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 00:00:48 Hello and welcome everyone to the Annuity Straight Talk podcast, episode number 75 THREEQUARTERS of the Way to a hundred. My name is Brian Anderson, founder and creator of annuity straight talk.com. Over the years have written hundreds of pages of content, answering your questions, explaining annuities, uses of annuities, the different types, how they work. I'm here to answer more questions and clear a few things up. If you have a question, ask me this podcast. Number 75 Say no to annuities, is based on a comment I got a couple of weeks ago from someone who read the newsletter, talk about it a little bit, and I thought it was interesting. It was kind of funny. This is, I said, I think I said this a couple weeks ago. I was doing one, it took four words for this guy to inspire me to write 1200 word explanation that I thought would be a good exercise for everybody out there.
Speaker 2 00:01:37 Anybody who's new to it and anybody who's been around for a while, I got a pretty good sense of humor. I can take it, gimme the heat. Tell me what you think the bad stuff is like. You know, it's enlightening. That's how I learned a lot of these things is I didn't always see annuity in a good light. They're not always the best thing and that's where the negative comments give me more fuel than the positive ones. It's how I learn things, but it's the opportunity to educate people, set the record straight. We're needed. Yeah, I might learn something new. So I'm curious. Some people have viable reasons for not liking annuities. Definitely a fair share of people fell for the wrong sales pitch. There's a lot of people though, they have a bias. They just have, they've a negative feelings about annuities. It's just a bias based on somebody else's opinion or in the financial services industry, it's competitive positioning because they want you to buy something else.
Speaker 2 00:02:25 So I'm not sure which one this was, but the most recent negative comment again, now it's on the title of the podcast, it's on the title of the newsletter. There's a newsletter I wrote along with, so you can do both. You can read it if you like to read it. Some people complain about the videos. I don't wanna watch that video. So I do what I can to put it in as many formats as possible. But it said in all caps, say no to annuities. I copied it from the email cause I didn't wanna count all the times he typed s, but it's all caps. It means he's yelling it to me. I think that's the way I think we're supposed to take it. But it's like, I just kinda laughed. I said, okay. You know when somebody signs up on the website, it's like, okay, it's here to learn something new.
Speaker 2 00:03:02 You don't have to agree with me. I'm not trying to sell everybody an annuity. I'm trying to educate. And believe it or not, this market is deep enough that it's taken me a 20 year career, you know, to get this going. And as a matter of fact, this will be released on the day of my 20th anniversary of having an insurance and securities license. Pretty cool, huh? I didn't even planned that. I just looked at the data like, oh crap, it was February 9th, 2003. <laugh> is when I got it. So if you're trying to learn something, that's what it's here for. And it's kind of hard. I think this guy, I looked him up and he, he'd been around for a few months, but he hadn't opened a lot of emails. I don't know, maybe it's something I said, but it's hard to understand if you've got a strong bias one way or the other before you even get here, why would you waste your time?
Speaker 2 00:03:48 There's a lot of people that like him, A lot of, they work for a lot of people and it's here that that's what the resources here for people that educate, make good decisions about it. But I don't know, maybe it's something I said in one of the podcasts that he did watch and he thinks I'm, I don't know, full of it. That's why I tell you, you know, comment, if I make a mistake, point it out. If you've got a better idea, point it out. Coming next week, I got an advisor that's on my calendar. I think, uh, the way he wrote his comments for, he made an appointment and I, I think he's got a bone to pick with me. Let's do it. I don't care. So I, I responded to his email and said, Hey, thanks for the comment. I'm curious why you say that.
Speaker 2 00:04:25 But he didn't mention it. He may have a really good reason and I know some people don't like annuities. I thought I might share a couple of stories or a few stories of the ones, the people I know besides him. So I mentioned this in a podcast last year. The most obvious case is someone, I forget where it was and I forget what episode, but I mentioned it in passing. A guy called me and he was probably the age of most of you. He's in his sixties and his dad had just passed away. And so he inherited eight or nine or 10 annuities. His dad had a bunch of annuities and he'd owned them for a long time. So there were highly appreciated, non-qualified money, I think. Yeah, so cash payments for these annuities. So he is digging through it, trying to figure out what what dad had.
