I have to say that a hartford VA w/principal protection and 5 yr step up is as cheap as managed money or a wrap. When you think about it objectively it’s pretty tough competition.

I have to say that any low fee VA is very expensive if you can't make a lot of money with it.

Most of you seem to think that cheap is better. If you're competing on fees, you don't have much to offer. Doesn't it make sense to consider the amount that's left in your pocket, after fees?

When people see the net performance of my annuities, they don't say a WORD about fees. Don't believe me? I don't care.

The performance is pretty darn good as well. Competitive with SMA’s or wraps. Too bad my bank limits the use, otherwise I’d use them more often. The Hartfor VA is a good product

[quote=ezmoney]The performance is pretty darn good as well. Competitive with SMA's or wraps. Too bad my bank limits the use, otherwise I'd use them more often. The Hartfor VA is a good product[/quote]

Why do they limit them?

becuase they’re dumb bankers and scared.

[quote=ezmoney]becuase they're dumb bankers and scared.[/quote]

That sorta sums it all up in about six words, doesn't it?  THAT, my friend, is why I'm indy, not because of payout.  Bankers and many folks in the management infrastructure at wirehouses(particularly compliance and product management) simply don't understand markets or the risk tolerances of individual investors.  They can't, because they've almost never spent any time in the trenches with real clients.....plus if they were so smart they'd be brokers because they would make a lot more $$$$

[quote=ezmoney]The performance is pretty darn good as well. Competitive with SMA's or wraps. Too bad my bank limits the use, otherwise I'd use them more often. The Hartfor VA is a good product[/quote]

I really don't see that. I have a few inherited Hartford annuities and between their charges and the fact most of their best sub-accounts are closed, I see it as NBD.

[quote=mikebutler222]

[quote=ezmoney]The performance is pretty darn good as well. Competitive with SMA's or wraps. Too bad my bank limits the use, otherwise I'd use them more often. The Hartfor VA is a good product[/quote]

I really don't see that. I have a few inherited Hartford annuities and between their charges and the fact most of their best sub-accounts are closed, I see it as NBD.

[/quote]

lol....I'm following you....get to work!

[quote=mikebutler222]

[quote=ezmoney]The performance is pretty darn good as well. Competitive with SMA's or wraps. Too bad my bank limits the use, otherwise I'd use them more often. The Hartfor VA is a good product[/quote]

I really don't see that. I have a few inherited Hartford annuities and between their charges and the fact most of their best sub-accounts are closed, I see it as NBD.

[/quote]

You should switch them into new annuities.

[quote=Dirk Diggler][quote=mikebutler222]

[quote=ezmoney]The performance is pretty darn good as well. Competitive with SMA's or wraps. Too bad my bank limits the use, otherwise I'd use them more often. The Hartfor VA is a good product[/quote]

I really don't see that. I have a few inherited Hartford annuities and between their charges and the fact most of their best sub-accounts are closed, I see it as NBD.

[/quote]

You should switch them into new annuities.

[/quote]

Yeah, lol, that's the solution. BTW, I didn't want to jump in on the thread with the "fee guys" comment. But when I run into someone that's been told they can avoid a fee by buying a an annuity, I simply show the client the MorningStar on the annuity they've been shown. When MorningStar shows them an all-in fee of 2-3.5%, they turn white as a sheet. 

[quote=mikebutler222][quote=Dirk Diggler][quote=mikebutler222]

[quote=ezmoney]The performance is pretty darn good as well. Competitive with SMA's or wraps. Too bad my bank limits the use, otherwise I'd use them more often. The Hartfor VA is a good product[/quote]

I really don't see that. I have a few inherited Hartford annuities and between their charges and the fact most of their best sub-accounts are closed, I see it as NBD.

[/quote]

You should switch them into new annuities.

[/quote]

Yeah, lol, that's the solution. BTW, I didn't want to jump in on the thread with the "fee guys" comment. But when I run into someone that's been told they can avoid a fee by buying a an annuity, I simply show the client the MorningStar on the annuity they've been shown. When MorningStar shows them an all-in fee of 2-3.5%, they turn white as a sheet. 

[/quote]

Not as white as when I show them the true cost of ownership of their mutual funds on personalfund.com, on top of the broker meter. An all-in fee of 4-6%. This is when the little light goes off in their heads and they really see the reason why their performance sucks.

Mike, do you also show them the compounding effect of the tax advantage in the annuity?

It's not how much you make that's important, it's how much of it you keep.

[quote=Dirk Diggler][quote=mikebutler222][quote=Dirk Diggler][quote=mikebutler222]

[quote=ezmoney]The performance is pretty darn good as well. Competitive with SMA's or wraps. Too bad my bank limits the use, otherwise I'd use them more often. The Hartfor VA is a good product[/quote]

I really don't see that. I have a few inherited Hartford annuities and between their charges and the fact most of their best sub-accounts are closed, I see it as NBD.

[/quote]

You should switch them into new annuities.

[/quote]

Yeah, lol, that's the solution. BTW, I didn't want to jump in on the thread with the "fee guys" comment. But when I run into someone that's been told they can avoid a fee by buying a an annuity, I simply show the client the MorningStar on the annuity they've been shown. When MorningStar shows them an all-in fee of 2-3.5%, they turn white as a sheet. 

[/quote]

Not as white as when I show them the true cost of ownership of their mutual funds on personalfund.com, on top of the broker meter. An all-in fee of 4-6%. This is when the little light goes off in their heads and they really see the reason why their performance sucks.

[/quote]

Good point, but the subaccounts of the annuity carry the very same costs PLUS there's that pesky M&E and the riders... it still boils down to the client realizing the "I can spare you fees" guy lied to them.

