[quote=anonymous]What’s wrong with an annuity being in an IRA? 
More importantly for you, do you know the reasons why an annuity might
be appropriate?  [/quote]



The tax deferal feature of the annuitiy is wasted in an IRA, but often
(though not always) it is the central element of the annuity pitch.



Without tax deferal you are left with insurance features of possibly
questionable value, illquidity/surrender charges and for sure a very
high expense ratio.

[quote=AllREIT][quote=anonymous]What's wrong with an annuity being in an IRA?  More importantly for you, do you know the reasons why an annuity might be appropriate?  [/quote]

The tax deferal feature of the annuitiy is wasted in an IRA, but often (though not always) it is the central element of the annuity pitch.

Without tax deferal you are left with insurance features of possibly questionable value, illquidity/surrender charges and for sure a very high expense ratio.
[/quote]

This has been beaten to death.  But again. You just don't get it. (and probably never will)

You need to look at all investments from the client's viewpoint and not from you own academic statitical analysis viewpoint.  The clients don't (usually) give a rip about the internal costs of the product if their money is SAFE. Especially their retirement money.  If they do care and can handle market volitility, then they don't invest in an annuity.

I seriously doubt that you are a real advisor with real clients. 

The tax deferral feature of an annuity IS redundant in an IRA. That isn't the feature that is the reason people put their retirement money in IRAs.  It is the guaranteed return.

[quote=AllREIT] [quote=OldLady]The same kind that ACATs those A shares in, sells them and puts him into a fee program or something else that lines your pocket.  Don't throw stones when you're surrounded by glass [/quote]

That would depend on the ongoing costs of the A-share vs the managed account. The original load is a sunk cost.
[/quote]

My Morningstar says the expense ratio on the 3 funds the kid gave us are:  ICA - 0.57%, Inc. Fd of Am - 0.56%, and Cap Inc Bldr - 0.58%.  Now what do you think?  Where's the client best served?

[quote=joedabrkr]

[quote=AllREIT]



4) B-shares!, which give you the 1% kickback of C-shares, and if you lose the client you get an bonus from the exit fee.



[/quote]

What are you talking about?  I’ve never seen b-shares that pay the CDSC to the adviser, much less a 1% trail.
[/quote]

AllREIT you never answered this question…enquiring minds want to know which B-shares pay a 1% trail and the CDSC charges get paid to the broker…

[quote=joedabrkr] [quote=joedabrkr] [quote=AllREIT]

4) B-shares!, which give you the 1% kickback of C-shares, and if you lose the client you get an bonus from the exit fee.

[/quote]

What are you talking about?  I've never seen b-shares that pay the CDSC to the adviser, much less a 1% trail.
[/quote]

AllREIT you never answered this question....enquiring minds want to know which B-shares pay a 1% trail and the CDSC charges get paid to the broker...
[/quote]

Shhhhh..... he's madly Googling as we speak to try and find some.

[quote=AllREIT][quote=anonymous]What's wrong with an annuity being in an IRA?  More importantly for you, do you know the reasons why an annuity might be appropriate?  [/quote]

The tax deferal feature of the annuitiy is wasted in an IRA, but often (though not always) it is the central element of the annuity pitch.

Without tax deferal you are left with insurance features of possibly questionable value, illquidity/surrender charges and for sure a very high expense ratio.
[/quote]

How many times have you been pitched an annuity? How much extra does the tax deferral feature cost?

[quote=OldLady]

[quote=AllREIT] [quote=OldLady]The same kind that ACATs those A shares in, sells them and puts him into a fee program or something else that lines your pocket.  Don't throw stones when you're surrounded by glass [/quote]

That would depend on the ongoing costs of the A-share vs the managed account. The original load is a sunk cost.
[/quote]

My Morningstar says the expense ratio on the 3 funds the kid gave us are:  ICA - 0.57%, Inc. Fd of Am - 0.56%, and Cap Inc Bldr - 0.58%.  Now what do you think?  Where's the client best served?

