Equity Indexed Annuities
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Indyone. I believe you need to study up a little on these products cause I think your 0-2…
Liquidity Risk. Investors typically will have limited opportunities, if any to redeem their equity-linked CDs prior to maturity. Moreover, the financial institutions do not guarantee the existence of a secondary market. Many equity-linked CDs do not permit the early withdrawal of your investment without the consent of the financial institution. If you need to withdraw your investment before the CD matures, you will incur withdrawal penalties. You also will lose any interest that you would accrue in a regular CD that has the same terms. There is no exception for CDs held in either a traditional IRA account or a Coverdell Education Savings Account (CSA). Therefore, you should carefully consider your retirement needs or the educational needs of a beneficiary of a CSA before investing in equity-linked CDs. Other equity-linked CDs allow for redemption only on pre-specified redemption dates. Therefore, you may not be able to redeem your equity-linked CD when you may want or need your money to be available.Tax Treatment. Equity-linked CDs may be treated differently than traditional CDs for tax purposes. Before investing in these products, you should carefully review the disclosures concerning the reporting of interest income and consult a tax adviser if appropriate.
Alright, alright…I didn’t see the word CD. I thought you were talking about an EIA. I stand corrected as I was answering the wrong question.
That answers my question about why you jumped the fenced so quick on EIAs...I'll try to read more carefully next time.[quote=heddy32]Indyone. I believe you need to study up a little on these products cause I think your 0-2…
Liquidity Risk. Investors typically will have limited opportunities, if any to redeem their equity-linked CDs prior to maturity. Moreover, the financial institutions do not guarantee the existence of a secondary market. Many equity-linked CDs do not permit the early withdrawal of your investment without the consent of the financial institution. If you need to withdraw your investment before the CD matures, you will incur withdrawal penalties. You also will lose any interest that you would accrue in a regular CD that has the same terms. There is no exception for CDs held in either a traditional IRA account or a Coverdell Education Savings Account (CSA). Therefore, you should carefully consider your retirement needs or the educational needs of a beneficiary of a CSA before investing in equity-linked CDs. Other equity-linked CDs allow for redemption only on pre-specified redemption dates. Therefore, you may not be able to redeem your equity-linked CD when you may want or need your money to be available.Tax Treatment. Equity-linked CDs may be treated differently than traditional CDs for tax purposes. Before investing in these products, you should carefully review the disclosures concerning the reporting of interest income and consult a tax adviser if appropriate. [/quote] Next time you pass yourself off as the expert on equity-linked CDs, try not to copy a source that is the first link listed in a google search of "equity-linked cds". http://www.sec.gov/answers/equitylinkedcds.htm Tell us, since you are an impartial witness to all of this, what are the downsides of an EIA?
Hey Deekay. Mr. Senior Idiot… I stated what the downsides were in my previous post anddyone obviously did not believe me so I need concrete evidence you moron. There are definitely downsides to an EIA, but I’m sure you already know them Mr. Deekay…
You, or your alter ego, started out this thread with some hype about this new Structured Allocation Annuity from Annexus. You tout it as a "clean/intuitive" product suitable for your clients. Then you tell us it's underwritten by a company out of England. The only real detail you give us is that it is a 6 year point to point. If it's that great and suitable for your clients, how come you don't have any other details? Surrender period? Caps? Participation rate? You're going to sell this to your clients, but you don't have any product specs available to answer such simple questions? Nowhere in your posts did you talk about any downsides of this EIA. So, why don't you grab whatever prospectus type document you might have for this thing and give up some of the details.Spaceman Spiff. Why do they call you spaceman? I do not have product specs for any contract.
I simply wanted you to, in the future, cite your sources when explaining your point. You made it seem like the comments you cut and pasted were your own. When, in fact, it was off the SEC website. I asked earlier what the downsides of an EIA are. Would you care to enlighten me, or should I google that as well? The only reason you're getting so bent out of shape with me is because you know the other posters have already called you out. You're a thinly-disguised annuity wholesaler, passing yourself off as a retail rep. Frankly, I wouldn't be suprised to find out you are a sub-par wholesaler at that. Your grammar and thin skin are a dead giveaway.Hey Deekay. Mr. Senior Idiot… I stated what the downsides were in my previous post anddyone obviously did not believe me so I need concrete evidence you moron. There are definitely downsides to an EIA, but I’m sure you already know them Mr. Deekay…
Deekay… We can compare W2s anyday… I’m not getting bent out of shape. I find it amusing how serious you folks take this online forum…
You called me a moron and you tell me I take it too seriously? Well, either way, you're mentally deficient. And we'll leave it at that.Deekay… We can compare W2s anyday… I’m not getting bent out of shape. I find it amusing how serious you folks take this online forum…
did anyone see the dateline story yesterday on salesman selling EIA’s? Chris Hanson made them look like the crooks that they are.
Careful to paint all with a broad brush stroke. The same could be said for an advisor charging 1.5% + fund fees for a MF wrap account.did anyone see the dateline story yesterday on salesman selling EIA’s? Chris Hanson made them look like the crooks that they are.
mm06-
I've never heard of a structured allocation annuity, very interesting thanks for posting. One product that my firm offers that does have a principle protection feature with uncapped upside is a structured product (equity linked notes). There was an article in InvestmentNews the other day on these types of investments. These products range from 18 months to 5+ years and have exposure to global and major indicies, commodities, different sectors or a combination of all. One of the more recent successful offerings was a short on the real estate market, came out 2 years ago and is up 50%. You can customize this product for a client with $1MM+ in assets. I work at an Indy firm that gets to cherry pick the best products from Credit Suisse, JP Morgan, MS, CIBC, HSBC, etc. Would like to hear any feedback or further info on the structured allocation annuity.Careful to paint all with a broad brush stroke. The same could be said for an advisor charging 1.5% + fund fees for a MF wrap account.[/quote] Yea....that's almost similar![/quote] Gee, I dunno, charging 2.3%+ all in for doing absolutely nothing seems kinda outrageous to me. Look, I don't want to get into an argument about this. My point was that we all as colleagues should be careful to call every EIA/wrap/VA/SMA advisor a crook because it doesn't conform to how we feel an advisor's practice should look like.[quote=deekay][quote=henryhill]did anyone see the dateline story yesterday on salesman selling EIA’s? Chris Hanson made them look like the crooks that they are.
