Episode Transcript
[00:00:00] Hello and welcome, everybody, to the Annuity Straight Talk podcast. Episode number 194.
[00:00:06] Climbing right up there.
[00:00:08] Brian Andersen, your host, founder and creator of annuitystraighttalk.com solving financial problems one at a time, simplifying things. It's not all that complicated, but you don't know that until you break it down. Please, like, subscribe or comment on any of your favorite podcast platforms or on YouTube and Schedule A call with me if you want me to help you figure it out and simplify it for you. Top right corner of any page, annuitystraighttalk.com this time. I've seen this a lot, but most recently, the worst advice I can possibly imagine. And even the other advisors I talked to. I can't even believe this kind of stuff happens, but it's not the first time I've seen it. But it has been a while. I used to see it a lot. And I talked to another advisor last week, told him the story. He couldn't believe it either. He said, you see that a lot. I'm like, oh, yeah, it does. But, yeah, there's some really greedy idiots working in this business, and it's frustrating to see them take advantage of nice people who are just looking for help. It's not that difficult.
[00:01:04] There's a lot to this story. I'm going to jump right into it, but I met a couple two weeks ago, they're in the early 60s, plans to fully retire. One's retired now, one's going to retire in three years.
[00:01:13] And when they made notes, their meeting notes, they simply said, hey, we want you to check out this annuity we're buying to see if everything's disclosed as far as fees and all that stuff. So I. First thing, I asked, what is the purpose for buying an annuity? And they both said, well, we don't want to take risk and don't want to lose money.
[00:01:28] That's it. Okay, well, that leaves the doors wide open. Yes, annuities can do it. A lot of other things can do it, too. But in order for me to tell if it's a good thing, I have to be able to look at the contract. All right, what's the name of the company? Oh, I had Allianz. Okay, cool. What product is it? What do you mean, product? What's the name of the contract? They've got a dozen different contracts. Which one is it? Well, he just said, we wouldn't lose money. And I said, okay, that's fine, but what's the contract? If I'm trying to tell you if it's legit, I need to know exactly what it is. And without information about it, I can't tell you if that's suitable for the purpose or if they clearly hadn't seen any other options either. So simple goal of protecting money, it's wide open. So they found the paperwork and we're going through it and they're like, oh, sure enough, good old Allianz Benefit Control. Does that sound. Yep, that's it. So for anybody who owns it, in itself, there's nothing wrong with it, but there's quite a bit more to that contract than just a couple who, hey, we just don't want to lose money.
[00:02:22] The point is it's an income contract first and foremost, the using it. Your primary goal needs to be income, whether it's maximum income or no fee income or whatever it is. Like they hadn't even determined that. And so I asked him if any income planning came along with it. I was like, did you tell him you needed some money or whatever? And they said, well, he didn't ask, but we could use a few thousand dollars a month in a few years. Okay, fine. Did he ask if he needed income? According to them, he did not. So here's a paraphrase quote. This is about what one of them said. He said he didn't have a whole lot of time and just handed us paperwork and told us that are no fees and we won't lose money and we expect 0 to 10% return every year. So I know I'm dealing with probably they're new to the world of annuities. They got a guy who is just going through it quickly. Maybe he's got a leads, maybe he's got a seminar series where he's used to people just taking his word forward after he has some other stuff. So I did a little question and answer. Instead of saying I, I, I, I, I, this is about it. What looked like I said, well, how much did he tell you to put into the annuity? They said, he told us to move our 401ks into it. I said, is that all of it? How much is in your 401ks? They said, yes, one of us has 400,000, the other has 1.3 million. And he told you put all of it in there. I said, what are the retirement assets do you have? And they said, well, we have some cash and some savings accounts and stuff, but that's the bulk of our retirement assets. We have the majority of it in our 401ks. Did he show you any other Options? No, he just told us this is the best thing we could do. So my comment was, he did zero retirement planning with you, gave you no other options, but told you to put all of your money into one single annuity.
[00:03:54] And they said, well, is it bad? We thought annuities were supposed to be a good place to put retirement money, so we're not sure what to do. Well, they're correct. It is a good place to put retirement money. But it was like when they told me $1.7 million, one contract with zero disclosure about the features of it, the limitations, the pros and cons. Right? One single contract that doesn't even suit the purpose of anything they've explained in their retirement. It might meet part of it, but they haven't even sat down and clearly defined their goals. Goals first, and then strategy, then product, the third thing. So they live in the Midwest, and I live in western Montana. Now, if you guys look over there, the camera's hitting the reflection of the lake. But over on that side and on that side, I got big mountains framing. So go to the east to get to the Midwest. And we got several peaks that go up 10,000ft between me and them. And I told them, I'm really tall, I'm reaching as high as I possibly can, waving the largest red flag I've ever waved. And if they look to the west, I was hoping they could see it. Do not go through with this transaction. There's nothing criminal about it. There's something extremely unprofessional and ignorant about it. So lots of things wrong. I'm curious what you guys see is your biggest problem. If you want to leave a comment or send me an email when this newsletter goes out and all that stuff. Neighbors walking by want to say hi. So first is, should you have all of your money in annuities? That's not a recommendation I can make. If the answer is yes, should it all be in one contract? No. It should. It should not. Is it okay to buy something you don't understand? Never. And certainly not with a large amount of money. Now, if this is in the millions of dollars, that's one thing. I don't care if you have 50,500 or 5 million. It's the same principle. All of your money. Is it okay to rely on advice from someone who has no apparent concern for your wellbeing in retirement? You decide. I know a lot of people who have a majority of their money in annuities, but none of them have it in just one contract. And they all took Time to build a portfolio of annuities with one or more advisors who help them address spec retirement concerns. As if the lack of professionalism and respect for these potential clients isn't enough, there's also the error of setting unrealistic expectations. He told them to expect 0 to 10% yield. The illustration he showed five individual index allocations of 20% a piece. One of them was allocated to the S&P 500 with a 5% annual cap and another was allocated to the fixed rate of 2.7%. Neither one of those is close to the top end of 10%. So the other allocations would have to serious obviously over perform to meet expectations. I said, how are you going to get to 10% if you're maxed at 5? That's where education comes in. That's where realistic expectations come from. I want to know who this guy is, to be honest with you, because I'd run ads against them just telling people, if this is a kind of annuity you're getting and the advice you're getting from somebody who's a professional, then I understand why people hate them. I hate those kinds of annuities too.