[/quote]

First, the client is best served by the ethical rep who earns a decent income from helping people.  If the rep stays in business, he can work with and help his clients.  Clients cannot work with a rep who is not earning enough to keep their job and put food on the table.

Second, IMO, the client would be best served by adding Capital World Growth & Income to that asset mix.

Good diversification and overall low volatility.

Third, if the client sees value in the fee-based approach, then the client should move into that structure.  This should be after 3-5 years of the original A-share purchase - depending on the breakpoint.  Higher breakpoints can be moved over sooner than lower breakpoints.

Check with your compliance officer before proceeding.

[quote=AllREIT][quote=anonymous]What's wrong with an annuity being in an IRA?  More importantly for you, do you know the reasons why an annuity might be appropriate?  [/quote]

The tax deferal feature of the annuitiy is wasted in an IRA, but often (though not always) it is the central element of the annuity pitch.

Without tax deferal you are left with insurance features of possibly questionable value, illquidity/surrender charges and for sure a very high expense ratio.
[/quote]

When was the LAST time you heard "tax deferral" as the advantage of an annuity?

The insurance features are of INCREDIBLE value - to the person who has market fears.

You are insuring a portfolio.  The portfolio has charges.  So does the insurance.  If you want a specific kind of insurance (rider), it costs a little extra.

The question is:  does it make sense for your client?  Does the client think it makes sense for them?

Easy question.

When I first got into the business I worked for American Express Financial Advisors (now Amerprise) for a Senior Advisor (I was a paraplanner).  It’s a very long story, but I will summarize it. 

My boss was selling mutual funds within client accounts without the clients knowing, turning around and buying AEFA’s ultra expensive financial plans (worth financial plans I might add). 

We all (the rest of her team) had no idea it was going on.  I left in Dec., primarily because the Advisor was a total idiot with very little investment knowledge (pushing AEFA funds left and right).  Her licenses were fully revoked and the entire practice was shut down in March.  The investigation is still going on.  Ugly ugly person, inside and out. 

Joedabker I completely agree with you, when people start insulting my intelligence I get a chip on my shoulder and have a bad attitude.  I need to learn to control how I react to other people. 

“The longer I live, the more I realize the impact of attitude on life. Attitude, to me, is more important than facts. It is more important than the past, the education, the money, than circumstances, than failure, than successes, than what other people think or say or do. It is more important than appearance, giftedness or skill. It will make or break a company... a church... a home. The remarkable thing is we have a choice everyday regarding the attitude we will embrace for that day. We cannot change our past... we cannot change the fact that people will act in a certain way. We cannot change the inevitable. The only thing we can do is play on the one string we have, and that is our attitude. I am convinced that life is 10% what happens to me and 90% of how I react to it. And so it is with you... we are in charge of our Attitudes.”

Charles Swindoll

Bobby Hull take this quote and tattoo it to the back of your hand, and read it before getting out of bed everyday!

[quote=OldLady]

Now....back to stories of the worst we've ever seen. 

I left the wirehouse to go indy in Dec. '99.  Had a client, single guy who had been early retired due to disability (just a regular joe -- not high paid), 100k in his whole life savings (plus a paid-for house).  Had never invested in stocks or stock mutual funds and had no interest in doing so.  Was comfortable on his retirement & didn't need any income from the portfolio at that time -- due to the early retirement, he likely will at some point.  I had him in a bond/CD ladder, little bit in bond mutual funds and a fixed annuity.  I leave and he's too nervous to follow (likes the corporate shell) -- he knows one of the brokers in the office from Rotary or something.

He walks into my office October 2002, hands me a statement and says "Is there anything you can do to help me?"  What had been $100k 3 years before was now worth $40k. 

When this broker took over the account (remember this was Dec '99 or Jan '00), he said he could do much better for this guy -- put him into UITs invested in: Internet stocks, wireless stocks, telecom stocks, technology stocks, computer stocks.  Everything that was in bonds and bond mutual funds was sold in Jan. 2000.  The only reason he even had $40k was that the broker wasn't insurance licensed, so he couldn't be on the fixed annuity as rep, didn't know about it, and it was spared. 

