unethical behavior and/or sales practices

132 replies [Last post]
troll's picture
Offline
Joined: 2004-11-29

It is not slight of hand, it is comparing actual returns to actual returns.  Nothing tricky about it.  What is slight (shouldn't there be an "e" in there?) of hand sales is showing a hypothetical "this is the way it could work" illustration as opposed to a historical "this is the way it would have worked" illustration.  Ever ask yourself why that is?  As far as fees are concerned, my fees are disclosed in bold type upfront, and then the client gets a quarterly reminder.  VA fees are buried in a prospectus.  At the end of the day, I charge less all in than a VA.  Quick question, how do you know about "unknown trading fees" if they are unknown?

troll's picture
Offline
Joined: 2004-11-29

Primo wrote:It is not slight of hand, it is comparing actual returns to actual returns.  Nothing tricky about it.  What is slight (shouldn't there be an "e" in there?) of hand sales is showing a hypothetical "this is the way it could work" illustration as opposed to a historical "this is the way it would have worked" illustration.  Ever ask yourself why that is?  As far as fees are concerned, my fees are disclosed in bold type upfront, and then the client gets a quarterly reminder.  VA fees are buried in a prospectus.  At the end of the day, I charge less all in than a VA.  Quick question, how do you know about "unknown trading fees" if they are unknown?One thing you rookies don't understand is that we know that the more we disclose, the easier it is to close the sale. Unfortunately for you, one of the words that we can use is "guarantee."

snaggletooth's picture
Offline
Joined: 2007-07-13

Primo wrote:It is not slight of hand, it is comparing actual returns to actual returns.  Nothing tricky about it.  What is slight (shouldn't there be an "e" in there?) of hand sales is showing a hypothetical "this is the way it could work" illustration as opposed to a historical "this is the way it would have worked" illustration.  Ever ask yourself why that is?  As far as fees are concerned, my fees are disclosed in bold type upfront, and then the client gets a quarterly reminder.  VA fees are buried in a prospectus.  At the end of the day, I charge less all in than a VA.  Quick question, how do you know about "unknown trading fees" if they are unknown?
 
Investors should concern themselves with "historical" past performance to an extent.  But how often do you think funds like the Magellan fund are shown to an investor, but the investor never knows that Peter Lynch doesn't run it anymore? 
 
I would be willing to bet that more often than people realize, the "historical" track record doesn't truly represent the fund they are buying today.
 
 
 Quick question, how do you know about "unknown trading fees" if they are unknown?
 
What is unknown is how much they are (hidden).  What is known is that they exist.  This fact can be found buried in the prospectus.

snaggletooth's picture
Offline
Joined: 2007-07-13

VA Salesman wrote:One thing you rookies don't understand is that we know that the more we disclose, the easier it is to close the sale. Unfortunately for you, one of the words that we can use is "guarantee."
 
That's exactly right.

troll's picture
Offline
Joined: 2004-11-29

I have no idea how much or little you disclose Tom.  Being that we live in different parts of the country, we most likely will never see the same prospect.  IF (and that is a big if) you pitch annuities like you post here, you are the poster child for the scorn given to annuities.  I base my opinions of annuities on what I see in my market.  EIA's are pitched as no downside equity products instead of fixed annuities with a different crediting method.  I would be willing to bet EIA sales will drop tremendously when they are regulated as equity products (if it happens).  I'm not a big fan of regulation, but I would welcome this particular piece.
As far as VA's, if a VA is needed to change client behaviour, i.e. client needs equity type returns but has no tolerance for volatility, then absolutely sell them a VA.  Every prospect I speak to is asked if they need a gaurantee.  The problem with the gaurantee is that it is very expensive and (using a very broad general definition) is unlikely to be needed.  I give the client the choice.  I use an investment outside the annuity and the like subaccount in an annuity to show the cost of the vehicle.  The investment I use to illustrate isn't cherry picked, in fact the returns have been very pedestrian.  The majority of the time, clients chose the non-gauranteed investment.  The two emotions that drive people when investing is fear and greed.  I will take the greedy ones any day of the week and send the fearful ones elsewhere.
 

