Breaking news: SEC approves Ruling 151A
102 RepliesJump to last post
Their business model was to have the receptionist girls get their 7s, and become super-producers, rather than chase already established reps. And I’m almost 30, not 19 - so therefore I basically know everything at this point.
And how has that worked out for them? How many salaried positions have become "super-producers"? Has their production justified the salaried expense and overhead associated to the hired help?Their business model was to have the receptionist girls get their 7s, and become super-producers, rather than chase already established reps. And I’m almost 30, not 19 - so therefore I basically know everything at this point.
And how has that worked out for them? How many salaried positions have become "super-producers"? Has their production justified the salaried expense and overhead associated to the hired help?[/quote][quote=IndyJosh] Their business model was to have the receptionist girls get their 7s, and become super-producers, rather than chase already established reps. And I’m almost 30, not 19 - so therefore I basically know everything at this point.
I was absolutely not serious. Quite the ability to pick apart an insanely ridiculous statement.
And how has that worked out for them? How many salaried positions have become "super-producers"? Has their production justified the salaried expense and overhead associated to the hired help?[/quote][quote=snaggletooth][quote=IndyJosh] Their business model was to have the receptionist girls get their 7s, and become super-producers, rather than chase already established reps. And I’m almost 30, not 19 - so therefore I basically know everything at this point.
I was absolutely not serious. Quite the ability to pick apart an insanely ridiculous statement.
[/quote] You're right. How crazy was I to think you would become a producer?
"I find it somewhat strange that some of your guys’ BD’s don’t allow index annuities. My BD has their advisors list all non-variable insurance as outside business activity on our U-4.
This means, I can go out and find my own general agent for life insurance and go directly to the insurance companies for fixed and index annuity business. None of this passes through the BD, so I don't take any haircuts along the way. " Snags, it's all about the Benjamin's. They don't allow the sale precisely because it doesn't go through the B/D. The B/D still has the responsibility to supervise, but doesn't make any money. This is true with other things as well, but the commissions do make these easy products to abuse. The B/D simply doesn't want the headache without compensation. As for these products being "securities", if an EIA is a security, the same logic can be used to deem all fixed products "securities".anonymous,
You have the cart pulling the horse above. When a would-be EIA purchase “doesn’t go through the BD”, it’s because the BD doesn’t allow it to do so (in fact, forbids the sale to it’s FC’s). BDs could/can/and, some do, allow the sales of EIA’s and they do run through the grid. This whole “they’re not profitable enough for the BD” is foolishness. Unless you’re implying that they aren’t profitable enough to justify the potential legal liabilites that the BD would incur.
I actually agree with you YHWY. But I guess I don't really care about the issue since my BD allows me to use them as an outside business activity and I get full commission. Same thing with the fixed annuity. I'd like to ask you, since you're not a fan of them, I don't think, have you really taken the time to understand them?anonymous,
You have the cart pulling the horse above. When a would-be EIA purchase “doesn’t go through the BD”, it’s because the BD doesn’t allow it to do so (in fact, forbids the sale to it’s FC’s). BDs could/can/and, some do, allow the sales of EIA’s and they do run through the grid. This whole “they’re not profitable enough for the BD” is foolishness. Unless you’re implying that they aren’t profitable enough to justify the potential legal liabilites that the BD would incur.
Yes, I have. Here’s why I’m not a fan: EIA’s are fixed annuities. They should be expected to return traditional fixed-annuity rates of return. How does it benefit a client to accept a very long (usually about twice a tradition fixed annuity) surrender period which carries a very hefty CDSC schedule (in some cases around twice that of a traditional fixed annuity)? If a fixed annuity is an appropriate vehicle for a client, I believe that a traditional fixed does a better job of achieving the objective efficiently. Just my opinion.
Ok. One of the companies I like has an index annuity with a 5 year contract and a fixed annuity with a 6 year contract. They both pay the same. The surrender charge is a little higher for the index annuity. So, I'm not incenticized by commission, just presenting both to a client and letting them choose. Seems like a win-win to me. Thank you though for at least looking at them before coming on here and dissing something you don't know about. Too many pikers here do that.Yes, I have. Here’s why I’m not a fan: EIA’s are fixed annuities. They should be expected to return traditional fixed-annuity rates of return. How does it benefit a client to accept a very long (usually about twice a tradition fixed annuity) surrender period which carries a very hefty CDSC schedule (in some cases around twice that of a traditional fixed annuity)? If a fixed annuity is an appropriate vehicle for a client, I believe that a traditional fixed does a better job of achieving the objective efficiently. Just my opinion.
[quote=anonymous]"I find it somewhat strange that some of your guys’ BD’s don’t allow index annuities. My BD has their advisors list all non-variable insurance as outside business activity on our U-4.