I've seen a lot of bad through the years, but this sticks out as perhaps the worst, particularly because it was so inappropriate for the client's experience, knowledge and financial situation. 

[/quote]

yes but think of all the commissions the rep generated that would have normally been stuck in some fixed income investments.  The rep in turn had more money to spend and therefore stimulated the economy!

[quote=BullBroker]

Joedabker I completely agree with you, when people start insulting my intelligence I get a chip on my shoulder and have a bad attitude.  I need to learn to control how I react to other people. 

“The longer I live, the more I realize the impact of attitude on life. Attitude, to me, is more important than facts. It is more important than the past, the education, the money, than circumstances, than failure, than successes, than what other people think or say or do. It is more important than appearance, giftedness or skill. It will make or break a company... a church... a home. The remarkable thing is we have a choice everyday regarding the attitude we will embrace for that day. We cannot change our past... we cannot change the fact that people will act in a certain way. We cannot change the inevitable. The only thing we can do is play on the one string we have, and that is our attitude. I am convinced that life is 10% what happens to me and 90% of how I react to it. And so it is with you... we are in charge of our Attitudes.”

Charles Swindoll

Bobby Hull take this quote and tattoo it to the back of your hand, and read it before getting out of bed everyday!

[quote=joedabrkr] ...one thing that amazed me was some of the high-level talent I encountered....And yes-we unfortunately have our fair share(maybe more than fair share) of bottom feeders.
[/quote]

Isn't this true of our industry (and most others) regardless of the channel? 

[quote=OldLady]

[quote=joedabrkr] …one thing that amazed me was some of the high-level talent I encountered…And yes-we unfortunately have our fair share(maybe more than fair share) of bottom feeders.
[/quote]

Isn't this true of our industry (and most others) regardless of the channel? 

[quote=skippy]

[quote=AllREIT][quote=anonymous]What’s wrong with an
annuity being in an IRA?  More importantly for you, do you know
the reasons why an annuity might be appropriate?  [/quote]

The
tax deferal feature of the annuitiy is wasted in an IRA, but often
(though not always) it is the central element of the annuity pitch.

Without
tax deferal you are left with insurance features of possibly
questionable value, illquidity/surrender charges and for sure a very
high expense ratio.
[/quote]

When was the LAST time you heard "tax deferral" as the advantage of an annuity?

The insurance features are of INCREDIBLE value - to the person who has market fears.

You are insuring a portfolio.  The portfolio has charges.  So does the insurance.  If you want a specific kind of insurance (rider), it costs a little extra.

The question is:  does it make sense for your client?  Does the client think it makes sense for them?

Have you considered the advantages of using a tax-deferred annuity as part of your retirement plan? An annuity enables you to invest for the future on a tax-deferred basis.1

1 If you are considering an annuity to fund your qualified plan, such as an IRA or 401(k), the tax-deferral feature of an annuity offers no additional value. Tax-deferral may not be available if the annuity is owned by a "non-natural" person such as a corporation or certain types of trusts.

[quote=skippy]First, the client is best served by the ethical rep who earns a decent income from helping people.  If the rep stays in business, he can work with and help his clients.  Clients cannot work with a rep who is not earning enough to keep their job and put food on the table.[/quote]

Sure...but the client paid an up-front sales charge a year ago.  Assuming mutual funds are an appropriate vehicle for the client, that 400k invested a year ago in those funds is likely now $472k ( I just used an 18% figure for a year -- it's likely higher).  Ok, so the kid tweeks the funds he's in, say moving into Cap. World G&I, maybe some EuroPac, SmallCap World, Growth Fd of Am, but staying in the fund family so as to not rake the client.  Get an allocation set and meet with the client once a year to review their account.  The 12b1 fees are $1,180 the first year  Even if I assume a 30% payout on the grid the broker put in his pocket $354 a year for doing the account and ACAT paperwork (OK, so the first year he's got 2-3 hours into the client), but after that, the money ain't bad for the little bit of work involved.  I don't see where the broker is going to go hungry. 

