that's correct. And then as we dug a little deeper, we found out we had even more connections. Didn't we
Speaker 2 00:01:28 Talk about that? This is the funny thing is Steve, Steve and I are related as much as anyone is.
Speaker 3 00:01:37 You're friends with my family up there and Montana where my mom's from, so, and where my heart is
Speaker 2 00:01:44 And my brother married your cousin's daughter. So like we're related.
Speaker 3 00:01:51 So it is a small world after all.
Speaker 2 00:01:54 That's true. And Hey, you take the connections you can get. Right? Right. So I thought that was really funny. He started throwing out names and he dropped one. I thought, wait a second. I know your whole family.
Speaker 3 00:02:04 I didn't know you from Adam when we were introduced,
Speaker 2 00:02:08 But you were interested obviously like doing due diligence. You're going to vet me a little bit, right?
Speaker 3 00:02:13 Yeah, it would. Absolutely. Yeah. You came with, uh, high recommendations from our mutual acquaintance.
Speaker 2 00:02:22 Okay, good. Well, thank goodness. You know, not everybody likes me, but I'm glad they do. So Steve, tell everybody a little bit about your experience in the business, your career, all that stuff. Why don't you start there?
Speaker 3 00:02:34 Okay. Well, I I've been around a long time. Brian, I've been an advisor for about 30 years now. I've managed the financial services department for a financial institution here in Utah for about 21 years. And um, for the last six or seven, I've been independent. And just focusing on where my real passion is and that's retirement planning, fun fact, you won't remember this, but some of our viewers might back in the mid eighties, Sears bought a company called Dean Witter, who is now Morgan Stanley and put advisors in the sear stores. And I was one of, I was the first group that went into sear stores back in the mid eighties as a financial advisor. They used to say that you could go into Sears and buy your socks, jocks and stocks. And I was the first, first group that went in there a long time ago.
Speaker 2 00:03:32 That's really interesting. Okay. So a lot of times, yeah, I'm a couple, I think a few years younger than you. Yeah. A few Have seen some things that I haven't, but I was, I was mentored in the business by guys that were older than you. So I learned of a lot of those things that happened, you know, when I was out kicking rocks as a toddler, but that's, I've never heard that one though. It's I'm not saying I can't be stumped, but that's a real interesting one. Steve. I had no idea they had financial advisors in Syria.
Speaker 3 00:04:02 Yeah. You could go and see our stores. And in the corner, there was a financial guy, a real estate guy and a property and casualty guy. And then I was the first group that did that. So just a fun fact.
Speaker 2 00:04:13 That is a fun fact. I, well, no, it's interesting. It's kind of like counterintuitive in some ways, because you could be the guy saying no, no, no, you can't afford that new washing machine.
Speaker 3 00:04:24 Well, it didn't, it didn't actually turn out to be a huge success for them, but it was nice starting the business.
Speaker 2 00:04:30 Okay. Well, it's a nice idea. Anyhow. That's interesting. So six, seven years you've been focused on the retirement market. That's where our paths crossed. Is there anything that you've seen specifically out of annuity straight talk that you appreciate or feel like you align with?
Speaker 3 00:04:42 Yeah. Most everything Brian, I, and I love the name that you've chosen annuity straight talk. We need more straight talk in the industry, unfortunately. And I think there's a lot of great advisors out there, but unfortunately, sometimes the straight talk gets in the way of a commission or something, some other thing. And that's sometimes not as prevalent as a, as I think it should be. So I really appreciate your approach in providing that straight talk that consumers need
Speaker 2 00:05:09 At one of my philosophies has always been a small percentage of something is bigger than a is better than a big percentage of nothing. Yeah. And I think you'd agree. Commissions and compensation from our point of view. That's the last thing I think about it is because a lot of times we're just out there helping people and answering questions. There's not really any money to be made, but I mean, do you, I always felt like I'm happy to do that because it kind of sharpens my blades a little bit and I get, I get experience and knowledge out of every, everybody I've coming into contact with it.
Speaker 3 00:05:43 That's right. Yeah. I feel the same way.
Speaker 2 00:05:45 So, so we're out there in a it's a, you could consider, I mean, would you consider it a cutthroat business? Maybe that's not the word for it, but uh, there's a lot of aggressive people out there. Am I right?
Speaker 3 00:05:55 Oh yeah. Yeah. There are. And that's the sad thing in a way that people that retire these days since they've kind of done away with pension plans, everybody's on their own and they go out to get advice. Right. And the problem with the industry is the only place they can go to get advice is from a commissioned salesperson. Oftentimes there's a lot of conflict of interest or there can be,
Speaker 2 00:06:22 No, that is true. And so, and guys, you know, advisors, a lot of them are pretty desperate. We'll do just about anything to make a sale. Okay.