troll's picture
Offline
Joined: 2004-11-29

Primo wrote:I have no idea how much or little you disclose Tom.  Being that we live in different parts of the country, we most likely will never see the same prospect.  IF (and that is a big if) you pitch annuities like you post here, you are the poster child for the scorn given to annuities.  I base my opinions of annuities on what I see in my market.  EIA's are pitched as no downside equity products instead of fixed annuities with a different crediting method.  I would be willing to bet EIA sales will drop tremendously when they are regulated as equity products (if it happens).  I'm not a big fan of regulation, but I would welcome this particular piece.
As far as VA's, if a VA is needed to change client behaviour, i.e. client needs equity type returns but has no tolerance for volatility, then absolutely sell them a VA.  Every prospect I speak to is asked if they need a gaurantee.  The problem with the gaurantee is that it is very expensive and (using a very broad general definition) is unlikely to be needed.  I give the client the choice.  I use an investment outside the annuity and the like subaccount in an annuity to show the cost of the vehicle.  The investment I use to illustrate isn't cherry picked, in fact the returns have been very pedestrian.  The majority of the time, clients chose the non-gauranteed investment.  The two emotions that drive people when investing is fear and greed.  I will take the greedy ones any day of the week and send the fearful ones elsewhere.
 Fear is stronger than greed. I'll take that side of the equation any day.

troll's picture
Offline
Joined: 2004-11-29

Nice to finally come to an understanding.

troll's picture
Offline
Joined: 2004-11-29

VA Salesman wrote:
Primo wrote:I have no idea how much or little you disclose Tom.  Being that we live in different parts of the country, we most likely will never see the same prospect.  IF (and that is a big if) you pitch annuities like you post here, you are the poster child for the scorn given to annuities.  I base my opinions of annuities on what I see in my market.  EIA's are pitched as no downside equity products instead of fixed annuities with a different crediting method.  I would be willing to bet EIA sales will drop tremendously when they are regulated as equity products (if it happens).  I'm not a big fan of regulation, but I would welcome this particular piece.
As far as VA's, if a VA is needed to change client behaviour, i.e. client needs equity type returns but has no tolerance for volatility, then absolutely sell them a VA.  Every prospect I speak to is asked if they need a gaurantee.  The problem with the gaurantee is that it is very expensive and (using a very broad general definition) is unlikely to be needed.  I give the client the choice.  I use an investment outside the annuity and the like subaccount in an annuity to show the cost of the vehicle.  The investment I use to illustrate isn't cherry picked, in fact the returns have been very pedestrian.  The majority of the time, clients chose the non-gauranteed investment.  The two emotions that drive people when investing is fear and greed.  I will take the greedy ones any day of the week and send the fearful ones elsewhere.
 Either you're lying about selling annuities to people who don't like volatility or you're lying about sending them elsewhere. Which one is the lie? Fear is stronger than greed. I'll take that side of the equation any day.

troll's picture
Offline
Joined: 2004-11-29

I only take about 80% of prospects, I don't take prospects that I can't help.  So that is not a lie.  If a prospect has reasonable expectations, the assets to accomplish their goals, and choose the gaurantee, then I sell them a VA.   Neither statement was a lie.  What lies do you tell?

troll's picture
Offline
Joined: 2004-11-29

Primo wrote:I only take about 80% of prospects, I don't take prospects that I can't help.  So that is not a lie.  If a prospect has reasonable expectations, the assets to accomplish their goals, and choose the gaurantee, then I sell them a VA.   Neither statement was a lie.  What lies do you tell?I don't lie. The truth closes more deals than a lie. I don't take people that don't want/need annuities. Especially people who are too ignorant to know that "inexpensive" doesn't usually mean "worth owning."

troll's picture
Offline
Joined: 2004-11-29

I've got a question, how much of your own money goes into annuities?

troll's picture
Offline
Joined: 2004-11-29

Primo wrote:I've got a question, how much of your own money goes into annuities?What does it matter? How much chemotherapy do oncologists give to themselves?

troll's picture
Offline
Joined: 2004-11-29

I knew you would duck the question.  More proof.  Thanks.

troll's picture
Offline
Joined: 2004-11-29

Primo wrote:I knew you would duck the question.  More proof.  Thanks.You're welcome. You may want to print it out and show it to your clients when you see that their annuity transfer paperwork has hit and your assets are flying out the door.

anonymous's picture
Offline
Joined: 2005-09-29

Primo, I've got to defend Bobby on this one.  
He's an annuity salesman.  He doesn't claim that everyone should own an annuity.   He doesn't claim that all of someone's money should be in an annuity.  He only sells annuities.   His claim is that he sells annuities when they are appropriate and if they aren't appropriate he doesn't work with the client.  That sounds to me like the way that an annuity salesman who wants to specialize should work.
Whether he owns one or not is irrelevant.  We don't know if they are appropriate for his situation.  I sell a fair amount of annuities, yet I wouldn't buy one based upon my current financial situation.

