Episode Transcript
[00:00:00] Speaker A: Hello and welcome everybody to the Annuity Straight Talk podcast, episode number 177. My name is Brian Andersen, founder and creator of AnnuityStraightTalk.com here to answer all your retirement questions.
Please like subscribe or comment on any of your favorite podcast platforms or on YouTube.
If you want to chat with me about your retirement concerns and you want to figure out how to find the best solution, you can hit the top right corner of any page on annuitystraighttalk.com to Schedule A call.
Name, time, zone time, and a few notes about what you want to talk about.
Today we're going to go back to an old topic with some new information and a better perspective.
I've got with me a guy who's going to be closely involved with Annuity Straight Talk going forward. I've known him for two years and everybody, meet Nate Lee.
[00:00:53] Speaker B: How's it going, Brian? Thanks for having me.
[00:00:55] Speaker A: Yeah, you bet. So Nate, you and I met a couple years ago.
You've been in the business. I'm going to have you share your background, but you've been in the business as a wholesaler for financial products for a long time.
And start with kind of your history and what you think.
What makes you want to do something different in your career and come to Annuity Straight Talk?
[00:01:19] Speaker B: Okay, yeah, absolutely. I started almost 20 years ago in the business. I've worked for three different large insurance companies, sold products from variable annuities to mutual funds to fixed indexed annuities. So kind of seen it all covered different parts of the country as a wholesaler, but most recently was with Midland national, which is where I met Brian. And really over the last probably year and a half was covering the Mountain west region, was actually working directly with Brian, gotten to know him really well.
But more than anything, just my time at Midland allowed me to really see some opportunities, if you will, to help people. I've been teaching and training advisors and agents for almost 20 years about these products, how they work, how to position them. And what I've learned is a lot of them honestly don't really know what they're doing and don't know really the right way in my opinion on how to sell these products because they should be solution based, right? These clients, they'll have different and unique needs depending on their goals and objectives. In retirement I saw an opportunity and then just having discussions with Brian to come and work with him. Obviously we see eye to eye on just about everything. So it was a kind of a no brainer to say, hey, are there some Things we could do. So I recently left my company and I've gone out on my own and going to be doing a bunch of work with Brian and Annuity Straight Talk.
[00:02:40] Speaker A: What's interesting is you hit on a lot of stuff right now. And what these guys are going to understand, people that listen to this all the time are going to understand that I say goals first and then a solution. Solution. And today we're going to revisit that topic where from my perspective, and I've told you guys what I thought, is that not a lot of guys are really working hard to find solutions. They're just more conveniently selling a product that's in front of them. And so when I start talking to Nate and we've got to know each other over the past year and a half, his perspective was the same as mine, but it came from a totally different place. And that's what we're going to talk about. So I had a newsletter that I wrote six years ago, how commissions affect annuity sales, the money behind it. And it's not just the agent sitting in front of you. It's the people that supply him with the products and the advice and the education.
And Nate was one of those guys, right?
[00:03:31] Speaker B: Yep, Absolutely. I. I worked again, as a wholesaler. So truly my job was to educate the agents on our products. And ultimately my goal was to get them to sell to the client. Right. The end user that had the money to invest for retirement.
[00:03:45] Speaker A: And so what's interesting is Nate wrote down a bunch of notes about what he saw as issues related to this in the industry.
Again from an insider directly related to a couple of companies.
And it's funny, I read this, I said, let's just talk about this, because what he wrote down is in.
And you guys, if you want to see, I've got the old newsletter up. But what you're going to see is I'm going to have him as an author.
We'll clean this up and make it and post it up to the website. But that's what you can see, is his perspective on this business.
And again, we're both here because we want you guys to be able to navigate this and find the best solutions. But he hit on a couple of direct podcasts I have. So let's work down the list and you can tell me about, like, what as the issues in the business and what a consumer can do to navigate that, where you can identify the problem so that they can find the best deal for what they need. So last year, yep, I talked about the fiduciary standard. Because a lot of people want a fiduciary, and that was the first thing on your list.