This means, I can go out and find my own general agent for life insurance and go directly to the insurance companies for fixed and index annuity business. None of this passes through the BD, so I don't take any haircuts along the way. " Snags, it's all about the Benjamin's. They don't allow the sale precisely because it doesn't go through the B/D. The B/D still has the responsibility to supervise, but doesn't make any money. This is true with other things as well, but the commissions do make these easy products to abuse. The B/D simply doesn't want the headache without compensation. As for these products being "securities", if an EIA is a security, the same logic can be used to deem all fixed products "securities".[/quote]The b/d does not have the responsibility to supervise. The broker only has to report that he's selling fixed annuities on the OBA Disclosure form, once a year. He does't have to have the firm look at any paperwork.
Hank, I’m probably using the wrong choice of words. Let me ask a question. It’s not rhetorical. If a registered rep is screwing 80 year olds by selling them EIAs with a 50 year surrender charge that doesn’t get waived at death, does the rep’s B/D have any responsibility?
[quote=YHWY]
Yes, I have. Here’s why I’m not a fan: EIA’s are fixed annuities. They should be expected to return traditional fixed-annuity rates of return. How does it benefit a client to accept a very long (usually about twice a tradition fixed annuity) surrender period which carries a very hefty CDSC schedule (in some cases around twice that of a traditional fixed annuity)? If a fixed annuity is an appropriate vehicle for a client, I believe that a traditional fixed does a better job of achieving the objective efficiently. Just my opinion.
[/quote]
The way fixed rates are right now, it’s much more likely that the client will do up to 50% better in an index annuity. The hefty surrender schedule is in place because the client pays NOTHING up front, in the way of a commission. If he leaves it alone for the entire contract period, he will NEVER pay a commission. Since EIA’s only pay interest during up years, it stand to reason that the more years in the contract, the more up years there will be, and the more likely the average return will be rather high for a principal guaranteed product.
I can’t believe that you can’t think through this on your own. You should try not to hate things until your really understand them.
[quote=anonymous]Hank, I’m probably using the wrong choice of words. Let me ask a question. It’s not rhetorical. If a registered rep is screwing 80 year olds by selling them EIAs with a 50 year surrender charge that doesn’t get waived at death, does the rep’s B/D have any responsibility?[/quote]
No, but in this litigious society, it wouldn’t stop some asshole lawyer from trying to extort money from the firm, anyway.
Have you ever seen the annuity disclosure forms, suitability forms or the statements of understanding that must be reviewed with the client? If you send me your email address, I’ll send some your way. You’d be quite surprised. They are quite comprehensive and tedious.
I haven’t seen the forms since I can’t sell the products. I’m sure that your asshole lawyer scenario is a big reason why they can’t be sold by reps of some B/D’s. Why would a B/D want to deal with this if they aren’t making any money?
Also, it is an outside business activity, but it's not an outside business in the same way as a weekend bartending gig is outside business. "Mr. Client, let's put $500,000 into this mutual fund and $250,000 into this EIA. Here's why..." It just seems to me that the B/D would have some responsibility, at least if the products are being sold to security clients. That being said, it still makes no sense for these contracts which are fixed annuities to be registered. It's nothing more than a powerplay/financial grab.Hank,
As you well know, I’m more than capable of thinking these things through on my own. I simply disagree with your assessment of traditional fixed vs EIA’s. There is no “hate” involved.
I’ve grown tired of the “disagreement”=“hate” mantra that’s grown so pervasive today.
And, just by way of evidence, here are the current specs. on an annuity solution that I believe offers an attractive option for very risk (of principal) and uncertainty (i.e. about rates of return) averse clients:
MetLife – Fixed Annuity FA 800-848-3854
Rate Structure: 5.75% for 5 years (Note: rate dropping to 5.10% on 12/17/08)
CDSC: 7,6,5,4,3%
Minimum Deposit: $25,000
[quote=YHWY]And, just by way of evidence, here are the current specs. on an annuity solution that I believe offers an attractive option for very risk (of principal) and uncertainty (i.e. about rates of return) averse clients:
MetLife – Fixed Annuity FA 800-848-3854
Rate Structure: 5.75% for 5 years (Note: rate dropping to 5.10% on 12/17/08)
CDSC: 7,6,5,4,3%
Minimum Deposit: $25,000
[/quote]
There’s nothing wrong with this product. It’s perfect for someone who wants to know what will happen every year. Index annuities are for people who want to take a shot at doing better than the fixed annuity. Just because we think something’s best, doesn’t mean that it is what the client likes the best. Show them both products, let them pick what they want, and the deal is done.
[quote=YHWY]Hank,
As you well know, I’m more than capable of thinking these things through on my own. I simply disagree with your assessment of traditional fixed vs EIA’s. There is no “hate” involved.
I’ve grown tired of the “disagreement”=“hate” mantra that’s grown so pervasive today.
[/quote]
I hate the taste of all seafood, but that will not stop me from going fishing with you.