troll's picture
Offline
Joined: 2004-11-29
troll's picture
Offline
Joined: 2004-11-29

joedabrkr wrote:
VA Salesman wrote:

Bodysurf wrote:Well, it's the very core of my belief system that only equities can deliver the long-term performance, price appreciation, diversification, and dividend growth that today's investor needs to ensure that inflation doesn't demolish his retirement portfolio.  So I begin with a long-term horizon and outlook.  For such people, EIA's, CD's, munis--are a guaranteed money loser after inflation and taxes.  (And yes, I'm aware that annuities defer taxes.)I demonstrate to the client, however, that it's always wise to keep a percentage of their post-retirement income guaranteed.  One way to do this is show how their Social Security, their pensions, and some money invested in VA's will guarantee--to the best extent possible, anyhow--a given level of income.  Every dime above that needs to be invested in instruments that historically outperform.  The real "risk" you need to concern yourself with, is outliving your money.Most prospects disagree.  Most like the temporary security and comfort that fixed-income investments provide.  It's only later, when they run out of money courtesy of a 25-year retirement and soaring costs, that they wish they'd done something--anything--differently.  Not my problem.  It's always baffled me how anyone hears the term "fixed income" and doesn't run in the opposite direction.  There are no expenses I know of that are fixed, but we pretend we're doing people a favor by helping them down a slope from which many will never recover.  Our job is not to tell people what they want to hear, or to modify our investment advice based on their "feelings"--it's to deliver cold, hard doses of the truth.  And the truth is that there are NO investors who bought into a diversified portfolio of stocks years ago, and would've been better off in bonds, or CD's, or these abominations called EIA's.
How do you explain to people why they should continue to pay you to lose money for them? Are the reps at your b/d  even allowed to sell EIA's? Tell the truth. How about if YOU tell the truth?You are not an 'annuity specialist' in the sense that you sell clients an annuity for that portion of their portfolio that must be guaranteed.No...you exploit their fear to sell them as much as product as you can, instead of helping them learn how owning investments that can grow over time-given reasonable costs of investment-are the only things that will allow them to maintain a reasonable standard of living.By my perception, that's no different than the snake oil salesmen who traveled from town to town in the old west making outragoeous health claims and separating people from money.  You just wear a nicer watch and hide your expenses a little better.You're an angry, angry man. Who are you to say what portion MUST be guaranteed? What if the client wants ALL of his largest asset insured? Do you insure your whole house or just the garage that you converted to an S&M dungeon?

babbling looney's picture
Offline
Joined: 2004-12-02

Bodysurf says:  I only deal with people who are serious about making money, and who
know that the best way to do so is to divorce your feelings about
temporary market swings.  Over time, the risk of a diversified
portfolio of stocks goes to zero; for everything that's "fixed"--let
alone those instruments that lock up principal for 10 years or
more--it's slow-motion suicide.  How anyone can lock in their money at
3% in a world of $3.50 gasoline and skyrocketing medical and nursing
home costs and feel good about it is beyond me, so I don't bother.

First a disclosure. I have only sold a few EIAs in my career and that
was early on when they first came out and were simpler than they are
today.  Annuities in general including fixed and VAs are about 20% of
my book.  EIA sales have been abusive and are coming under the scrutiny
of FINRA.  If I wanted to place an EIA, my B/D has a list of approved
firms and there are numerous suitability forms that must be completed
and the trade is reviewed by compliance.

That being said BS (nice abbreviation no?) seems to be under the
delusion that there is NO risk in a diversified stock portfolio. He
also suffers under the hubris of thinking that he is smarter than the
market.  In addition many of our clients aren't that concerned with
growing the portion of their funds that are invested in
annuities and are more concerned with capital preservation and
guarantees.  When your time horizon (death looming on the horizon) is
about 10years you aren't that concerned about inflation.   They aren't
willing to take anymore market swings, divorced from emotion or not.

Talking about when every tool is a hammer all solutions look like
nails, BS must not be dealing with the elderly very often.  For a young
client I agree that a portfolio of diversified stocks, a long term risk
taking investment strategy and using covered calls in a down market is
most likely appropriate. 