So why don't you expand on that? Because like I said in that is like, the only true fiduciary is you're the only one that knows what's in your best interest.
Like, I can give options. You get to decide. Right?
[00:04:59] Speaker B: Yeah. So that term has been thrown around pretty loosely for a long time. Right. Everybody is a fiduciary in this business. Business. They should be. But the reality is, so many people out there, they're doing what's best and truly the easiest thing for them, not necessarily what's the best thing for the client. And this gets me. I know you touched on it, the podcast. We make money, right? When you make money. Yeah, that's obvious. But guess what? They make money when you're losing money.
So one of the huge things with an annuity is you can't lose money. Right. It's protected, principal protected, and there's a time and place for every product. So don't get me wrong, it's just one of those things where you're making blanket statements and trying to cater to the mass audiences out there that, oh, certain products or certain companies are bad because they get a commission. No time out. Like, these people are making money on you no matter what. Whether they do a good job managing your assets or not, whether the markets go up or down, they're still getting paid. So when they use that term, I'm a fiduciary. Take a step back. And then the truth is, like Brian said, in the end, you've got to do your homework and find the best fit for you.
But I think our job is to sift through all the. The crap, if you will, and try to give you some good options.
[00:06:07] Speaker A: Yeah. And that's the whole idea. And I always tell. I get a lot of people that come in and they'll say, somebody tried to sell me this product. And I say, why? Why? Why do you want to buy that product? I don't know why.
Okay. That means they didn't do any of the background work to get you to figure out whether even an annuity is the right solution. And we're both proponents of and believe in.
I'm not an either or, I'm a both. And you should have.
Some people don't want to, and that's fine. But it's perfectly okay to have continued investment in the stock market.
But when you're in retirement, you want a guarantee of some Sort whether it's income or just a protected bucket of money. And that's something that we're not really seeing a whole lot in the market. And that's what you've seen from the distribution side of it as well. So I like. He goes from fiduciary to cfp.
I've written a couple letters about that. And I know good CFPs, I know good guys. But the designation CFP is not what makes them a good advisor. In your experience, 20 years of wholesaling, Nate, what do you have to say about that?
[00:07:08] Speaker B: Yeah, 100%. And again, I've worked with some amazing CFPs, so there's some excellent people out there. But just having that designation doesn't make you a good agent or a good advisor in this case. As a cfp, in a lot of cases, I jokingly call it the academic advisor or the academic agent, if you will. And that's that person that has every designation behind their name. But I'm the one teaching them about products going, this person, they might be really good at taking tests, but they can't even understand a basic product like an annuity. It's really scary that they're out there selling and pushing things that they don't truly understand.
So don't. I guess, long story short.
Yeah.
[00:07:48] Speaker A: We know guys that we like that are just like that. And it's not to say we dislike them, but.
[00:07:53] Speaker B: Right.
[00:07:53] Speaker A: It's. Are they qualified to really help you solve a problem? And I, like, I go back to. I talked to a guy. You were here. I had a meeting the other day and I told him, I said, do you know why I did all this work? And he said, it's hard to answer that question. But I said I had to prove it to myself first.
[00:08:10] Speaker B: Yeah.
[00:08:10] Speaker A: So that I could sit here and confidently, with good conscience, sleep at night and feel like I'm giving you guys the right solutions. And that's a big deal these days. And I think, I hope you guys recognize that because that's really what we're trying to do.
And again, there are people like that. That's why Nate comes here.
There's other guys that want to come in and do it as well. So we're going to try to develop that. And really the goal is to just be the best ones out there because we already know we are. So.
[00:08:37] Speaker B: And you touched on this, Brian, that. But the key here is the knowledge, right. That he has in the years that he's been working in the industry and the time and energy and effort he's Put into learn about all the products, the different companies or carriers out there and all those things. But the reality is a lot of people don't do that and I mentioned that. We'll probably touch on it here in a minute. But a lot of the agents out there get really comfortable with a certain product or a certain company and that's all they'll sell. And that's not going back to being a fiduciary. That's not being a fiduciary. They're just selling what's easy for them because they understand it versus that it's the best fit for you, the client.
