Media and annuities
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ok, i never watch this show on cnbc (not sure what it is called) but was flipping channels and cuaght the word annuity last night.
they had a caller complaining about her 401k rollover which she had put into a variable annuity, which of course was down some 20-40% yoy. the "expert panel" consisted of 2 CFP's. the first one, an older lady, proceeded to rail on the va as an overpriced investment where the only benefit is tax deferral, which she already had with the 401k, so in essence she was getting hosed by this CFP's logic. the other talking head, CFP, chimed in and mentioned living benefits, allowing for the possibility that the contract may have a GMIB rider. but on the phone was an attorney whose job it is to sue crooked agents, and he remarked that the GMIB benefit was worthless as she had to annuitize the contract to reap any rewards of the thing. the gentleman responded that this was wimply not true. he asked, "what other product is there available to a retiree, where you can deposit $500,000, watch the account value drop to $300,000, and then say, wait a minute, i want an income based on my original $500,000 deposit?" i am not arguing y/n of va's, i am just sick and tired to people having no idea what the heck they are talking about but being held out to the general public as "experts" in their field. why do 1980's views of annuities still persist in the current climate?Because people are stupid. If you could find that clip on youtube or wherever, I would love to have it to play for prospects/clients in the office in the right situation.
What a bunch of fcuktards. Do they let anyone who buys or was grand-fathered a designation talk on TV?I saw the same show last night. It is called “on the Money”. The host used to be a editor for Money magazine…i watch the “panel of experts” and laugh wherever I can. The only guy who has a clue is the credit guru.
This panel last night is typical. High End advisor's (CFP's), probably have a huge staff with marketing, para-planners, admin, office management, etc. The last time they had to "think" was 20 years ago. I is amazing to me to think that these people are even on tv?? What the heck?? Oh by the way............a few weeks back when I was watching, this same panel and the host told a caller to put muni's in their IRA for "safety". Get real !![quote=llcoolj]I saw the same show last night. It is called “on the Money”. The host used to be a editor for Money magazine…i watch the “panel of experts” and laugh wherever I can. The only guy who has a clue is the credit guru.
This panel last night is typical. High End advisor's (CFP's), probably have a huge staff with marketing, para-planners, admin, office management, etc. The last time they had to "think" was 20 years ago. I is amazing to me to think that these people are even on tv?? What the heck?? Oh by the way............a few weeks back when I was watching, this same panel and the host told a caller to put muni's in their IRA for "safety". Get real !![/quote] Actually, considering the unusual environment we're experiencing, munis in an IRA aren't a bad idea . Historically, they're much safer than corporates and many have higher yields than comparably rated corporates do right now. And I agree about the On the Money "experts." I cannot believe someone could pass the CFP exam and be so in the dark and/or stupid.I agree, I like muni’s. However for long-term money I don’t support the idea of taking a muni (tax-free gains) and putting in a IRA (tax-deferred). That makes the muni taxable and that doesn’t make too much sense to me.
Trust me, I fully understand the tax treatment of munis and IRA funds. However, if the yields of the tax free bonds are higher than comparable taxable bonds--and safer--there's really no reason not to do it. I've put several munis in IRAs over the past couple weeks. At first blush it appears nonsensical, but once you look at the entire situation, it CAN make sense in some instances.I agree, I like muni’s. However for long-term money I don’t support the idea of taking a muni (tax-free gains) and putting in a IRA (tax-deferred). That makes the muni taxable and that doesn’t make too much sense to me.
Point taken…but in the context of this show, the caller was doing it themselves (no adviser) and reaching retirement. This was obviously the ONLY advice they were getting or going to get. That means they will never move out of it, thinking it is good now, then it will be good forever.
The appropriate response was to "talk to a professional". Instead, every "do-it-yourselfer" who watched the show thinks that muni's are the place to be. You know as well as I do, that is not going to be the case in the not so distant future.Insurance companies should use their influence on the TV Networks to get a fair shake. Given the advertising $ they spend, they should demand to have objective commentary on VA or any Annuity product being discussed.