Sure, there may be changes down the road to 12b1s, but that ain't now

[quote=AllREIT] [quote=skippy]

[quote=AllREIT][quote=anonymous]What's wrong with an annuity being in an IRA?  More importantly for you, do you know the reasons why an annuity might be appropriate?  [/quote]

The tax deferal feature of the annuitiy is wasted in an IRA, but often (though not always) it is the central element of the annuity pitch.

Without tax deferal you are left with insurance features of possibly questionable value, illquidity/surrender charges and for sure a very high expense ratio.
[/quote]

When was the LAST time you heard "tax deferral" as the advantage of an annuity?

The insurance features are of INCREDIBLE value - to the person who has market fears.

You are insuring a portfolio.  The portfolio has charges.  So does the insurance.  If you want a specific kind of insurance (rider), it costs a little extra.

The question is:  does it make sense for your client?  Does the client think it makes sense for them?

Have you considered the advantages of using a tax-deferred annuity as part of your retirement plan? An annuity enables you to invest for the future on a tax-deferred basis.1

1 If you are considering an annuity to fund your qualified plan, such as an IRA or 401(k), the tax-deferral feature of an annuity offers no additional value. Tax-deferral may not be available if the annuity is owned by a "non-natural" person such as a corporation or certain types of trusts.

[/quote]

I've heard it from AMP reps, I've heard it from my insurance agent, I've heard it from the insurance companies, and I've heard it from clients who ended up buying annuities when they were younger and didn't need either feature.

If you are selling annuities as an asset accumulation product then you talk about the tax deferral, if you are selling them as an income product then its not the main feature.
[/quote]

I don't know about all the fancy stuff you're talking about, but I do know that I'm selling the piss out of them and I'm stripping off the gains and putting them into another VA or an EIA. I love this high paying job!!!

If you are considering an annuity to fund your qualified plan, such as an IRA or 401(k), the tax-deferral feature of an annuity offers no additional value.

If you are considering a growth stock to fund your qualified plan, such as an IRA or 401(k), the tax-deferral feature of growth stocks offers no additional value.

The tax treatment that a non-qualified investment gets is irrelevant to whether that same investment is appropriate in a qualified account.

Allreit, you are a classic case study for showing that a little knowledge is worse than none at all.

[quote=BullBroker]

Joedabker I completely agree with you, when people start insulting my intelligence I get a chip on my shoulder and have a bad attitude.  I need to learn to control how I react to other people. 

“The longer I live, the more I realize the impact of attitude on life. Attitude, to me, is more important than facts. It is more important than the past, the education, the money, than circumstances, than failure, than successes, than what other people think or say or do. It is more important than appearance, giftedness or skill. It will make or break a company... a church... a home. The remarkable thing is we have a choice everyday regarding the attitude we will embrace for that day. We cannot change our past... we cannot change the fact that people will act in a certain way. We cannot change the inevitable. The only thing we can do is play on the one string we have, and that is our attitude. I am convinced that life is 10% what happens to me and 90% of how I react to it. And so it is with you... we are in charge of our Attitudes.”

Charles Swindoll

Bobby Hull take this quote and tattoo it to the back of your hand, and read it before getting out of bed everyday!

[/quote]

WOW that tattoo would hurt!! I think it would be too small to read as well.

[quote=anonymous]

If you are considering an annuity to fund your
qualified plan, such as an IRA or 401(k), the tax-deferral feature of
an annuity offers no additional value.

If you are considering a growth stock to fund your qualified plan, such as an IRA or 401(k), the tax-deferral feature of growth stocks offers no additional value.

The tax treatment that a non-qualified investment gets is irrelevant to whether that same investment is appropriate in a qualified account.

Allreit, you are a classic case study for showing that a little knowledge is worse than none at all.