[00:09:14] Speaker A: It makes sense and it comes to. And it's not just the insurance guys as well, it's guys that don't like annuities. I've done a lot of work on the Fidelity, the big investment companies that are starting to do exactly what I've been telling people to do for the last 15 years.
But it goes on to like the perspective that portfolio or investment managers have.
Frequent listeners know my buddy John in California who is a very good portfolio manager and there's even a difference between him and other people. But as it relates to retirement planning, I don't know what have you seen like cost effective, good solutions, open minded, right?
[00:09:51] Speaker B: Yeah. And no 100%. There's some amazing portfolio managers out there that do an excellent job and you gotta have that money in the market. Right. At least a portion of it for most people makes sense. But I do think the key is a lot of those people can't sell annuities. So just keep that in mind. Right. Where are they coming from when they're saying hey, that's better for you to keep all your money in the market or exposed to market risk. It's like okay, but can you even sell me an annuity Versus truly doing the homework and finding out what's a good fit or what that client needs. And we're going to talk. I think about this here in a second, but it went back to when I came in the industry. There are a lot of companies that had a brand name over their door and I would always sell. Are they only showing you those companies? Are they a captive agent where that's all they've got and they're going to only show you that because either they make more money on it or that's all they can offer you versus is it the best fit?
[00:10:41] Speaker A: No, that's true. And it's interesting. Like very beginning of my career, I was a guardian life guy, big strong mutual company Some annuities, whole life, all that stuff.
We got podcasts about it. You guys can go look at them. But I like Guardian because they allowed me to have an independent channel. And so there was really no other way that I knew how to do it in my career except to go and be able to shop the widest variety of products because those, every annuity is built for a specific solution.
And if I only have an income solution for a 55 year old, I'm pretty much irrelevant to anybody else.
And that's what a lot of the captive agents end up getting into.
But they're still selling the product for a 55 year old to somebody who's 70, just wants to protect some money.
And it's pretty ridiculous. But if you go into like, distribution of products is a real issue, and that's what the past newsletter was about.
You have to understand the money behind all those other channels is in a lot of ways more significant than what the agent's going to get paid to sell it for.
[00:11:46] Speaker B: Sure.
[00:11:46] Speaker A: And so one of the big, I mean, go to the next point on the list, the broker dealers. We maybe give an example of those. Not everybody knows that term broker dealer.
[00:11:53] Speaker B: When I was selling variable annuities back in the day, the distribution channels were through broker dealers. And essentially they were selling mostly VAs, as we call them, variable annuities back in the day. You don't even hear about them anymore. There was after the collapse, right, in 070808.
[00:12:10] Speaker A: Yeah.
[00:12:10] Speaker B: When everything kind of hit the fan, a lot of those companies got in trouble. And the reality is I always told people the products were too good, they did a bad job either hedging or pricing those things. And in some cases the products were excellent. My dad got one that he still swears today is the best investment he ever made. But it had to be sold correctly. And I can't tell you how many times now, right? Wholesaling, fixed, indexed annuities. Most recently I'd sit down with agents and they'd go, man, Nate, my clients and I hate variable annuities. I'm like, you know why? It's because that person just blanket sold those products to people like you said, because that's all they had in their bag that was like the one arrow, if you will, in their quiver that they could use. And so they sold it to everyone whether it was a good fit or not.
[00:12:50] Speaker A: And even the guys that I started working with, mentors in the business, guys that I trust and who do a really good job.
Guardian came out with a variable annuity in 2005. And so they started selling it. And that's when I really like. That's when I really got on the analysis side of where is your dollar most effective?
And I figured out that those. The payouts on those were a guarantee for sure, but it was not the fastest way where to get where you wanted to go. But these guys were just selling them to everyone. And what happened in the last few years when the rate shot up and we had really good mygas and stuff like that? These guys were looking at their variable annuities and the clients looking at them saying, this has performed well, and it's got this income on it, but there's all these fees. And I don't know why I bought it, because I don't even really need the income. It might be a business owner or a guy that's got real estate. He's got cash flow elsewhere. And these guys were bailing and selling them. My guess. So they paid all those fees for all those years for no purpose. Fortunately, the market did well, so the contracts performed. But you see the other side of that, where I don't. I know specifically MetLife contracts. Some of those variable annuities, like, miserable returns.
