[quote=Bobby Hull][quote=joedabrkr] [quote=Bobby Hull]

solid salesmen like me. We're talking to your clients and you don't even know it.

[/quote]

Exactly.

My clients are smart enough to recognize one, in my experience.
[/quote]

That was a very snappy comeback, Joe. I'd rather be open about it then to be one in disguise, like you.

[/quote]

We are ALL salespeople and there is nothing wrong with that.  If you don't think you are, then you are kidding yourself. 

[quote=Bobby Hull]

I sell annuities, dickhead. Everybody that comes to my office knows that we are going to talk about annuities. A piker like you wouldn’t have the first clue about having the courage to specialize in something - “I can’t do that…what if I leave money on the table?” Faggot.

[quote=Maxstud] [quote=Bobby Hull]

I sell annuities, dickhead. Everybody that comes to my office knows that we are going to talk about annuities. A piker like you wouldn't have the first clue about having the courage to specialize in something - "I can't do that....what if I leave money on the table?" Faggot.

[/quote]

Nice, 6th grade level name calling.  Are you ever going to show how you get 25% per year, or are we just going to have to trust you on this one?
[/quote]

Trust me.

[quote=joedabrkr]

[quote=Bobby Hull]

solid salesmen like me. We’re talking to your clients and you don’t even know it.

[quote=AllREIT] [quote=joedabrkr] [quote=Bobby Hull]

solid salesmen like me. We're talking to your clients and you don't even know it.

[/quote]

Exactly.

My clients are smart enough to recognize one, in my experience.
[/quote]

If you tell clients the truth about annuities they won't buy them.

1) 6% Commisions.

2) Surrender charges. (What if you suddenly need the money?)

3) Fee's Fee's Fee's. (You pay more than a hedge fund to get a bunch of crotty mutual funds)

4) Insurance company profits == Consumer losses (Your annuity, my dividend.

5) For EIA's, walk people through AEL's financial statements and explain how the EIA is just bad fixed annuity whose stable cash flow has been converted to risky cash flow.

6) Magic conversion of LTCG into Ordinary Income.

7) You vs 50 Actuaries. (Even with a 6% handicap, the insurco still expects to make money).
[/quote]

The commissions are 7.5% and they are none of the client's business. What the client pays, is their business. You've never seen a disclosure form, have you? Did you know that they include every tiny detail and that I use it as a tool to close the deal? That's right...I go over the disclosure form first and have them sign it, acknowledging that I've disclosed every material fact. It's easy to sign this form, but once I've gotten a signature out of them, they don't resist signing apps and paperwork.

THere's a little sales tip for you kids.

Allreit: when you give your pitch, the client hears, " blah, blah, blah." They remember the fear, though.

Bobby's disclosure form, client hears, " blah, blah, blah."

Problem is, both of you are right and both of you are wrong.

The only thing that matters is disclosure, regulation. Allreit, do we need more disclosure and regulation?

From a financial planning standpoint, in some way, folks will have to stay open minded about (immediate) annuities, given the goals and constraints of the general public.

Since all they hear is blah blah blah, why strike the fear of God into the average consumer? Better to focus on documented disclosure.

Personally, I am not a big fan of the Bobbys and their product, but a little perspective suggests maybe he is selling an overpriced Chevy and you a Toyota, or whatever, this is the reality - why not scrutinize the whole Bobby value proposition - is he a good planner, and does he provide good service?

[quote=AllREIT] [quote=joedabrkr] [quote=Bobby Hull]

solid salesmen like me. We're talking to your clients and you don't even know it.

[/quote]

Exactly.

My clients are smart enough to recognize one, in my experience.
[/quote]

If you tell clients the truth about annuities they won't buy them.

1) 6% Commisions.

Which the client doesn't pay.  We've been through this before, AR.

2) Surrender charges. (What if you suddenly need the money?)

Then don't put all your liquid assets in an annuity.  Simple.

3) Fee's Fee's Fee's. (You pay more than a hedge fund to get a bunch of crotty mutual funds)

Since when does any VA cost more than a hedge fund?  Last I checked, a hedge fund took 20% of the profits before giving anything to the investors.  Oh yeah, they still get a 1% management fee.

4) Insurance company profits == Consumer losses (Your annuity, my dividend.

If a VA allows a client to invest more aggressively to reach their goals, then they profit more than investing conservatively.  I fail to see how a product manufacturer's profit motive has anything to do with it.  Is it safe to assume all the companies you work with are non-profit organizations?

