Episode Transcript
[00:00:00] Speaker A: Hello and welcome, everybody, to the Annuity Straight Talk podcast, episode number 222.
Hey, 222, wherever. Heard that before. Got any ideas, Nate?
[00:00:10] Speaker B: I think Allianz, probably.
[00:00:12] Speaker A: Okay. My name is Brian Anderson. Welcome. And I'm the founder and creator of this website. Nate has joined me in the past year to help everybody else with retirement. Sometimes I'm too busy to get to it all, so I need someone equally, if not more qualified than myself.
Please, like, subscribe or comment on any of your favorite podcast platforms or on YouTube. Share it with your friends. Let them know what the message is. If you think it could help them, or if you think they'd have another opinion, we'd like to hear it, good or bad. Okay. We don't really want to trash on anything specifically. We just want to tell you where it's right and where it's not right. Nate, to be as fair as possible. What's. I mean, what's your overall opinion of Allianz having been a wholesaler for 20 years?
[00:00:50] Speaker B: Well, I will say I competed with them in the variable annuity space. They were always a good competitor, strong company. They've got that name and kind of brand recognition. Everybody knows Allianz. I hear Alliance a lot. Oh, yeah.
[00:01:03] Speaker A: Don't know how to say it, though.
[00:01:04] Speaker B: You can't say it, but the truth is, I hear more about Allianz today as far as products that haven't necessarily performed up to the way they were presented. So oftentimes people say, hey, I got this contract. The performance isn't there, the income isn't there, the fees are high. I mean, right? You name it. Unhappy clients that are looking for options. And honestly, I just hear Allianz more than anybody else. Whether that's the 2, 2, 2, or even the ABC, they just. They don't tend to perform very well. A lot of sizzle and not a lot of substance. Yeah.
[00:01:33] Speaker A: And that's kind of where we're at today. So I'm going to show you guys a case because I've got a client, a guy I've worked with. It's pretty common that I don't do everything for everyone. He's got some things from other places. We get along really well. Mutual respect between the two of us. He bought the Allianz Benefit control, the abc, a couple of years ago. So this isn't about the 2 to 2. And remember, the ABC, you can take income in any year. The 2 to 2, you have to wait 10. Yeah. So it's more specific. And this is Why I was kind of considered it their answer to the 10 year deferral because a lot of people wanted it sooner. So they created the abc. So he's had it for two years and he's going to retire. Maybe you want to start taking income in two more years. Right now he's 68 and he wants to take income at 70. He got a statement at that.
A lot of times they're sold with this grand projection. Right?
[00:02:20] Speaker B: Yeah. And I mean again, kind of one of those things we see is they run illustrations and when I say they advisors, agents out there. But Allianz tends to run numbers, 10, 12, even 14% type average returns. And the truth is that's just not realistic. These products are not designed to do that. I'm not saying you can't have a good year, double digit performance, you've seen it, I've seen it. But to average that consistently over time would be extremely difficult to do. And so that's what people get sold on when they buy them. And then all of a sudden they get their statement and go, geez, Brian, that's not what they told me was going to do.
[00:02:52] Speaker A: Yeah, exactly. And I think one of the, one of the problems I've had with it is again, those overblown expectations. We've talked about it, where you get. The one good thing is they don't have a product fee or a rider fee. And that's why the payouts are so low. You need that performance to go forward and reach those expected targets. So it's not really for a maximum income. That's where you unfortunately you got to pay a fee because it'll get you the higher guaranteed payment and you don't have to worry about it. So I'm going to share my screen and talk about this guy who. And he's a realistic guy. I think he just, I don't think he's like really disappointed with this.
But we'll look at a few important factors. Okay.
[00:03:29] Speaker B: And while Brian's pulling that up, to be fair. Right. That interest rate environment from kind of that 2020-2022 range, it was tough, right. But it doesn't change what we still continue to see with these contracts and their performance.
[00:03:41] Speaker A: Right. And so what you guys can see if you're looking at the screen here, he put a hundred thousand in in November of 2023. So he's just passed the second anniversary and a hundred thousand grew by a total of $398.
[00:03:54] Speaker B: Not that great, not considering what the markets have done over the last few years since 2023.
[00:03:58] Speaker A: And I honestly think it's more the fault of an agent that like picks these indexes that might have good past performance but the economic conditions aren't present for them to do really well now they're in the contract and could pay off well earlier, but he could have gone into an S&P 500 cap rate and the market ripped and he would have done 4 or 5%. So this is not again, not even a trash on all hands. It's just there's some idiots selling them that don't even think about it and they just let it go and never come back to it.
[00:04:27] Speaker B: Well, and you bring up a good point. Sorry.
[00:04:29] Speaker A: It's going to be nice.
[00:04:30] Speaker B: Right. We see this a lot though too. Right. We call them risk control or V control strategies. Right. Most companies offer those and that's good. It's good to have diversification options. But again, if you're using them to show historical performance or inflated numbers, that's where it'll get you in trouble. If they tell you to put all your money into one of these strategies, we think that's a mistake. Right. I mean, that's going to get you in trouble.
[00:04:49] Speaker A: And it's again like it's the same with any investment manager. They're going to make changes and rebalance and movements in the portfolio depending on current conditions. You've got to do that within an index annuity. So, yeah, so he's got 100,003, 9,833. I'm not going to scroll around on the page too much. It's got his name on it. We believe in anonymity and privacy. So what happens is, what's interesting, if he decides to surrender it, right.