I will submit that crook is a strong word but in your opinion, when is an EIA suitable? I would answer never.
An EIA is nothing more than a fixed annuity with a different crediting method than a traditional fixed annuity. Therefore, it is suitable whenever a fixed annuity is suitable. It makes sense when the fixed annuity purchaser is willing to take the chance of getting a higher return than a traditional fixed annuity, in exchange for taking the risk that the return may be lower.
The product is fine, but I would agree that there are many crooks selling them and the insurance companies are involved with letting unsuitable sales get approved. Personally, I think that they are "suitable" in many instances, but in the clients "best interest" on rare occassions. For the record, I have never sold one in the past and now, I don't think that my B/D will approve their sale.You're showing your ignorance here. The right EIA is plenty suitable for a CD-only prospect. The Allianz shit in that piece and the slimeballs who sell it and similar contracts deserve all the abuse that they got, but that is far from the universe of EIAs. The one I use is 5 years, pays some interest regardless of the market, gives some upside market participation AND allows you to walk away after five years with principal plus. Show me a mutual fund, VA, or stock that guarantees that.I will submit that crook is a strong word but in your opinion, when is an EIA suitable? I would answer never.
My name is Sheryl J. Moore, and I am an independent market research analyst that owns a consulting firm which tracks every product and company in the indexed annuity market, as well as the sales of the products.
I must admit, was sorely disappointed after seeing the undercover investigation on Dateline.
Was Dateline trying to use psychological methods by repeating the chant “indexed annuities have lengthy surrender charges?”
Fact: the average surrender charge duration on indexed annuities sold as of the fourth quarter of 2007 was ten years. (Source: AnnuitySpecs.com Advantage Index Sales & Market Report.) Are there products on the market with longer surrender charges? Yes- as long as 16 years and as short as one year, but longer-term products usually come with a premium bonus to enhance the consumer’s cash value (hence those “hefty surrender penalties” the Dateline producers kept pointing out on the show; yet no mention of the benefit the consumer gets from the bonus?).
Furthermore, what were producers trying to accomplish by alluding that indexed annuities are illiquid? Fact: 92% of all indexed annuities offer 10% penalty-free withdrawals annually with no cumulative limit, and some offer 20% penalty-free withdrawals! (Source: AnnuitySpecs.com)
Another aspect of disappointment was using Attorney General Lori Swanson as a credible source of information on indexed annuity products. Is this a reliable person to provide unbiased information on the product line? Would you rely on someone who is suing carriers that offer indexed annuities, just for her own political gain? In all fairness, Chris Hansen should have disclosed that Minnesota's legislative auditor has launched a preliminary investigation into allegations of ethical and legal lapses in Attorney General Lori Swanson's office (of interest, Swanson and some of her top aides have been accused of trying to find defendants to fit lawsuits on high-profile topics.) Coincidence?
Indexed annuities are not a one-product-fits-all solution and there is never an excuse for agents behaving badly. Yes, at times indexed annuities are the instruments that are used in the course of bad agent behavior. However, I would hope that by now Chris Hanson, along with all of the viewers, would realize that this is the case with ANY financial product. Insurance companies in this industry do not put up with it. Market conduct and suitability (particularly senior suitability) have been a primary focus in this industry since Fall of 2005, and tremendous strides have been made.
Overall, I will close with the fact that I hope this investigation was a big wake-up call for all of the agents that aren’t doing their job and disclosing all of the facts to their clients. DO YOUR JOBS IF YOU WANT THESE VALUABLE PRODUCTS TO BE AVAILABLE FOR YOUR CLIENTS! To Lori Swanson, you need to worry more about your consumers than about suing indexed annuity carriers just for the sake of suing and headlines. And to Chris Hanson, a special message- indexed annuities are NOT investment products.
As a consumer, I rely on the news for unbiased information that provides BOTH sides of the story. I wish I could have received that with this broadcast.
All of you think that "EIAs" cannot be suitable, and those that sell them are crooks. However, the fact is that all products can have a niche- they just cannot be a one-product-suits-all solution. This product has a different distribution model that those which you sell, and it seems like you are not entirely familiar with it's benefits. Be careful not to trust everything that you read/hear in the media. sjmDrop your commission scale down to acceptable levels, on par with VA’s or funds and shorten surrender schedules to 7 years and we’ll see just how “suitable” and appropriate all your respectable annuity reps will find them. They won’t. They are sold far and away because of the commission(s) they pay. Bottom line. The people who give your industry the bad press and horrible name are the ones who sell your product for the high commissions and because they don’t need any acceptable licensing to do so.
And before anyone says I am painting with a broad brush, I am not referring to those advisors who sell a handful a year. I am referring to "advisors" who do ONLY EIA business. Those would be the guys/gals making $500,000 per year, of which $490,000 is from EIA commissions. Follow the money tends to work in most instances. The "bad" advisors, ie the product salesman, go where the quickest bang for the buck resides, and it is you.When is an EIA the BEST solution for a clinet? When is a product with a 16 or 20 year CDSC charge the BEST solution for a client? I would argue never.