Speaker 3 00:06:28 I think, you know, I hear things on the radio that are, I call cringe-worthy yet, even on the radio claims of things like being able to get achieved stock market returns with zero risk to, you know, that's, that's not possible. And I don't know why so many advisors feel a need to embellish. What's already a good product. You know, I don't know why we need to feel like we have to give imply stock market returns as opposed to what I believe the expectations ought to be for annuities at four to 6%. There's no reason to.
Speaker 2 00:07:05 Yeah. So you've talked about, you know, you call them like cringe-worthy, but we do see a lot of claims of guys saying, Hey, this thing average is eight, 10% every year, and you can make an illustration look like that. But I don't know if you consider that to be a little bit misleading if you set expectations that high.
Speaker 3 00:07:23 Absolutely. I, I would hate to set expectations that I, and then I wouldn't look very forward to that annual review, you know, when they don't, when they don't achieve that and all they will on occasion, they, they will do that right on occasion. But the, but the expectation for an average annual returns needs to be more realistic. And there's no reason to apologize for four to 6% return on a guaranteed principal product. What are your alternatives? One seven
Speaker 2 00:07:53 Complete protection, right? Yeah. Well, I don't know if there's any safe money. One to 2% savings accounts are paying like a 10th of a percent. It's ridiculous radios. So, yeah. And I agree, like you said, no need to apologize for four to 6%, but it's also, I mean, just, you know, looking at the theory behind it, you're going to get four to 6%. It's a more reasonable planning figure, correct? Yes. Because if you require an eight to 10% return on your annuity to make a plan work, then I believe I consider that to be a poorly conceived plan. It was, you're putting too much pressure on it and
Speaker 3 00:08:33 Hope is not a strategy. And
Speaker 2 00:08:34 We know that we've got a 10 or 12% return in certain years.
Speaker 3 00:08:38 That's right. But it's, but you can't, you can't depend on that. And as I say, hope is not a strategy. And sometimes that's what,
Speaker 2 00:08:45 Yeah. I was going to say, you know, we say to four, four to six and you know, the guy comes and he gets a 10 or 11. It's better than expecting 10 and only getting four that's. Right.
Speaker 3 00:08:55 So
Speaker 2 00:08:56 Reasonable expectations is all it is, I think. Yeah. Let's see. You had a term that you, that I've never heard before, but it makes sense. You called it a moat folio.
Speaker 3 00:09:05 Yeah. That's a
Speaker 2 00:09:06 Term. I've when you explain that one a little bit,
Speaker 3 00:09:09 I help people build what I call a mult folio. You know, everybody needs a good portion of their money in the market, right? We need to address the inflation, especially as it's going out of control. Now we need to have something that's going to address inflation. We need to have something that's going to address longevity. We need all of that, but trying to take it to provide your spending needs out of a variable account is a dangerous thing because of the sequence of returns. If we have a bad sequence of returns in your, and you're putting the pressure on your portfolio of having to meet, spending needs, that can be a real problem. And so if you could build a moat around that portfolio someplace where you can go in years where the market's down and spend freely from that, because you don't have to worry that you're spending or selling shares that are depressed and won't be there to rebound, then that gives you the ability to spend more freely in retirement. And oftentimes it also gives you an opportunity to be maybe a little bit more aggressive with your variable portfolio, right? Because you've got some money that, you know, there's somebody that will not go down in the market.
Speaker 2 00:10:22 No, that's absolutely true. So you it's the same with anything. If you've got a protected, protected asset, then you've got the ability to take risk elsewhere. So typically, you know, in my research and the numbers that I've run actually creates more growth over time because then you're not, you know, you're not forced to pull money out in a depressed market. And that's the sequence of returns you were talking about.
Speaker 3 00:10:46 That's a lot of pressure to put on a variable portfolio. If you're putting a, you've already got market fluctuations, pressuring that portfolio, and that's okay as you're going through your working years. But once you hit retirement, you add spending needs to the, as pressure on that portfolio. And, and sometimes that's, that's just unsustainable.
Speaker 2 00:11:08 Well, I mean, one of the biggest problems for us is what's happened recently in the market where, I mean, there was a big correction in March, 2020, but it came back in a hurry. And so people because of having such good experiences in the marker over the past, especially five years, probably when there was a fair bit of volatility from 2008 and nine up to 2015, the market was climbing, but it was just all over the place. And yeah. So, I mean, do you think that affects people's decision-making saying, ah, you know what, the market's been so great. Maybe I'll just keep doing it. What do you think about that?