Speaker 2 00:05:05 And he revealed that in the past, you know, six or seven or eight years, his dad was buying bonus annuities that were 10 years in surrender term. And then just two years, three years later, he was surrendering them to buy a new bonus annuity. And I think it was the fact that eight or nine annuities had been exchanged in a six or seven year period, two or three times a piece. So it had cost us data, a substantial amount of money in surrender charges. It was not a small sum. I think the total value of his annuities was two and a half million dollars. And you think about the 10%, 8%, 7% surrender charge for eight or nine different annuities, two or three separate times. It cost him hundreds of thousands of dollars. And that, it's the kind of thing that the agent who did that should probably literally should be in jail.
Speaker 2 00:05:49 I mean, it's borderline fraud, certainly self-dealing, it's churning annuities and it's the kind of thing that just makes me sick to my stomach. Cost his dad a pile of money. And so he had two and a half million, might have had three and a half, 4 million in there. Who knows? I didn't dig into it a whole lot. But the guy had seen, I think he saw my podcast, unin inherited annuities. So I kind of told him what he could do. Either way this guy had a, like a verifiable reason to not like annuities. It wasn't actually the annuity, but I would understand why he would look at it that way. They were all still highly appreciated cuz they had existed for a long time and he'd be better off from a tax standpoint to draw that out. But he didn't want to do that. He just wanted out of it.
Speaker 2 00:06:27 I knew based on, you know, his tone, what he'd been through, how he looked at it, it was best to give him some good advice and give him some clear answers to the questions he asked. I wasn't gonna get any business out of him. I'm not gonna waste my time and I'm not, I'm not gonna patronize him saying, oh I won't do that. I wouldn't of course, but, uh, he's not gonna believe me at this point, right? He distrusts salespeople, so I'm gonna get lumped into that category. So his dad should have said no, but trusted the wrong person. He didn't, dad didn't say no, the son's going to fair enough. I understand why and you probably do too. So everybody sees the ads out there. We talk to a lot of guys that at least talk to Ken Fisher. He's the obvious one, hates annuities, right?
Speaker 2 00:07:05 Well, last year one of his clients called me. He was around 73, 74 years old, really didn't want that much risk. He said, ah, you know, he is like top of the market, crazy idea. Wow, I got all this money and my portfolios really run up ways. Maybe I should take some risk off the table and I don't know, crazy idea. And a newi might work, right? It's a good place to put money in a bad market. Protect it, make sure you don't lose it. So he was in his seventies, he had to take required minimum distributions. It was all Ira, I think his wife was a little younger, half of it was her. She didn't have to take RMDs yet. So we kinda had a plan. I'll do some outta yours. You got time with your wife, she can leave it, do what they say.
Speaker 2 00:07:41 And I, I wrote a podcast, this is probably about this time last year. It's called Why Not An Annuity. Look it up. I did that on his case where we could prove growth was the same or actually better if he had 25% of his asset and annuity because he was withdrawing money because we reduced volatility. Okay? I found some numbers and some advertisements from Fisher Investments. I think I'm gonna do a deep dive into this and do it this week or the next and I'm gonna rebut some of the things he says. So we pr we showed like reduced risk, better performance in the long run across his entire portfolio. But Fisher add his in, his portfolio a hundred percent in stocks. I've never seen a single model in my life that suggests a risk of verse 73 year olds should be completely exposed to the stock market.
Speaker 2 00:08:27 Now if you're out there and you think that's appropriate, you tell me, I'd love to hear it. I maybe you have a good reason for it. If you look at the, like the robo-advisor, like the stock bond blends, even for a 35 year old that's just starting a 401k, they recommend five 10% in bonds. <laugh> a hundred percent in stocks. Wow. Ken Fisher says no to annuities no matter what. I suppose this guy didn't buy an annuity, took him a while to make the decision. By the time he got around to it, I, I stopped hearing from him. I don't don't know where he, where he is at. Hopefully he's doing well in getting some of his money back. But he lost a couple hundred thousand bucks I'm guessing. Educated a guest. Okay, on a side note, another client of mine, I've worked with him for about almost six years.