[00:13:59] Speaker B: Yeah.
[00:14:00] Speaker A: And Prudential had good ones. Guardian had good ones. Hartford went out of business on their variable annuities.
[00:14:05] Speaker B: Hartford got in trouble. What was ING now? Voya.
[00:14:08] Speaker A: Yep.
[00:14:09] Speaker B: Aig. I mean, some of those names, they took bailout money because they needed help. Because they. Yeah.
[00:14:13] Speaker A: So we, like. Our goal here is to say as independent as possible.
And you'll understand this one. Nate. I always said that in this newsletter, like, and you've met guys that will only sell the highest commission. But if you do the right thing, then you. Who cares what you make? Because some of those products are, like 1% commission. Some of them go up to seven or eight. And you make a lot of money. But it's only. It doesn't matter what side you're on. It just matters what's best for you.
[00:14:37] Speaker B: And I have to just. I laugh when. Whenever somebody would tell me, I don't care about commissions, I knew right away that their top priority was commissions. Yeah, it was, like, laughable if an agent's like, oh, I don't worry about that. But always, like, throughout the conversation or at the end, they'd be like, so what does this pay me like? And let's be honest, nobody works for free. And you should get paid for hard work in any industry, no matter what you do. But the truth is a Lot of these people, again, it's the path of least resistance. Instead of doing the homework and learning about the products and understanding what really is a good fit for their client. That's the bigger issue that I have with so many of these people out there. They were just taking the easy road, if you will.
[00:15:14] Speaker A: Yeah. The other road is like so much more fulfilling. It's not that hard. Just take your time, be patient.
[00:15:20] Speaker B: Shouldn't be that hard. But that's a whole different story. Right. Is some of these people. It's transactional, hate to say it, they're not in it for the long haul. Brian had a call the other day with a client, wanted to talk about reallocating and unfortunately there's bad agents out there that they'll write to business and you may never see or hear from them again. And it gives the industry and all of us a bad name.
But the reality is somebody that's doing it the right way and is truly trying to put you in a long term product, you're going to be talking to them for the next 10, 15 years, maybe longer.
[00:15:49] Speaker A: Absolutely. That's my goal is like in a number of years then I just take care of people. I say it's like if you get in the door before I close it, you're part of the family forever.
Some point I'm going to close the door. And then there's guys like, no, you'll never stop doing this. Yeah, that'll be like old annuity guy. And then I'll be everything that I said you shouldn't look for. When I was 35, it's like, oh, I'll be here when you need me. And now like I don't know. I'm not there yet though. I'm only 46. So.
So a big part of like talk about distribution and what sways agents to sell one thing over another.
And I. It's a necessary evil in the business because most of them work through that. But we talk about IMO's insurance marketing organizations or it's sometimes called FMOs, field marketing organizations. But it's a third party distribution system for the insurance companies. So they kind of like outsource it and they keep their home office operations lean. And that's what this newsletter that's up the how commissions affect annuity sales. Tell us what you know about that. From a different perspective than I have.
[00:16:55] Speaker B: Yeah. Full disclosure, I didn't know that much about them. I had always been on the independent side when I was wholesaling like variable annuities. Right. I Didn't understand when I came to work, you know, most recently with a company called Midland national.
And I'm like, wait a minute. So we're the direct distribution, but we had a sister company that was selling products to IMO's. But I could never understand, like, why would somebody go work with an imo? Like, what's the premise behind it? For a lot of them, it's newer agents that are. They're getting into the business and they need help to grow. And so a lot of that is around marketing, but it's marketing expenses in dollars. Right.
[00:17:30] Speaker A: One second. Right.
So just to make it very clear for everybody that's listening to this, the IMO is going to get a separate commission from what the agent is paid. So I have to go through IMOs on most of the products.