Not all EIA or fixed annuities are 10 years or longer.  I just placed a
portion of some portfolios in a 5.25% 5 year surrender fixed product
for some of my older income oriented clients who just couldn't take the
downturn in this current bear market.  They know this money is not
going to grow.  They don't care.  They want to take the income and not
worry about it while the rest of their money is in play.

Our job is not to tell people what they want to hear, or to modify our
investment advice based on their "feelings"--it's to deliver cold, hard
doses of the truth.

Sometimes you have to compromise from your high horse know it all
attitude and work with your clients to keep them from bolting and
completely destroying their financial plans.As to the fees in VAs being buried in the prospectus. Not true.  The fees are clearly detailed for each option in the sales material and often in the application and suitability forms.   Any product...ANY product can be inappropriately sold or under disclosed with the risks minimized.  Just ask any long term bond holder who was 'sold' a bond.  Do you think they were disclosed that the call date is theoretical.  Did they get completely informed of the ramifications on their bond market value when rates go up?   How about those stocks that were sold based on hot air back in the dot com boom?  Did their advisors discuss P/E ratios, market cap, cash to debt ratio of the company?  Or did they just say buy this stock it's growing and as part of a diversified portfolio of stocks over time there is no risk.  Enron..  Worldcom anyone??

troll's picture
Offline
Joined: 2004-11-29

anonymous wrote:
Primo, I've got to defend Bobby on this one.  
He's an annuity salesman.  He doesn't claim that everyone should own an annuity.   He doesn't claim that all of someone's money should be in an annuity.  He only sells annuities.   His claim is that he sells annuities when they are appropriate and if they aren't appropriate he doesn't work with the client.  That sounds to me like the way that an annuity salesman who wants to specialize should work.
Whether he owns one or not is irrelevant.  We don't know if they are appropriate for his situation.  I sell a fair amount of annuities, yet I wouldn't buy one based upon my current financial situation.
 
An annuity is not an investment, it is an investment vehicle.  You can be a fixed income investor, a moderate investor, or an aggressive growth investor and accomplish this with an annuity.  I did not ask how much of his money was in an EIA, I asked how much was in an annuity.  If you only work with one type of investment because of your belief is that investment is superior enough to work exclusively with it, then certainly your own money should be in it.  I know I won't get an answer, but I would be curious to know what the reason his own money is not gauranteed as he rails about the importance of this product.  As far as his "claims" about his sales practices, have to say they sound awful hollow.

troll's picture
Offline
Joined: 2004-11-29

Primo wrote:anonymous wrote:
Primo, I've got to defend Bobby on this one.  
He's an annuity salesman.  He doesn't claim that everyone should own an annuity.   He doesn't claim that all of someone's money should be in an annuity.  He only sells annuities.   His claim is that he sells annuities when they are appropriate and if they aren't appropriate he doesn't work with the client.  That sounds to me like the way that an annuity salesman who wants to specialize should work.
Whether he owns one or not is irrelevant.  We don't know if they are appropriate for his situation.  I sell a fair amount of annuities, yet I wouldn't buy one based upon my current financial situation.
 
An annuity is not an investment, it is an investment vehicle.  You can be a fixed income investor, a moderate investor, or an aggressive growth investor and accomplish this with an annuity.  I did not ask how much of his money was in an EIA, I asked how much was in an annuity.  If you only work with one type of investment because of your belief is that investment is superior enough to work exclusively with it, then certainly your own money should be in it.  I know I won't get an answer, but I would be curious to know what the reason his own money is not gauranteed as he rails about the importance of this product.  As far as his "claims" about his sales practices, have to say they sound awful hollow.Why are you so obsessed with me? Seems kind of gay. I'm sorry that I trigger your father issues. I'm not your dad. I'm not the one that abused you. I'm here to help.

Borker Boy's picture
Offline
Joined: 2006-12-09

If a person is retiring and wants to roll their 401(k) into and EIA and take immediate income from it, are there products out there that will allow them to do so?

anonymous's picture
Offline
Joined: 2005-09-29

If you only work with one type of investment because of your belief is that investment is superior enough to work exclusively with it, then certainly your own money should be in it.

 
I don't think that someone specializing in one investment vehicle has anything to do with its overall superiority.  It just has to be superior enough to be in the client's best interest often enough to make a good living from it.  I would guess that Bobby is an annuity salesman because it is a smart business decision for him.    Just because he's usually a jerk is no reason not to take his claims at face value.  He may sell them when they aren't appropriate, but he hasn't given us any indication that this is the case.
 
He hasn't said one way or another what % of his money is in annuities.   I'm failing to see how it matters.
 
