Annuity Business
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Aug 1, 2008 1:45 am
Seems on this forum there are a wide range of opinions on annuities (as there should be). I am curious to know, what % of your business is done with annuities.
Me first- 11% T12 in annuities, almost exclusively VA.I’ve got a question for those of you that aren’t doing as much in annuities:
You have a 60 year old client who retiring next year. He has $1,000,000. It is invested in a balanced allocation. In addition to social security, he will need $50,000 year in the first year. Based on health and family history, you are planning for a 30 year retirement. How confident are YOU that you will be able to maintain his income while keeping his lifestyle the same? Not what does Monte Carlo tell you, not this or that. Just in your gut, 30 years worth of income, how confident are you? 100%? 90? 75? 50? 25% 0%?keeping his lifestyle the same?
This implies inflation. If inflation is not taken into account 100% confidence, zero risk. With inflation, needs net 5.93% ann, in my opinion, there is a greater chance the annuity will not keep up with inflation than a non-annuity running out of money, but I wouldn't care to guess at a #.[quote=Primo]keeping his lifestyle the same?
This implies inflation. If inflation is not taken into account 100% confidence, zero risk. With inflation, needs net 5.93% ann, in my opinion, there is a greater chance the annuity will not keep up with inflation than a non-annuity running out of money, but I wouldn't care to guess at a #.[/quote] Yes, I should have put 3% inflation. For how you would invest this $1,000,000 portfolio, Primo, what would you fairly estimate the out the door annual expense (wrap fee, mutual funds, etf's, trading costs, etc.) to be?VA Salesman:
Nope. I am a little surprised nobody has questioned the "100% confidence, no risk"[quote=Primo]On a $1mm? 70-90 bps all in.[/quote]
Are you paid by the hour?
Primo:
Nope. I am a little surprised nobody has questioned the "100% confidence, no risk"[/quote] It's Friday, I'll play along. What's the deal? And let's not sit here and say we're investing $1,000,000 with one fund family at NAV. That's just not happening in this discussion.[quote=VA Salesman] [quote=Primo]On a $1mm? 70-90 bps all in.[/quote]
Are you paid by the hour?
Primo:
Why should we question you? You've always been very honest with us.
Nope. I am a little surprised nobody has questioned the "100% confidence, no risk"[/quote][quote=VA Salesman] [quote=Primo]On a $1mm? 70-90 bps all in.[/quote]
Are you paid by the hour?
Why should we question you? You've always been very honest with us.
Thanks Bobby err Hobby err Frank err VA! Not every Tom, Dick, and Harry on this board is as astute as you.