EDJ to RIA: I have a client who rolled over his 401k of $582,000 and the bank broker put him into an IGN Smartdesign VA. That was June 2003. The value is now $627,000. That's a compounded return of around 2%. Still have huge surrender charge. Returns are have been below inflation in 3 of the best market years in a long time.

Is the point of this example to show that VA's are bad?  If so, it's a poor example because you could have just as easily found someone with the IDENTICAL VA who had an incredible return over the exact same time period.  This is nothing more than an example of someone who did a terrible job picking subaccounts or possibly an EIA and not a VA.

[quote=Bobby Hull]

Here’s some real numbers…

10-11-2002 value: 143,200.00

3-28-2007 value: $290,030.93 (Net of ALL fees)

Standard death benefit, GMIB

[quote=Ashland] [quote=Bobby Hull]

Here's some real numbers...

10-11-2002 value: 143,200.00

3-28-2007 value: $290,030.93 (Net of ALL fees)

Standard death benefit, GMIB

[/quote]

Thanks, Bobby! Don't expect THIS market going forward, though, do we??? We expect somewhat of a muddling one with a very different demographic trend from the last 20 yrs. 6 Pct w/d for a 65 yr old off of the current amount invested for 30 + yrs may be a VERY good thing!

For a piece of their money![/quote]

Actually, I'm prepared for it to be pretty dicey for a number of years. It's critical that people own something that can outperform the market like this annuity and to own investments that don't have anything to do with the stock market. Also, EIA's can help buffer the bad years. In short, I'm prepared for all 3 possibilities of market direction. Don't tell anyone, but it's easy to steal clients from brokers who are only positioned for an up market.

[quote=Bobby Hull] [quote=Ashland] [quote=Bobby Hull]

Here’s some real numbers…

10-11-2002 value: 143,200.00

3-28-2007 value: $290,030.93 (Net of ALL fees)

Standard death benefit, GMIB

[/quote] Thanks, Bobby! Don’t expect THIS market going forward, though, do we??? We expect somewhat of a muddling one with a very different demographic trend from the last 20 yrs. 6 Pct w/d for a 65 yr old off of the current amount invested for 30 + yrs may be a VERY good thing! For a piece of their money![/quote]

Actually, I’m prepared for it to be pretty dicey for a number of years. It’s critical that people own something that can outperform the market like this annuity and to own investments that don’t have anything to do with the stock market. Also, EIA’s can help buffer the bad years. In short, I’m prepared for all 3 possibilities of market direction. Don’t tell anyone, but it’s easy to steal clients from brokers who are only positioned for an up market.

[quote=anonymous]

EDJ to RIA: I have a client who rolled over his 401k of $582,000 and the bank broker put him into an IGN Smartdesign VA. That was June 2003. The value is now $627,000. That's a compounded return of around 2%. Still have huge surrender charge. Returns are have been below inflation in 3 of the best market years in a long time.

Is the point of this example to show that VA's are bad?  If so, it's a poor example because you could have just as easily found someone with the IDENTICAL VA who had an incredible return over the exact same time period.  This is nothing more than an example of someone who did a terrible job picking subaccounts or possibly an EIA and not a VA.

[/quote]

Exactly why it's important to have an advisor whose compensation is tied directly to the client's success (no big losses & reasonable gains). I just don't believe that commissioned brokers are in the best interest of the client, especially when they have no fiduciary responsibility.

[quote=EDJ to RIA][quote=anonymous]

EDJ to RIA: I have a client who rolled over his 401k of $582,000 and the bank broker put him into an IGN Smartdesign VA. That was June 2003. The value is now $627,000. That's a compounded return of around 2%. Still have huge surrender charge. Returns are have been below inflation in 3 of the best market years in a long time.

Is the point of this example to show that VA's are bad?  If so, it's a poor example because you could have just as easily found someone with the IDENTICAL VA who had an incredible return over the exact same time period.  This is nothing more than an example of someone who did a terrible job picking subaccounts or possibly an EIA and not a VA.

[/quote]

Exactly why it's important to have an advisor whose compensation is tied directly to the client's success (no big losses & reasonable gains). I just don't believe that commissioned brokers are in the best interest of the client, especially when they have no fiduciary responsibility.

[/quote]

Sounds like someone's been drinking the "fiduciary" Kool Aid.

I have to agree with Bobby Hull on this one.  An ethical advisor is an ethical advisor regardless of mode of compensation. 

(In the spirit of fair disclosure.  I do some of my business on a commission basis and some with fees.)

Yeah, I'm sorry, but, Not for nothing...