If you felt that you could make more money only selling annuites while still only doing what is best for your clients, would you do it?  I would. 

anonymous's picture
Offline
Joined: 2005-09-29

If a person is retiring and wants to roll their 401(k) into and EIA and take immediate income from it, are there products out there that will allow them to do so?
Borkerboy, I don't know the answer.  I'm one of those people whose B/D won't allow us to sell them.  (complete B.S. since they aren't securities)  Anyway, even if one could, it seems like for the immediated need something simpler with a higher guaranteed minimum might be better.  I'm sure someone more knowledgeable will chime in.

Anonymous's picture
Anonymous

I like where this thread is going...
 

Borker Boy's picture
Offline
Joined: 2006-12-09

The EIAs I've looked at (I can't and won't sell them either) all seem to be designed for 10+ years. Then, if you're able to abide by the myriad rules, you'll be eligible to receive all of the wonderful promises at the end of the contract period.
 
The ones I've seen are not designed for immediate income and will even take back the earned interest and bonus credit on the allowed "free" 10% annual withdrawal.
 
 

troll's picture
Offline
Joined: 2004-11-29

Borker Boy wrote:The EIAs I've looked at (I can't and won't sell them either) all seem to be designed for 10+ years. Then, if you're able to abide by the myriad rules, you'll be eligible to receive all of the wonderful promises at the end of the contract period.
 
The ones I've seen are not designed for immediate income and will even take back the earned interest and bonus credit on the allowed "free" 10% annual withdrawal.
 
 Give some examples of these promises, at the end of the contract period,  that you've "looked at."

troll's picture
Offline
Joined: 2004-11-29

VA Salesman wrote: Primo wrote:anonymous wrote:
Primo, I've got to defend Bobby on this one.  
He's an annuity salesman.  He doesn't claim that everyone should own an annuity.   He doesn't claim that all of someone's money should be in an annuity.  He only sells annuities.   His claim is that he sells annuities when they are appropriate and if they aren't appropriate he doesn't work with the client.  That sounds to me like the way that an annuity salesman who wants to specialize should work.
Whether he owns one or not is irrelevant.  We don't know if they are appropriate for his situation.  I sell a fair amount of annuities, yet I wouldn't buy one based upon my current financial situation.
 
An annuity is not an investment, it is an investment vehicle.  You can be a fixed income investor, a moderate investor, or an aggressive growth investor and accomplish this with an annuity.  I did not ask how much of his money was in an EIA, I asked how much was in an annuity.  If you only work with one type of investment because of your belief is that investment is superior enough to work exclusively with it, then certainly your own money should be in it.  I know I won't get an answer, but I would be curious to know what the reason his own money is not gauranteed as he rails about the importance of this product.  As far as his "claims" about his sales practices, have to say they sound awful hollow.Why are you so obsessed with me? Seems kind of gay. I'm sorry that I trigger your father issues. I'm not your dad. I'm not the one that abused you. I'm here to help.
 
Project much?  To quote you "Yaaaawwwwnnnn".  As far as trying to help. I will believe that when you post something helpful.

troll's picture
Offline
Joined: 2004-11-29

If you felt that you could make more money only selling annuites while still only doing what is best for your clients, would you do it?  I would. 
 
I probably could make more money only selling annuities.  It's the "while still only doing what is best" part that hangs me up.

troll's picture
Offline
Joined: 2004-11-29

Primo wrote:If you felt that you could make more money only selling annuites while still only doing what is best for your clients, would you do it?  I would. 
 
I probably could make more money only selling annuities.  It's the "while still only doing what is best" part that hangs me up.Ask your clients "How much of your assets are you comfortable leaving unprotected?" and see what they say.

Incredible Hulk's picture
Offline
Joined: 2006-03-24

How much of your assets are you comfortable leaving in an annuity for 8-10 years so as to avoid surrender and get those great income guarantees?

Borker Boy's picture
Offline
Joined: 2006-12-09

If it's paying an 11.5% commission, I'd have to recommend 100%!

troll's picture
Offline
Joined: 2004-11-29

Incredible Hulk wrote:How much of your assets are you comfortable leaving in an annuity for 8-10 years so as to avoid surrender and get those great income guarantees?NOOOOOO!!!!! Don't give them something to object to! Let them figure it out, themselves.

Please or Register to post comments.

Industry Newsletters
Investment Category Sponsor Links

 

Sponsored Introduction Continue on to (or wait seconds) ×