[00:06:42] So 0% is realistic, but this contract would never reach 10%.
[00:06:46] The podcast I did last week about the bonus annuity, the guy got out of an Allianz contract. It was averaging less than 1 from when rates were. The rates are better now. It should do okay, but it's not going to blow it out of the water. That's built to be a 3 or 4% contract. He didn't tell him that. And if you don't need income, you're better off buying a myga for sure. And if you're going to buy an index annuity because you like it, wouldn't you want something with twice the performance potential? And if you're buying an income contract, wouldn't you want the top of the market growth potential in a performance based contract?
[00:07:13] So that's the one we talked about with Nate the Income Vantage Pro. Lots of different options. That's why you say goals first. Because even in the last few weeks I share a bunch of different product ideas and I apologize. Some people say, wait, what about this? It's like, well, we're looking at income. This is growth, this is accumulation. This is not touching it. You want to dip into it, you want to get money out of it. We're in a different ballpark here, right? It's likely that if this couple move forward with the purchase, they would be extremely disappointed. And in just a few years, if not sooner. Now no one should take the path that this couple was guided down. I hope nobody ever has to. But unfortunately you're going to have to wade through it. That's what this website is for, to get you to pump the brakes. We're not here to prey on the good nature of nice people who have worked hard to become successful and the exact contract doesn't really matter, but I'll touch on that shortly. If any of you have been in a similar situation, I hope you were advised by someone else to take your time with such an important decision. These guys just wanted to protect money. It was really easy. They can do that inside the 401k using their money market fund. Call CREF and have them put it in the money market fund. If you're nervous and want to preserve it, then it's going to sit and gain a decent interest rate while they learn about all the options they have and account for every retirement concerns one by one in a simple form so they actually feel like they accomplished something rather than just stuffing the pockets of a greedy son of a Whatever. In the Midwest if someone doesn't have the time to explain something in great deal along with a great detail along with alternative options, they have no business in this industry no matter what type of money is involved. Now I talk to people pretty frequently say well I own this product and I know you don't like it. That's not true. This product is suited for a purpose. It's deferred income for the benefit control. It can be used immediately but it's good for a younger couple and I know a lot of people that have it and it works just fine. It's suitable, it's appropriate, it's just fine. Is it the best? I don't think so, but I'm not going to fault anybody who buys it with a full understanding of what the contract is. It is just fine in the proper situation. I've shared the company website and explained to everyone the conditions of each contract. They are explained very well by the company itself. With respect to that. Allianz is very open about what they offer. The problem is that the products seem to attract the bottom feeders on the advisory side. That bonus is easy to sell, right? The 2 to 2 came out in 2014 is when I started talking about it. I've seen advisors recommend that someone put nearly 100% of their assets in a single contract. Dozens and dozens of times people call every single time. It was an Allianz bonus annuity. The 2 to 2 or the ABC, if I've seen it that many times. How many other times do you suppose it's happened? That's just me. Education is incredibly important. Without it, you could end up with something that doesn't work for you. Or maybe you'd avoid annuities altogether. Either way, you might be missing out on valuable protection in retirement. Something that's really going to make you feel good about your goals. From just one phone call, I found out these guys had a moderately favorable view of annuities and they landed in the perfect spot. I would have been happy to slowly walk them through the process and watch them make a confident decision. What's most important right now is that they were hopefully able to stop this one in time. And if any of you feel like you got similar pressure with the same type of lack of disclosure, I'll do my best to put a stop to yours too. But you got to get on my calendar and contact me if you want. No pressure and full disclosure. With an incredible education, that's what I'm here to do. This is officially the worst advice I have ever seen. I've seen it a lot of times, but this is the most recent. Just popped up. I thought I got to talk about this. There's some red ridiculously greedy, irresponsible, ignorant, selfish advisors out there and those guys should be ashamed of themselves. My name is Brian Anderson. I'm proud of what I've done here. This whole website, everything is on it. I stand by it. If you have any questions, you can get on my calendar, top right corner of any page on annuitystraighttalk.com share it with your friends, your advisors, your family.
[00:10:54] Like, subscribe or comment anywhere you want. Let me know what you think. Challenge me if you want, and that is perfectly fine. I'm here for it and I invite the opportunity to become better through education. I don't know everything, but I know a lot. And that's the way it is. So thank you guys for stopping by today for episode 194. I'm going to talk about another point of avoiding bad advice next week on episode 195. I'll be back for that next week. Thank you guys so much and I'll see you there. Have a great day. Bye.