I prefer to go to the company. But you understand there's a financial incentive for that company who has no attachment to the solution for you.
And you can talk about they could be chasing separate goals and all this stuff, but you never see them, you'll never know about them. But those guys have a vested interest and a monetary benefit for you, buying one thing over another. And they put a lot of pressure on the agents to sell what's best for their business and it's irrelevant to what you're trying to do.
[00:18:13] Speaker B: That's some good background. And the truth is, it's gotten to the point where in some cases, they're controlling almost all of their business. And what do I mean by that is they have contracts. So if you sign on with an IMO, it could be, hey, Brian, you need to write 100% of your business through us. Would you ever do that?
[00:18:30] Speaker A: No.
[00:18:31] Speaker B: Why?
[00:18:32] Speaker A: You want a story or just say, I wouldn't do it because I don't want anybody telling me what I should do for you. That's why, even in the past, because I've had these offers, we'll take care of all of your marketing. We'll give you this whole ad budget, but you got to do this.
And that's going to keep me from finding the right solution for someone. And I always say, if I sell you something, the worst thing I've ever done in my career is sell some index annuities when rates were low that don't grow a whole lot. And people, nobody really likes them, but it's not a huge part of the portfolio. And we do what we can to make them better.
[00:19:02] Speaker B: Yep.
[00:19:03] Speaker A: But I don't want to have a tense conversation with you as a client. Three or four or five years down the road. And if I'm captive and forced to sell something that's maybe not appropriate for you, it increases the odds of doing that. So no matter what's in it for me, I'm not going to worry about that because my conscience and my ego is more important.
[00:19:22] Speaker B: But the reason I ask you that is, is the truth is you want to always sell what's the best fit for the client. Right? The solution based option. And that's why you give people choices. And it's not always the same thing. And I can't tell you how many times. And Brian knows the companies, but literally almost, I would say what 90% of agents out there use maybe a handful of the larger companies. And I would come into meetings and I could guess right, like, oh, my clients are mad because I put them in one of these contracts six years ago and it hasn't performed right and it had fee on it or it's this or that had a big bonus on the front end. And I'm sitting there going, you did this to yourself, first of all. But instead of going out and finding a good company, a good product that worked the way that the client wanted it to, they were just selling it because it was easier for them.
[00:20:09] Speaker A: Well, that's true. And what's interesting to me, if you talk about index annuities and growth and all this stuff or even income products, it's. And I would say 90% of agents out there sell only one company. That's just easier. Yeah, I understand the simplicity of keeping all your business at one company, but it's not necessarily best for you. I sold 14 different companies last year. There you solution based stuff. We're going finding whatever we got to do. But like in a lot of the cases, the. Even if you get an index annuity that doesn't perform, you have to be able to explain why. That's why I dug into the indexes and understood how they work, understand the components of them. So if we get a poor return on index annuity, we want to know why. If we can't explain it. So back in 2020, I think I don't. It doesn't matter the company. But J.P. morgan had an index and one of my clients was watching it and that index, when things dropped in March 2020, that thing went straight down and it flatlined like they just quit. Yeah, they quit trading it. They didn't want. J.P. morgan was like, yeah, screw that, we're done throwing the car. You got to understand, it's like, okay, let's just not use that one anymore. It hasn't moved in four months.
[00:21:18] Speaker B: Yeah, but it's not going up.
[00:21:20] Speaker A: So you got to be able to explain it and have a reasonable. And that goes. This is more of a topic for past illustrations. I did the podcast BS Annuity Illustrations. Encourage everybody to use the search bar on the newsletter page to find these past episodes. As we get more and more, maybe harder to find what you want to see, but if we're illustrating the past 10 years, we have to understand the economic environment that existed over that 10 years to create the return that you call hypothetical.
And do you think, what's the likelihood of repeating that over the next 10 years if that's when your contract time period is? So there's little things like that where we do a little bit more work so that we can give you a good expectation when you start it. And again, it goes income products are the same thing. Companies come in and out of being competitive. If you stick with a company that dropped the rates because they don't want the business right now, you're leaving money on the table. So.