Speaker 3 00:11:48 Yeah, absolutely. I call that recency bias. And when people have, when the markets are doing well and they've not been through a significant correction, sometimes we end up making allocations to our portfolios that are outside of our real true risk parameters. And that can come back to custom real problems in retirement.
Speaker 2 00:12:15 Yeah. I mean, if we, it's not going to continue like this forever, we had the investment manager, we had John Bawlmer on a couple of times. And he was saying that even in a given year, even when the market's going up, the average peak to trough throughout the year is 14%, which is a big, that's a, I mean, that's a big number when you're talking about that type of volatility, especially when you're consistently drawing from or spending money out of a portfolio.
Speaker 3 00:12:44 And will you build, uh, a distribution plan with expectations like that? You're probably going to be disappointed,
Speaker 2 00:12:54 I would say so. Yeah. It, it, well, it's, it's just scary again, ultimately we're in this business because we care about people, right? So the point is just to say, no, don't take it all off the table, but you know, your Mo folio example, I like the word, but I'll let you use it. We'll put that in your bio, on the website. How about that? Steve wants to help you build a moat folio.
Speaker 3 00:13:19 I think most people can relate to that intuitively. It's just, you know, it's just nice. Now, one of the pitfalls that people have when they get into retirement, there's two, the first one is obvious. And the, the concern, the biggest concern is running out of money early, right? But another pitfall that sometimes people don't think about is that when you're taking money out of a variable account, the fear that there's a fear that drives people to maybe preserve resources too frugally. And no one wants to, to run out of money early, but at the same time, and no one really wants to get to the end of their retirement and look back and realize that there were things that they could have done. And didn't because, because of fear and not having that malt around a variable portfolio creates what Wade fowl reverts to, you know, Wade valley well-known researcher in our industry.
Speaker 3 00:14:20 He refers that to that as spend a phobia. And that can be eliminated. Those fears can be eliminated, just like everything else in life. Where do we go to shift risks that we don't want to take? Whether it be in our car or our home, our life, whatever it is, we have an industry that's willing to take those risks. Right, right. And it's no different in your, with the retirement portfolios. There's an industry that is willing to take on those risks. And if we don't use them, we might end up with spend a phobia through our entire, uh, retirement and ended up, but not really maximizing the joy and satisfaction that can come and retirement.
Speaker 2 00:14:57 I agree a hundred percent. I think that's well said, because as you're talking about that, I was thinking I've got so many clients that have that problem, spend a phobia. That makes a lot of sense. Even the people that do have a fair bit of assets protected, they have all the reasons in the world to go enjoy the fruits of their labor and enjoy the protection inside there with their assets. And they still, I think a lot of people I'm coaching. I a funny story, a woman, we never did business, but she called me and this was probably eight or nine years ago when we kind of became friends. And I think we probably talked maybe once a year and she called everything. You just said about scary, scary stuff. And she just didn't think she could ever retire. She had a big pension and then she had a bunch of money saved and was living pretty frugally.
Speaker 2 00:15:44 And I said, I know exactly what you should do. She's like, oh, thank goodness. What should I do? I said, you need to call your best friend. Do you know who that is? She said, yeah. I said, you need to call your best friend and you need to schedule a day at the spa tomorrow. You guys need to get your nails done. Your hair, done a facial pedicure, just really pamper yourself, go all out, get everything, leave a big tip, make them happy, you know, just relax. And then when you're done with that, pick the nicest restaurant in Chicago, she was over in Chicago, picked a nicest restaurant that you've always wanted to go to get your bottle of wine, your whatever, you have, everything you want. Right. Just do it out just one night, just one day, just give yourself everything you've ever wanted.
Speaker 2 00:16:29 Pamper yourself, you and your friend. She said, I could never do that. And that's, but I could look at the numbers. And I always say, I look at things I can. And you're the same way we have the luxury of looking at the situation objectively. Whereas a person who's saved all the money has a subjective connection to the hard work labor, the stress that's been required to create that, that position. Right? So it's hard to change those habits and say all of a sudden, okay, well now I'm just going to start spending. So that's why it takes a little bit of coaching.
Speaker 3 00:17:04 And that's the fun part of this business. Isn't it? When you can take someone like that and show them things that make, you know, we call it the happy factor. We give them the happy factor by just by making these concepts and strategies available that they maybe didn't know about.