[quote=Sam Houston]I prefer tax-free equity investments.[/quote]
Based on the losses that you’ve inflicted upon your clients, I would say that paying taxes is off the table. Too bad the fees you charged them to lose their money aren’t tax free.
Annuities have a place in some portfolios, but they are often presented as a no downside, no cost, e ticket ride to financial nirvana. Nothing is free. There is a cost to everything, whether it be opportunity cost or fees, etc.
When some annuity sales pitches tout that there is "no fee" or "no cost to you", it's wrong because it's just not true. Those nice insurance companies aren't providing the contract and all the associated benefits for free. They have developed these products to make money. If they keep some of the gains, it still has a cost to the client who provided the money. Returns can also be distorted when it isn't clarified that some of that cash is return of principal. We have all heard that if it's to good to be true it must not be, but when people are scared they will often only hear what that want to hear as they rush to "guarantees" and "safety".[quote=blackduc]Annuities have a place in some portfolios, but they are often presented as a no downside, no cost, e ticket ride to financial nirvana. Nothing is free. There is a cost to everything, whether it be opportunity cost or fees, etc.
When some annuity sales pitches tout that there is "no fee" or "no cost to you", it's wrong because it's just not true. Those nice insurance companies aren't providing the contract and all the associated benefits for free. They have developed these products to make money. If they keep some of the gains, it still has a cost to the client who provided the money. Returns can also be distorted when it isn't clarified that some of that cash is return of principal. We have all heard that if it's to good to be true it must not be, but when people are scared they will often only hear what that want to hear as they rush to "guarantees" and "safety". [/quote]Let's see if I have this right.....if the market goes straight down for the entire term of the annuity, there is no gain for the ins company to keep a portion of from the client. If that's the case, according to your naive mind, then there is no cost. Of course, the client had to forgo an opportunity cost of losing money in the market.
Are you over 13 years of age?
Gee, all the fancy charts the nice annuity companies show me, never said the market goes down for the whole 10 year contract...or 7 years...
In fact they usually say stuff aboout the market going down and then later, when it recovers, I can lock myself in a raise! If there is a misconception about annuities and fees, please, by all means explain it to us. When they are touted as no cost, I call BS. Nothing is free. You don't make any money on a annuity? Here is your opportunity to set the record straight.blackduc, Of course, everything has a cost if we are going to include opportunity costs. However, it is perfectly legitimate to say that a fixed annuity has no fees (assuming that it has no fees).
[quote=blackduc]
Gee, all the fancy charts the nice annuity companies show me, never said the market goes down for the whole 10 year contract…or 7 years…
In fact they usually say stuff aboout the market going down and then later, when it recovers, I can lock myself in a raise! If there is a misconception about annuities and fees, please, by all means explain it to us. When they are touted as no cost, I call BS. Nothing is free. You don't make any money on a annuity? Here is your opportunity to set the record straight. [/quote]How many annuities have you sold?
[quote=blackduc]Annuities have a place in some portfolios, but they are often presented as a no downside, no cost, e ticket ride to financial nirvana. Nothing is free. There is a cost to everything, whether it be opportunity cost or fees, etc.
When some annuity sales pitches tout that there is "no fee" or "no cost to you", it's wrong because it's just not true. Those nice insurance companies aren't providing the contract and all the associated benefits for free. They have developed these products to make money. If they keep some of the gains, it still has a cost to the client who provided the money. Returns can also be distorted when it isn't clarified that some of that cash is return of principal. We have all heard that if it's to good to be true it must not be, but when people are scared they will often only hear what that want to hear as they rush to "guarantees" and "safety". [/quote] If my money is at an insurance company, and some of it is, I sure as hell want the insurance company to be making money.Wait a second…
So you’re telling me I’m getting paid, AND the insurance company?
Stop the presses
how can anybody call themselves a “professional” if they are not recommending annuities?