Episode Transcript
[00:00:00] Hello and welcome everybody to the Annuity Straight Talk podcast. Episode number 212 More Fiduciary Shenanigans welcome. My name is Brian Anderson, the founder and creator of annuitystraighttalk.com answering all your retirement questions.
[00:00:16] Here's a podcast. A lot of good feedback. A lot of people. Hey, thanks for the videos. They help a lot. If you find the right ones, you're going to get all your questions answered. Let us know if you got a great question. It makes a good topic. It'll give me another reason to reach out and help people.
[00:00:31] Please, like subscribe or comment on any of your favorite podcast platforms or on YouTube. Schedule a call with me, top right corner of any page on annuitystraighttalk.com and I will answer your questions. Today is a really good example of why I'm not just trying to make money on everyone. If I help everybody, then the opportunities for me to make money, make a living, justify doing this are going to come. I adopted that mindset a long time ago. It served me well and I do just fine. I'm going to share my Screen Visual Aid newsletter. Takes a few minutes to read. If you want to just do it. That way you can get the idea of the story.
[00:01:12] Try to put an appropriate amount of personality into this. But about a year ago, I think almost exactly a year, I published a podcast warning people about the fiduciary label. It's very important.
[00:01:25] It's a distinction that implies the highest levels of integrity and I've seen it abused on far too many occasions. And I think it honestly is Some advisors will say, oh, I'm a fiduciary.
[00:01:36] You let your guard down a little bit. Oh, he's going to do the right thing. I don't have to worry about it. They're required to act in your best interest.
[00:01:43] Why ever challenge that? It's we're required to first of all, there's little to no oversight. So it's just somebody's opinion. And I'm telling you to do exactly that. Challenge the assertion, anyone who claims it, because nobody but you can truly determine what's in your best interest. I will say it a thousand times. You are the only true fiduciary. Here's my new disclaimer. For the purpose of this letter and all other similar I'm going to make this disclaimer. I'm not talking about all agents and financial advisors who carry the fiduciary label. Clearly I only hear from the clients of advisors who have not acted in the client's best interest.
[00:02:23] Clients of good advisors are getting the explanations they need and obviously don't need to seek clarifications from other professionals. When I talk about things like this, I expect true fiduciaries to stand up, pat me on the back and say, thank you for saying it, because those guys are running into the same problems I am. So this story involves two people who claim to be fiduciary advisors. One of them is on the insurance side, one's on the investment side. The guy who made an appointment with me was being pulled between the two with each of them claiming to have his best interest in mind. So he already owned the annuity. It had underperformed expectations, so he wanted to talk to me about it. It's one that I talk about it a lot and I don't want to make this about the annuity. He was misled about a bonus and it didn't grow as much as he thought it to. So he felt, really felt like he missed out on the last two years of good growth in the market. Now he knows that he doesn't want the annuity and he wants to make the right move. What can I do now? He's got seven or eight years until he retires. That date wasn't even firmly decided on. He's like, ah, probably retire at 65, I don't know. Right. But he's got plenty of time to figure it out.
[00:03:29] So couple years ago, he put 80% of his portfolio into an index annuity. And he told me about this going into his meeting. If you follow me regularly, you're gonna know the first question that I ask.
[00:03:42] What was the point of buying the annuity? Why did you buy it?
[00:03:45] He couldn't answer. That was a big red flag. He had no true answer for why he owned the annuity. It was an income product that was set to give him guaranteed retirement income. But he said he hadn't really given much thought to how much income he would need retirement several years away. And he hadn't started with the basics of defining his goals.
[00:04:03] The guy who sold the annuity claimed to be a fiduciary, and that was enough to earn the trust of the clients.
[00:04:09] Now, if you're going to overstate potential performance on an annuity and have no clear goals defined for why you should use the annuity at all, do you guys think that's how a fiduciary should act? That's a really reasonable question.
[00:04:23] So if the guy's not able to define goals, how in the world would this advisor say oh, this is in your best interest.