Speaker 2 00:17:20 And then at some point they realize, Hey, I'm not worried about it at all. I think that's a breakthrough for a lot of people, you know, a few years into an annuity contract and you know, some nights IELTS and they realize, Hey, this is really cool. I got all this money that sitting here and I don't ever have to worry about it. That's great. It is. Yeah. Creates happiness. That's what we do. We create happiness. So this is a good time for a quick plug annuity, straight talk.com. I've got Steve price from Utah. Uh, he's my newest affiliate. So he's going to be on the state of Utah. Some you may hear from them. If you're in Utah, you're always welcome to get ahold of them. I've got a new website coming. His bio is going to be on there as well as a calendar where you can contact him directly.
Speaker 2 00:17:58 In the meantime, if you want to talk with Steve, go ahead and hit the green schedule, a call button on any page on the website, the button might be a different color with the new website. I'm not sure that's how you make an appointment. Get ahold of me at 804 3 8 5 1 2 1. Just tell me you want to talk to Steve and I'll certainly set up an appointment. It's a piece of cake. If you like the podcast, this is also available on YouTube. If you want to, uh, look Steve in the eye before you go meet with him. So I can tell you he's got a good heart and he's in this for the right reasons. And we've got a lot of things we share in philosophy. We'd love to help you together and make sure you guys get things done right in retirement. So Steve, this has been a constant theme on the podcast this year, and this is the first time you've been on. We'll probably have you back when we have a good topic that you and I can really, uh, flesh out for people. But we've talked about the difference between insurance and investments. There's really two philosophies are, they're not.
Speaker 3 00:18:53 Yeah, yeah. These, we call them a safety first or variable or a probability based.
Speaker 2 00:19:00 And so I'm glad to hear you say some of the things you said, because it does really fit what we've been trying to tell people that there's a lot of people out there that are kind of, that are insurance only approach. I've seen a lot of people, you got to put all your money into annuities. Mark is going to crash, whatever this we're not in a scare taxes. There's also the investment industry. They want to ask the assets under management. They don't, you know, all risks. It's fine in the long run, you know, your 10 fishers of the world and anybody who's trying to be like him. It's kinda like that. So, I mean, is that a fair synopsis of the two different philosophies?
Speaker 3 00:19:37 Yeah, absolutely. And you know, when you get right down to it, there is no one product that solves all problems and you, and you really need, most people really need some exposure in all of those industries and products and strategies. There's annuities. That definitely are, there are people that should never even buy an annuity. They're not right for everyone. Just like, you know, nothing's perfect mutual funds. Aren't perfect rates. Aren't perfect CDs. Aren't perfect. Nothing is perfect, but it's a process of finding the most appropriate and most perfect for your particular needs and strategies. And it's, you have to be agnostic when you, when you go into your planning and, and, and not let not care what product comes out. The other end, you're just looking for the right solution, right?
Speaker 2 00:20:28 No, absolutely. I mean, you've got, you know, and, and there's obviously there's things, you know, the annuity in itself is a good product. And again, like you said, it's not perfect. It's not for everyone, but unique annuities are unique in that they add something, even if the growth is not as high as the market, you get the Ruddock, you know, the loss on the downside, but kind of, I mean, can you tell us a little bit more how that works? Like you add the annuity, even if the growth is not opens up so much more than the rest of your portfolio. So
Speaker 3 00:20:59 Yeah. You know, sometimes people will say in annuities, in the insurance industry, as the only place you can go to solve certain things. And, you know, sometimes some criticisms might be that a annuity, people feel like annuities might be too restrictive, might take and tie up a portion of a portfolio more than they want it to be. But the reality Brian is that having that annuity in there really creates more freedom and more flexibility in the rest of your portfolio, because you now have the ability to be more aggressive, choose, you know, maybe some investment strategies that you wouldn't otherwise that might give you more growth, potential might add to your legacy at the end of your retirement, you may end up with more money than had you not tied some up in, in annuity. And the other thing is, you know, this idea of liquidity is a little bit of a misnomer because anyone who has spending needs for the next 20 or 30 years really has to earmark a certain amount of their portfolio to address that need. Right. That means that it's, it's really no longer truly liquid it's misnomer in some ways,
Speaker 2 00:22:10 Yeah. W interest rates, low of bonds, bonds don't kick off enough interest to really make that a viable option. Plus the interest rate risk. I mean, that's where you've seen it in the spreadsheet. The AST flux strategy is kind of one of my creations over the years, which really gives you a real life sampling of how, how you will lead to more growth. And the fact of the matter is if you're drawing money from a portfolio in retirement, you've got to have a portion of it protected. Otherwise you're not going to see the same upside results. Uh, and that's where exactly what you're pointing out is that, you know, having that protection allows you to take the risk elsewhere. But then the big thing is being able to let those risky assets ride. Cause they're not going to always go up. They will come down. But it's the idea of not, you know, you not worrying about it when it goes down because you have another place to draw money. You can give it the time it needs to recover, and that's going to lead to more growth over time.