5) For EIA's, walk people through AEL's financial statements and explain how the EIA is just bad fixed annuity whose stable cash flow has been converted to risky cash flow.

A fixed annuity and an EIA are the same farging thing, except for how the gains are credited.  FI's are generally based on overall interest rates in the general account.  EIAs are tied to an index of investments, usually the S&P or such.  Both guarantee a minimal rate of return.  For someone who claims to know alot, you haven't the foggiest.

6) Magic conversion of LTCG into Ordinary Income.

Use annuities in qualified accounts and you never have to worry about this.

7) You vs 50 Actuaries. (Even with a 6% handicap, the insurco still expects to make money).

How'd you come up with this one?  Of course the insurance company expects to make money.  They're capitalists just like you, me, your client, and the rest of the country.  Again, I reiterate - if a conservative investor (who needs to be more aggressive in order to reach their goals) can invest for higher rates with the peace of mind knowing their principal is protected, then the fee is justified.

Mind you, I understand how the markets work.  Nobody needs an annuity if they've got a long-term time frame.  But I have to agree with BH, when you present the concept to them, a whole helluva lot of them want it.
[/quote]

Deekay,

Great post!  You are 100% on the money.

Oh lordy DK.

[quote=AllREIT]Oh lordy DK.

1) If the client doesn't pay the commision who does? The insurance company. Where does the insurance company get the money to pay the commision? From the clients.

So, you work for free?

Denial is not just a river in Egypt

2) VA's are usually pitched as total portfolio solutions. That's how big-ticket annuity salesmen work.

Sometimes a VA for all of a clients assets is the best way to go.  I've never seen that senario yet, but there could be a case.  I fail to see how having something relatively illiquid is a bad thing.  Why are there spendthrift clauses in trusts?  So people can avoid spending down their assets too quickly.

3) Typical VA has all-in costs of around 2.5% and not uncommon for it to be higher.

How much do you charge for your uninsured portfolios?  1%?  1.5%?  How much is that peace of mind worth to your clients?  Not to you, we know where you stand.  How much is it worth to a client to fully insure a retirement nest egg?  For some, it may be worth nothing.  For others, it may be a whole lot more than 1%.
4) Well, Vanguard is a cooperative company, and the ETF providers are "low profit"

OK - low profit.  I didn't ask to what extent they make profits.  I asked whether or not they were "non-profit".  Last I checked, Vanguard is one of the largest fund managers in the world.  Even their very low expenses create enormous profits for them. 

5) Read and understand what "fixed annuity whose stable cash flow has been converted to a risky cash flow" means.

I read it and understood it.  Now, I ask you, what does "guaranteed minimum rate of return" mean to you?

6) Using VA's in pre-tax accounts is probably dominated by directly investing and then buying a SPIA when needed. Without the tax deferral all that's left is package of over priced put options and an call option on buying a SPIA.

Actually, there's not a thing wrong with this strategy.  But you know as well as I do that when the market goes down again, our clients will focus on the part that was invested, regardless of how much we invested in the SPIA.  And might I remind you that when we are discussing VAs, we're not just looking at clients who are in the income phase.  In those instances, an SPIA obv. doesn't make sense.

7) You're not getting what I'm saying. The insurance company has designed the contract to be profitable under all reasonable conditions, that means the client takes an economic loss under all reasonable conditions.

All investment companies by their structure make money regardless of whether the client makes a profit or loss.  The internal costs of a ETF, MF, SMA, EMA, VA, whatever, make this so.  I think we're caught in two different worlds.  Your argument is academic - mine is practical.  I will be more than happy to discuss the academic validity of your theories.  You dismiss my practical investment applications because you fail to see how ethical, good-natured, honest advisors could ever see how a VA fits.  And that's a shame.

If making insurance company shareholders rich is your bag, go for it.

FTR, I deal mostly with mutual insurance companies.  So, no, despite your flip answer, I don't try to make shareholders rich.  I try to help my clients from going poor.

Client education solves most of these issues, and it is possible to invest in an agressive though conservative manner. Much of the potential higher performance of agressive investment strategies is given up to VA fee's.

Please define "agressive though conservative".  My weak mind cannot get itself around this.  I agree, ongoing hand holding is essential for clients to acheive their goals.  I am a firm believer that investor behavior is to investment results as 19 is to 1 (thank you Nick Murray!).  A VA is one tool in my shed that allows me to focus on good 'investor behavior' rather than what their ROR is.  Think about this - an investment's 10 year ROR is 10%.  What is the investor's ROR if they bailed out at the bottom?