Speaker 2 00:09:05 He retired, put half of his money in annuities in the other half of the Fisher Investments when he retired. Emailed me a few weeks ago, tell me his investment portfolio is right back to where he started five years ago. Does that mean annuities beat Ken Fisher? Well in that situation it did. Market timing being what it is now we've had a nice little run up again, who knows like from one day to the next. But that's another example of well you accept the risk of loss in the market and eliminating that volatility. Who actually produces better results over time. So if he had put all of his money with Fisher, he probably lost even more. So it's a good thing he didn't. Now if you buy an income annuity or a fixed rate annuity, you're gonna be satisfied. So I know people that buy, if you buy a a fixed income annuity or a fixed rate annuity, something easy, you have no reason to regret that outcome is guaranteed.
Speaker 2 00:09:49 I've never sold a fixed annuity or an income annuity. Or someone came back years later and said, you know, I hate this thing. Why would they? They wouldn't do that because they signed up for what they got. They got what was promised. It worked out great. Index annuities, variable annuities. I talked about the index annuities last week. They have the promise of safety but no promise of yield. Variable annuities fluctuate up and down index annuities baseline zero upside, who knows? So about eight years ago I sold an index annuity to a great guy in his mid sixties. Really, really nice guy. He wanted to reduce the risk. It was about 20% of his portfolio. Nice chunk of money. See he had some money. It was 2015 if you don't remember that was a previous low of the interest rate market. Tenured treasury was paying about one and a half percent.
Speaker 2 00:10:31 It was a miserable time to be a retirement saver. That's when I really pushed into the bandwagon of index annuities cuz we could project higher growth. Nobody was, was buying 2% bonds. Nobody wanted 2% fixed annuities. The initial projection on his index annuity, it showed about four and a quarter, something like that at the time was really good for safe money. Wow, okay, I'll give up. I could get a guaranteed two but I'll take a chance at four. That's the point of the index annuity. Do you wanna do better than the fixed rate but don't wanna take the risk than you do the index annuity. That would've been really good. Safe money at the time. He bought the index annuity, bumped along over the years, had some good, had some bad seven year contract. Came outta surrender December, 2021. He started with around 300,000. Uh, he took a nice withdrawal maybe once or twice.
Speaker 2 00:11:14 Ended up with about 400,000. It was like right at four, just a shade under 4%. Okay, so you gotta remember the time, the circumstances with which you bought the previous annuity. And he said well we talked before. And I said okay well I think we're starting to see movement and rates. It didn't really affect annuities. I said, you know what? The market's really high. So 2021, that was the top of the market, right? I said, I don't think it's great to go in the market and you know, surrender free annuity, that's another podcast. What happens at the end of the surrender term? This one in particular was an open-ended annually renewable, no more surrender fees. He could keep it for a while. And I told him, I said said Well maybe you want to, I don't care what you wanna do. I would just hang onto this a little bit cuz we're an uncertain time period and your money's fully liquid no matter when you do it.
Speaker 2 00:12:01 I'd wait three to six months just to see what happens. His wife put pressure on him saying, well uh, look how well our other investments did. So we should maybe go back to this uh, other advisor and he'll put it. So he called me and said, you know, I'm getting a lot of pressure and yeah we're gonna send this money back. Uh, transfer the IRA out to this local guy. He's got a really uh, good blend of ETFs and all that stuff. So he said no to the other annuity 4% wasn't good enough. He thought he could do better. Wasn't as good as his market investments. It's a point like it's a balance. Decided instead to go put it in a bunch of ETFs with a local guy that was at the very top of the market. So I don't know whether that was a good idea.
Speaker 2 00:12:38 You guys tell me s and p was down 17% last year. It was as down as much as 25 almost. Anyhow, so that's what happens. You know, y you with annuities, you've gotta guarantee, you wanna take the guarantee for a piece of what you got. That's a good idea. If you don't want a guarantee, yes, say no. Fair enough. Not everybody likes them. Not everybody does what I say. I just, hey gimme a shot. Listen to me if you wanna learn more about 'em. Over the years heard from hundreds of people who are dissatisfied with an annuity purchase. Most of the regret that I saw, like real regret came from variable annuities bought with poor market timing. You know, lose a bunch of money right after you put in. Maybe they had income guarantees on them in some really bad instances. Companies had to seriously increase fees in order to keep reserves high enough to weather the storm.