Speaker 3 00:23:10 That's right. Even the most well-diversified portfolio cannot withstand all market downturns. And if funds and spending needs continue in down markets, you know that the fact that, that we all know markets will recover just kind of cold comfort when you know that you're having to take a, your spending needs out of that portfolio. That's, you know, maybe down 10, 20, 30%, who knows,
Speaker 2 00:23:38 Right? So it's just being ready. It's being prepared for the worst case scenario, right? And a lot of people can slowly get into annuities. Maybe the numbers suggest that you should put 30% of your portfolio into an annuity that might sound like too much, but annuities should not put you in a hurry. So a lot of times, and tell me if you've had the same experience, a lot of times people buy an annuity and after the first or second year, once they get that nice big interest, credit surrender charges are going down. Maybe the growth has offset that and they realized their money's there and it really relaxed with it. And I've had a lot of people come back and buy another one after that point in time. And so that's something that people need to remember. I mean, don't you think just, it, it doesn't have to happen if the number suggests you put $300,000 into an annuity that might sound like a big, you know, most people have never made a purchase like that, aside from a home that down payment and payments for years. So that's kind of one thing I like to reiterate. And I think you'd probably agree that, you know, start small, get comfortable with it a couple years. You can always add more. And, and a lot of people have found that they really, really liked the contracts and then what they can do. And it's perfect for, for retirement. They don't have to worry about it. Right?
Speaker 3 00:24:52 Yeah, that's right. I feel exactly the same way. If people aren't comfortable with anything, it shouldn't be doing it. And if it helps raise that comfort level to just stick a toe in the water, then that's fine too. I often say, if you don't get it, don't get it.
Speaker 2 00:25:09 That's a good thing. Uh, say over disclosure, right. If you're going to probably I'll tell you everything. That's why we never get, never get a gotcha. So I've never had anybody call up and say, Hey, you didn't tell me about this. Oh yes, I did. I told you about everything. So it's good for people that want to do their due diligence and work through a problem and find a solution. Yeah, that's right. I appreciate your philosophy. I'm happy to have you on board Steve, and look forward to, uh, helping all the people in Utah or anyone else nationwide who likes that beautiful face of Steve's and say, you know, and he's a nice guy. I want to work with him.
Speaker 3 00:25:47 I definitely have a radio face. Brian. I'm really excited about this relationship too. And I, and I think the way that the name that you've chosen for your program is perfect. I think that I, I love the annuity straight talk that you always give on your podcast and on your, in your sites, it fits perfectly with my philosophies. And, and I'm really excited about this new relationship that we have going here.
Speaker 2 00:26:14 Oh, thank you. I appreciate it. And, uh, I'm happy to have you as well. This is something I need. And just to tell everyone, I do not take this mission lightly. We've spent a fair bit of time making sure we get the right people to do good work because it's in a lot of ways, you know, Steve's a representative of my website as well. And, and I'm comfortable with that based on what I know about him now and how he does business and how he takes care of people. So we're happy to have it again, uh, scheduled call on annuity, straight talk.com probably within a few weeks. Steve, we'll get your bio. We'll get you up there. Uh, if you're open to it, annuity straight talk, Utah, Steve price. So give me a call in the meantime, (800) 438-5121. And, uh, I'll be here to help you.
Speaker 2 00:27:01 I'd be happy to contact or get, get you in touch with Steve and you'll be able to get him on the website soon. So thank you, Steve, for joining me today. Thank you, Brian. It's been fun. I think we got a good little bit of information for people that are, uh, you know, looking for something, especially in Utah or anywhere else. So we'll, uh, come up with another topic. We'll have you back on. How does that sound? Sounds great. Thanks, Brian. Okay. All right. Well thank you everybody for joining us. We'll look for episode 22. Next week. We'll be back. Don't have a topic yet, but I'm sure it's going to be something good. So Brian Anderson for annuity straight talk, signing off everybody have a great day. Thank you.
Speaker 1 00:27:48 You've been listening to annuity straight talk. The preceding information is for informational and educational purposes only and does not represent tax legal or investment advice. The views expressed by guests on this program are their own and do not necessarily reflect the views of nerdy straight talk or no information presented today should be acted upon without meeting with a licensed profession. It is important that you read all insurance contract disclosures carefully before making the purchase decision guarantees are based on the financial strength and claims paying ability of the insurance company.