[00:22:15] Speaker B: Well. And you hit on something. And I could tell all sorts of stories and just crazy things from my time, but around illustrations, we would get calls, right? And my internal partners would say, hey, so and so called me up and they wanted to see an illustration showing 14% because company XYZ is showing 13%. Can you do better? And we would always say, yeah, we can show those returns. Right. Those hypothetical illustrations that you're mentioning. But the reality is that's not what these products are designed to do. And sometimes we would even walk away from business because we knew that if they're selling this to their client, that this is a realistic return. This is the expectation.
[00:22:51] Speaker A: 15%.
[00:22:52] Speaker B: Yeah, yeah. That they're going to be mad at us and come back in a couple years and go, hey, these haven't returned that. But literally that's how these people will go out and sell annuities. And again, buyer beware. If you ever have an agent showing you double digit returns, it's not realistic. Now, I'm not saying you can't get a 1012 return, but you could just as likely have a 0.
[00:23:12] Speaker A: Exactly. It's an average over time.
[00:23:14] Speaker B: It's an average over time.
[00:23:15] Speaker A: And I guess just a word of caution, put his feet to the fire. Tell me why that worked that way. Most of them get mad at you.
[00:23:20] Speaker B: Yeah.
[00:23:21] Speaker A: Why would. No, how. Why would you. Why would you question me? And it means they don't know the answer. To it. That's why. And you go and ask me and I'll talk to you about it.
[00:23:28] Speaker B: Yeah. But it is funny because there's people literally that will call us and say, I got to see this illustration.
And full well, like, this isn't how these work. This isn't realistic. It's not going to happen.
[00:23:37] Speaker A: No, I think that kind of like. I mean, it's more or less sums it up. Is there anything else you want to add on some of this stuff?
[00:23:43] Speaker B: No, I'm just a big believer in annuities. Right. I've sold them for a long time. I think they belong in most clients. Part of their diversification, part of their portfolio, whether it's myga or an fia. But the reality is not all agents really, truly understand what they're selling. It's going to come down to a gut feeling that the trust that you have and the understanding. But the one thing that Brian has done, and one of the reasons I'm here partnering with him, is put in the effort to understand the industry and understand these products, how they work, because there's good and bad with anything. And if you don't have somebody that's willing to tell you both of those things, the positives and the negatives, then you're probably not working with the right person.
[00:24:23] Speaker A: Yeah. And I, like, I would say.
I totally forgot what I was gonna say. Nate, I hope. I truly appreciate you being here and explaining some of these things to these guys. Looking forward to doing this more. We'll have you back on the podcast. He's going to be an author on the website in some places. I can't take all this, all the points he put together and take credit for it. I got to put his name on it. But we're going to move forward, and some of you guys will have the chance to talk to Nate on the calendar again.
We got a lot of things in common. We grew up the same way. We like the same things. We think about things the same way.
So maybe you're not getting that much of a difference with Nate, but still, personalities mingle or personalities mesh with different people. Awesome, dude. He'll take care of you. Everything's going to be fine. Nate, thanks for joining us.
[00:25:09] Speaker B: Thanks for having me. Looking forward to. To working with you and, yeah, having some fun here going forward, but it'll be great.
[00:25:15] Speaker A: We're going to do a lot of fishing, hunting.
Right. Just enjoying life and helping you guys. Best part of it is meeting you guys. If any of you guys have questions about any of the topics here. Go ahead and leave them in the comments. Respond to the email on the newsletter if you get it, we'll respond to them. We'll get back to you. It might give us a new topic. That's one blessing we have is all these topics come from your questions, and so we're here just to answer those. And this has been episode 177. My name is Brian Anderson, founder and creator of AnnuityStraightTalk.com like, subscribe or comment on any of your favorite podcast platforms or on YouTube. Top right corner of any page on annuitiestraighttalk. Com. If you're watching the video, it's right there. It says schedule a call. Hit the button. We'll give you a call at the time you suggest.
Thank you so much for joining us. And we will see you next week with episode 178.