[00:04:29] When the guy made the appointment with me, he was obviously hoping to find justification for bailing on the annuity. I want to get out of it. It's not what I thought it was, and I don't even have any goals, so I want my money back. It's going to cost him a lot of money in surrender charges, and most cases. I don't recommend that unless you have goals. And he's got no goals defined for his retirement plan, there's no way for someone like me to look at that and give him advice. Right. He met with another fiduciary on the investment side of things, and that's, I think, where he got the idea to surrender the contract. I piece a few things together, make some assumptions, educated, of course. And since the annuity hadn't matched market returns, then it's an easy emotional sale for the investment manager.
[00:05:12] Hey, look how much you've lost. You missed out on all these great gains in the market.
[00:05:17] You would have been so much better off under my management in the past couple of years. But paying a penalty to get out of it, top of the market, Is that really in his best interest?
[00:05:27] There's got to be a better way for him. So the fiduciary who sold the annuity made a really nice commission and really isn't providing service for the contract.
[00:05:36] No explanations. Why did this happen? Why did that happen? Goes back to the last podcast about volatility controlled indexes. He illustrated one thing. It didn't perform like it would have done in the past. And now he's got another fiduciary who wants investment management fees, tells him to bail so he can increase his book of business.
[00:05:52] Neither of them is acting in the client's best interest, and both of them have actually had the opportunity to help. I talked to this guy for a little more than 20 minutes, gave him a couple of ideas how to rationalize it. Now, if I did the right thing for this person, there's no way for me to make money. I identified that early. There's no reason for me to do anything but tell him what I think would be a couple of ways to handle it. My motivation should be beyond question because I'm not trying to make money off you. I'm trying to help you sort this thing out. So the guy is several years from retirement and also saving a nice chunk of money every year. He has time to figure things out, and the worst possible thing he could do is lose a bunch of money in surrender charges. He doesn't want to lose those surrender charges unless he's got a goal, a purpose of doing it. He needs to define retirement goals first and then slowly work the current annuity into the goals. Since he is unhappy with the contract that he owns, then a free withdrawal each year allows him to incrementally get into other investments. Now, if he does that over time, he can significantly reduce the annuity allocation without making a rash decision. Right now, and as it develops, he may find that it makes sense to keep part of the annuity for retirement income. Might not be a bad thing to have in parts, but not 80%, right? If he doesn't want to keep the annuity, then he's going to be able to get about 70% of his initial investment out of the contract before it's surrender free. If he wants to get more money into the market, then it's better to do it gradually than all at once. We're at the top of the market. He wants to average into it again. So these are ideas that hit a middle ground for him that are different than the two extremes offered by other people who are obviously looking at what's in it for them. This guy has plenty of things to think about and a variety of options. He gets to decide what he likes best. He is the only fiduciary. It's kind of like watching the news, right? You can find an opinion in news and commentary that supports what you already feel and that's really easy, right? If you get two differing opinions, you can almost guarantee that neither one of them is right.
[00:07:55] Somewhere in the middle. I know a lot of good fiduciaries and I hear a lot about a lot that use the label only because they don't want you to question their advice, which is more appropriately called a sales pitch. That is exactly why you should question it and seek a different opinion. Go back to it. If two opinions differ, then there's a good chance that neither one is in your best interest and you got to find the middle ground or something completely different. I am always going to give you multiple options because only you can decide what you think is best. That's what we're here to do. We present the information, let you make a decision. So you decide how you want to participate in the market, how you want annuities to help you in retirement. This has been episode number 212, more fiduciary shenanigans. Happens all the time. Don't trust anyone. Trust yourself. Trust good research, good due diligence, and we've got all the tools for you here to make that happen. If you want to make an appointment with me, top right corner of any page on annuitystraighttalk.com like subscribe or comment in any of your favorite podcast platforms or on YouTube. Share it with your friends. Anybody that's got a different perspective would be good. I'll take it. Please let me know. I appreciate you guys joining me. You guys all have a great day and I will see you next week for episode number 213. Have a great day. Okay, bye.