IMHO the main appropriate place to use a VA is as weak replacement/suppliment to Roth IRA's

That could be one way of positioning a VA.  I don't agree with it, but different strokes for different folks.   
I guess I shouldn't be so negative on VA salesmen, the collective economic losses of annuitants are the excess profits the insurco's. So this MET/HIG shareholder thanks the worker bees who collect the honey for the beekeeper.

 
Of course, no AllReit rant would be complete without a smarmy back-handed remark.  Kudos, sir.  You've done the RIA community a world of good. 

[/quote]

[quote=AllREIT]Oh lordy DK.

1) If the client doesn't pay the commision who does? The insurance company. Where does the insurance company get the money to pay the commision? From the clients.

Denial is not just a river in Egypt

2) VA's are usually pitched as total portfolio solutions. That's how big-ticket annuity salesmen work.

3) Typical VA has all-in costs of around 2.5% and not uncommon for it to be higher.

4) Well, Vanguard is a cooperative company, and the ETF providers are "low profit"

5) Read and understand what "fixed annuity whose stable cash flow has been converted to a risky cash flow" means.

6) Using VA's in pre-tax accounts is probably dominated by directly investing and then buying a SPIA when needed. Without the tax deferral all that's left is package of over priced put options and an call option on buying a SPIA.

7) You're not getting what I'm saying. The insurance company has designed the contract to be profitable under all reasonable conditions, that means the client takes an economic loss under all reasonable conditions.

If making insurance company shareholders rich is your bag, go for it.

Client education solves most of these issues, and it is possible to invest in an agressive though conservative manner. Much of the potential higher performance of agressive investment strategies is given up to VA fee's.

IMHO the main appropriate place to use a VA is as weak replacement/suppliment to Roth IRA's

I guess I shouldn't be so negative on VA salesmen, the collective economic losses of annuitants are the excess profits the insurco's. So this MET/HIG shareholder thanks the worker bees who collect the honey for the beekeeper.
[/quote]

Guess what? You're wrong, but even if you're right, it doesn't matter. All I have to do is show people my annuity statements and it's all over. Even if the fees were 10% per year, they'd still average 15%! You know what else? This is a big selling annuity that I'm using and there's lots of guys who have enjoyed the same type of returns, with principal protection. And your clients are being bombarded by annuity salesmen with high returns and there's nothing  you can do to stop it. You have no defense against it.

Bobby,

If you want to keep the returns up, you better swap out of the Real Estate Funds.

[quote=FreeLunch]

Bobby,

If you want to keep the returns up, you better swap out of the Real Estate Funds.

[/quote]

No real estate funds. No "funds" at all. UIT's only.

First Trust?

[quote=FreeLunch]First Trust?[/quote]

Nope, but close enough.

Bobby,

If many of your clients like the guarantees, don't you have to start making many of these portfolios more conservative?

Deekay I agree with many of your points.  But, to state the the client “does not pay the 6% commission” on an annuity is splitting hairs, IMHO.  Whether it is shown overtly or not, they are paying in in the form of a surrendur period and M&E charges.  Simple enough.

I’m not taking the position that an annuity is bad, btw.  For the right situation I think they’re just fine.  

[quote=anonymous]

Bobby,

If many of your clients like the guarantees, don't you have to start making many of these portfolios more conservative?

[/quote]

what are you talking about?

I would think it would be the opposite

[quote=joedabrkr]Deekay I agree with many of your points.  But, to state the the client "does not pay the 6% commission" on an annuity is splitting hairs, IMHO.  Whether it is shown overtly or not, they are paying in in the form of a surrendur period and M&E charges.  Simple enough.

I'm not taking the position that an annuity is bad, btw.  For the right situation I think they're just fine.   [/quote]

Yeah, after reading my original post, I realize I wasn't 100% clear on that.  My mistake.  I interpreted AR's comment about a 6% commission as being that it comes out off the top immediately.  We know that isn't the case, and the internal costs/M&E allow the insurance company to compensate the rep for placing the business.

And FTR, I entered this debate not as an "all VA all the time" rep.  Far from it.  I placed far fewer VAs than you may expect  I guess it was pent-up frustration about the "VA's are evil" camp.

The fact of the matter is, all financial institutions are looking to hold onto our money as long as possible and don't ever want to give it back.  The best solution is to come up with the most effective strategy to take advantage of that knowledge.

I respectfully bow out of the debate because I know it's a never-ending argument.  Unless someone comes along and says something moronic that I can't avoid making a comment about