He has a positive market value adjustment now that happens when rates were higher when he bought it than they are right now. So the value of the underlying bonds has increased and it actually reduces the hit from surrender charges. So it makes it more viable for him to move it and do something different.
[00:05:32] Speaker B: And we've seen that in different market cycles. Right. But it does give you potentially an opportunity to move your money and just like Brian said, not take as big of a hit if you're still within that surrender charge schedule.
[00:05:42] Speaker A: Absolutely. If he surrendered it today, a hundred thousand dollars, he'd get hit by 4 or 5%, but he'd get a market value adjustment, a credit of $2,832.
So he's actually going to come out with almost a hundred thousand dollars or if not even just a little bit. More, right?
[00:05:57] Speaker B: Yep.
[00:05:58] Speaker A: So two years, you lost a little bit of time. Makes sense. At least he's not taking a major financial hit. So one thing he talked about is he thought, oh, hey, maybe I can just go in with a Myga or another annuity of some sort. So he had to first decide if he's going to go growth or income. As of the recording, I think he's going income, but he hasn't submitted the paperwork yet. So we're just, we're letting him. Like, this is what we do. He gets to decide. Take your time. And I think he wanted to meet with the guy that sold this one last time, talk about some other things they've got. So because he was 95% sure he was going income, this is what we did. You guys all ready to see this?
[00:06:37] Speaker B: Just keep in mind, suitability is important. So anytime Brian and I are evaluating something that you bring to us, we're always going to have to consider what product and if your objectives have changed. Right. How important is that to somebody if they're making a decision?
[00:06:50] Speaker A: Yeah, absolutely. And we're going to do that. We got another episode where we'll kind of hit on that. More specifically, this guy, he's purchased a number of annuities over time. So he's not brand new at it. He understands how it works. So if you go to the webpage on the top bar, it says calculators. It's right next to that schedule a call button. If you want to make an appointment, roll over that and you've got FIA income quote and Spia income quote. We've already know that it's going to be higher on the FIA for deferring two years. So his income, if he sticks with alliance till age 70, would be $5,700 per year for life. It's a single life payment. Be 5,700. Now, if it grows a little bit more, that could go up, but as of now, if it doesn't, and so we look at, well, what's the likelihood of it really growing a ton in two years? Even if he gets 4 or 5% on that contract for two straight years, it's still going to be somewhere in the neighborhood of 62, 6300.
[00:07:44] Speaker B: And another thing to think of and consider always is when they're showing you an illustration or a projection, is it guaranteed they might show you this pie in the sky number that, oh, you could get more based on performance. But what we see is poor performance, which equates to a poor income stream. A lot of Times what Brian and I are going to run or show you and we can prove it on the calculator is guaranteed income, single or joint that you can outlive depending on your situation.
[00:08:08] Speaker A: So this is how easy it is. If you're looking at the screen, you just set in their source of funds, IRA or non IRA. IRA would always be a 401k for anybody. It's just qualified or non qualified premium 100,000 income starts after two years. We got a sample client. What you do is you put your name and your email. When you put your email in, just we have a system where it saves the quote so you can always go back to it. It's nothing we do anything with. Nobody else ever gets it. Sample email. He is 68 years old. That's his date of birth. And again comparing to 5,700 to maybe 6,200 per year, what do you suppose the payout is if he wants to go guaranteed?
[00:08:44] Speaker B: I'm going to go with higher.
Quite a bit higher if I had to guess.
[00:08:48] Speaker A: Okay, so here is the list. Boom. Guaranteed income, same parameter. 68 year old single guy, two years out when he's age 70 nationwide peak 10, $9,932.50.
[00:09:01] Speaker B: That is a huge difference.
[00:09:02] Speaker A: What would you do?
[00:09:04] Speaker B: That's about as easy as it comes. If your objective is to maximize income. I'm taking the 99 versus the 5,750%
[00:09:11] Speaker A: increase in income a little more than 50%. So that's as simple as we can possibly make it. Hey, buy the contract, see how it goes. You have options if it's not working out.
That's what we're here to help figure out. And again, we're not pushing him. He could still go growth and say, you know what, I don't need the income, I'll go growth. But if he does, anybody else out there and you can do this without calling us, go to the website. Just showed you how to do it. So check it out and if it's in the ballpark, you want to talk about the specifics like suitability and all the things that have to be true in order for a new company to accept the money.
[00:09:44] Speaker B: And one other thing, got to plug the annuity strategy calculator. Right. If we want to take it a step further, you run the numbers right here on the income calculator. We can put your entire portfolio in there, run the numbers and just kind of show you how that would work for your overall portfolio.
[00:09:57] Speaker A: Portfolio. And that's what we did last week where we said, okay, a couple that wanted the annuity, it's like, okay, well, the annuity is a good deal, but then we need to see how it affects your overall portfolio and what the result of that is to see if it's a really good deal. So the annuity itself can be a good deal. How it works in conjunction with the rest of your portfolio is what seals it and tells you whether that's a viable strategy or not.
[00:10:19] Speaker B: Absolutely.
[00:10:20] Speaker A: Okay. Well, thank you guys for joining us for episode 222, Brian Anderson, Nate Lee. Thank you. We will see you guys next week for episode number 223. Doesn't have the same ring to it, but we're going forward. All right. Thanks, guys. See ya. Bye.
[00:10:32] Speaker B: Thanks.