Speaker 2 00:13:25 Hartford was one company nearly wiped out because of it. I don't think they sell annuities anymore. Probably managed some that they've had that they have like fixed products and all that stuff. A lot of it was sold off. They ended up getting out of it. But you know, nobody lost money. But again, like I said this last week, that's the stock market more than than it is the annuity. The annuity at least kept a guarantee on it. Okay, you are using more risk when you use a variable product. Lots of other people bought contracts without understanding restrictions like bonuses, income riders, income rollups back when rates were low. It's like, oh this annuity pays 7%. No it's an income rider. It's like social security. It increases by your income increases by 7% of year. Your money's not growing at 7%. Oh I didn't know that.
Speaker 2 00:14:11 Yeah, no your money's not growing at all. That's one of the biggest reasons I started the website because they're not sold the right way. It's not sell at all costs. It's about education. You get to decide whether you buy an annuity and I'm gonna be pretty fair about it when I talk to you, I say no to annuities more than yes because of circumstances that are u unique to each customer. Either I don't feel like they're truly gonna understand it and embrace a a decision to the positive or it's really not appropriate for their situation. For risk tolerance and all that stuff. A lot of it's borne of distrust. People just can't get over the hump. That's fine. One in 10, the people I talked to, I think I did the numbers. I think I would say two to three, three out of 10 people I talk to I recommend.
Speaker 2 00:14:53 Yeah, I think annuity is the right thing to use out of, you know, one in three of those people will actually buy one. A lot of phone calls. It's hard to issue a blanket statement. Say no to annuities. If you're gonna mark 'em all at all with a negative re review, then you're doing an injustice to anyone else and yourself more than anything cuz I can, like I said, it doesn't bother me if you don't like 'em, it's too broad a category. Annuities in general, 75 podcasts about annuities. I've barely touched on the same thing. I've, I, you know a couple times I've touched on the same thing more than once. I try to remind you of other podcasts back there. There's too many useful ideas to just say generally it's a bad idea for everyone. Surely if someone were to write a book about why you should say no to annuities, they're gonna end up, if they do an honest research, they're gonna find even more reasons to say, to say yes.
Speaker 2 00:15:38 So you be objective. Spend some time educating yourself so that you can say yes or no with confidence. I did the work so you don't have to, if you needed to know where it is, you let me know. I'll point you in the right direction. I hate to say go back and listen to all the podcasts. There's 75 of 'em now and it wouldn't be fair. And there's a lot of things that are not relevant to your specific situation. So, uh, a lot of my meetings right now, I'm giving people like one or two, maybe three. Hey, go look. Listen to these. Especially someone, someone coming in right now. Hey, this is the first one you listen to. That's why the podcast page on the website or it's on YouTube. You can scroll down, you can scroll down on your phone, on your podcast app, all that stuff.
Speaker 2 00:16:19 But I'm here to help you out and educate you so you can make good confident sound decisions. My name is Brian Anderson. You can schedule a call with me by calling (800) 438-5121 or schedule an appointment using the button at the top right corner of any page on annuity straight talk.com. That guarantees you a slot time slot. And I will be there. I will give you a call. I don't like no shows. If you're not gonna show up, just don't show up. I had one guy cancel an appointment fine, but like two, two this week somebody just didn't show up. And it's okay if you're late, you got other things going on. I usually like, I'll leave a message and wait, you know, five, 10 minutes. Most of the time people call me back, Hey, sorry I was on the phone doing something. That's okay but respect my time. I'll respect yours anyway. But I'm here. You can get ahold of me. So episode 75, say no to annuities. I will be back next week. Maybe we'll do Ken Fisher, maybe we won't. I will get to that cuz I saw some really interesting stuff on his. So anyway, thank you for stopping by. Thank you for joining me. All your support is appreciated. Comment, like, share, let me know what I can do to make it easier for you to make decisions. That's what I'm here to do. Okay, thank you again. Have a great day. Goodbye.
Speaker 1 00:17:36 You have been listening to annuity talk. Information is for information educational purpose. The views expressed by guests on program are their own and do not necessarily reflect the views. Partners. Information presented today should be acted. It is important that you all insurance disclosures GS are based insurance.