You guys are talking apples and oranges when you discuss a fee based account vs a variable annuity.

First of all Zacko has it right. You analyse each client's trading patterns and determine which would be the most beneficial for the client....not your pocket.  The clients appreciate this service and recognize that you are thinking of their best interests and will be a client for life. Lower the dorsal fins once in a while guys   If the client has a bond portfolio why would they want to pay you an annual fee. On the other hand if they have an active stock, ETF, UIT, and mutual fund portfolio. Then they are probably fee based candidate.  One size doesn't fit all.

Comparing VAs and fee based is just, to use Dirks favorite phrase, retarded. What about those clients who have stock portfolios.  Do you just not handle them?  Dirk has already stated that he doesn't want to bother with quoting stock prices and worrying about that stuff.  Comparing the fees between loaded funds and VAs may be be applicable, but it doesn't work when we are discussing no loads, and exchange traded equities.  I have quite a few clients who have extensive stock portfolios (over a million dollars in stocks and other equities).  Those clients take a lot of my time and energy not only with the stock portfolio but in advising them on estate issues, wealth transfer, retirement planning etc..... should be fee based.  Other clients who have mutual funds only or minimal holdings....not. IMNSHO

As to Philo's glib comment about the compounding effect of the tax advantaged annuity: Do you also explain that the variable annuity capital gains which are currently taxed at a 15% level will be taxed at the client's ordinary income tax rate which is considerably higher  (or should be since a person in a 15% tax bracket is probably not a good annuity candidate) and that if they want to take a lump sum all gain is taxed first which would push them into an even higher tax bracket.  How is this an advantage????   I mean to the customer....not to the broker who gets 7.5 to 10% on the sale.   

Don't get me wrong. I do sell VAs and even an EIA or two and there is nothing wrong with those products. But not as the major portion of the client's portfolio.  The guarantees of the VA and the EIA will sometimes be more important to the client than anything else.  So be it, as long as they are fully informed.

Our time is worth a lot and as some of you may remember I told Pennypch that same thing.  Just how much?  Good question.

[quote=Philo Kvetch]

Mike, do you also show them the compounding effect of the tax advantage in the annuity?

It's not how much you make that's important, it's how much of it you keep.

[/quote]

Good point. Then again, in an IRA, that's not an issue. I also show them the affect of paying taxes as capital gains versus regular income, and the lack of step-up in annuity versus that in other investments. Given them the whole picture let them decide.

I didn't mean to bash annuities (that's been done to death) as bash the "You can avoid fees with my annuity" line which is so easily exposed as dishonest.

[quote=babbling looney]

 Do you also explain that the variable annuity capital gains which are currently taxed at a 15% level will be taxed at the client's ordinary income tax rate which is considerably higher  [/quote]

Thank you.  I'd rather pay taxes off the gains from $100,000 portfolio as opposed to taxes of a $500,000 portfolio (after my great tax deferral program).  There's a proposal gaining momentum that will eliminate capital gains taxes on mutual funds if the dividends are re-invested in the same account.

Here's the problem with everyone's criticism of me. You guys are assuming that I'm getting mediocre returns like you are. If that were true, you guys would be absolutely right. Annuities would suck. In general, almost ALL annuities suck in  my opinion.

However, you guys are wrong. The benefits FAR outweigh the costs, in my case. I know how most brokers did last year. I see lots  of statements. I have yet to see one that can even sniff in the same neighborhood of my returns.

You guys may not understand this, but most clients are willing to overlook costs when the net, after tax dollars put more money in their pockets than what they've already experienced.

Here's a conversation I had today:

Me: I was just reviewing the annuity statements this week. Have you looked at yours?

Client: It came about a week ago. Not too bad.

Me: I'm pretty happy, too. On January 1, you had a little over $600,000. Now, you're north of $710,000. If you had invested in the S&P 500, you would be at about $620,000. A lot of people didn't even do THAT well. Let's add another $250,000 to the annuity?

Client: We can add money to it?

Me: Yep

Client: I'd like to, but I can only part with $175,000.

Me:That's no big deal. Do you have it in your checking account right now?

Client: Yes.

Me: Great. I'll have a courier stop by in a couple of hours to pick it up. Does that work for you?

Client: Yes. I really appreciate you.

Me: Me too. I really appreciate your business and friendship. I'll call you when your money hits the account. Say hi to Sally for me.

$175,000 * 7.5% * 90% = $11,812.50

5 minute phone call = $2,362.50 per minute

THAT is what happens when you make people money. I LOVE this business.

I didn’t say compare cap gains vs ordinary income taxes…I said the compounding effect of the tax advantage.  I’ll debate that with y’all, but not with strawman arguments such as babbling looney’s contention.

[quote=Philo Kvetch]I didn't say compare cap gains vs ordinary income taxes....I said the compounding effect of the tax advantage.  I'll debate that with y'all, but not with strawman arguments such as babbling looney's contention.[/quote]

Oh, I see. You want to debate the facts. How are you going to do that when you and I are the only one's with the facts?

[quote=Philo Kvetch]I didn't say compare cap gains vs ordinary income taxes....I said the compounding effect of the tax advantage.  I'll debate that with y'all, but not with strawman arguments such as babbling looney's contention.[/quote]

The compounding effect of the "tax advantage" means jack s--t if you have to pay it all out in income taxes when you either take the money or when your heirs get it with no step up in value.  Again, to make myself perfectly clear to the comprehension challenged......

Comparing a VA to other investment strategies is apples and oranges.  There is nothing wrong with annuities....unless that is the only investment vehicle you schlock to your clients and misrepresent the fees by making invalid comparisons.