The other morning on the Today show they had this kid who was brain damaged by self asfixiation and they're asking him about it... I'm saying to myself, this is like when the hurricane goes through town and they ask the hommnion who decided to "ride it out" what his advice is... Why the heck do we want to know what this idjit has to say?

He apparently wasn't worth asking opinions of BEFORE he almost won himself a Darwin Award (don't go to http://www.darwinawards.com/ unless you have hours to kill!) Now that he's dainbramaged he's better?

I'm sorry, but I get this same feeling when many of the exjoners speak in absolutes! Gee, maybe you DIDN'T learn your lesson at Jones!

Commissioned Brokers have THE real reason to put client's interests first. They'll sue your kulow back to the ice age!

Asphyxiation

I told myself to spell check!

If anything else is misspelled, I meant to do it that way.

Commissioned brokers who sell VA's are funny!  They're so fixated on how great they are they don't realize every single client they have in annuities that realize one day how shi*** the products are and how huge the commissions are will end up hating them.

You can take a salesperson out of their coffee stained polyester suit - but you are what you are.  Don't try to rationalize the sale you make for a monster payout for well thought out expert advice for turbulent markets.  I wonder how many VAs or EIAs Warren Buffet has?

If annuities are so great, then why do they have to have sickly commissions?  I suppose there's a logical reason - but to me annuity sellers are kind of like a mirage in the desert:  You think it's a drinking fountain after days of dehydration or to realize your making out with a rattle snake.

[quote=brandnewadvisor]

Commissioned brokers who sell VA's are funny!  They're so fixated on how great they are they don't realize every single client they have in annuities that realize one day how shi*** the products are and how huge the commissions are will end up hating them.

You can take a salesperson out of their coffee stained polyester suit - but you are what you are.  Don't try to rationalize the sale you make for a monster payout for well thought out expert advice for turbulent markets.  I wonder how many VAs or EIAs Warren Buffet has?

If annuities are so great, then why do they have to have sickly commissions?  I suppose there's a logical reason - but to me annuity sellers are kind of like a mirage in the desert:  You think it's a drinking fountain after days of dehydration or to realize your making out with a rattle snake.

[/quote]

You sure picked a good name for yourself, even though we would've figured it out with from this post. When you fail out of this business, remember that it was because you saw yourself as an "advisor" and not a salesman.

[quote=Whomitmayconcer]

Asphyxiation

I told myself to spell check!

If anything else is misspelled, I meant to do it that way.

[quote=EDJ to RIA] [quote=anonymous]

Hmm, All the people I run into with VA’s that have supposed riders to protect their principal have lost their shirts, are pissed at the people who sold them and should NOT be investing more aggresively because of a rider they will never use.

Feel free to post one specific example. How much did they invest? What is the account value today?

[/quote]

I have a client who rolled over his 401k of $582,000 and the bank broker put him into an IGN Smartdesign VA. That was June 2003. The value is now $627,000. That’s a compounded return of around 2%. Still have huge surrender charge. Returns are have been below inflation in 3 of the best market years in a long time.

I thought the client’s wife was going to throw up when I told her the broker got a $40,000 commission. They never heard from the guy one time!

This really happened. I recently transfered in a victim (76) from a local bank broker. Back in 2002 the client wanted more than what cd's were paying on his 120k so the clerk introduced him to Mr Jones their floating wachovia broker. He could get him 3.1 guaranteed with some type of bonus going in, for 7 years. CD's were 1.9 and tax deferral, umm good. His wife retired from the bank Wachovia bought out. They were very trusting of the advise they received. Long story short. He sold them a Hartford Leaders Variable Annuity, with a DCA (bonus) and earned them 3.1% fixed (fixed sub-account) as a fixed annuity. I helped him divide the principle by the account value to see what he as earned, well its not 3.1% because it cost over 2% a year to own. The jerk is still in business, but has never called them in 5 years even though that "fixed" annuity earned him 9500 bucks.

I know I am ranting, but I just tired of these type jerks ruining our industry.

Yep. A good advisor just educates clients about these crappy money moves. And those clients tell their friends … and eventually you end up with all the business you need. You see, the jerks make us more valuable. True economic value.

When you fail out of this business, remember that it was because you saw yourself as an "advisor" and not a salesman.

Speaking of the desert and the  metaphor of making out with a rattle snake, from what wellspring of wisdom flows all of this gratuitous fatherly tough love?

[quote=Bamzor]

This really happened. I recently transfered in a victim (76) from a local bank broker. Back in 2002 the client wanted more than what cd's were paying on his 120k so the clerk introduced him to Mr Jones their floating wachovia broker. He could get him 3.1 guaranteed with some type of bonus going in, for 7 years. CD's were 1.9 and tax deferral, umm good. His wife retired from the bank Wachovia bought out. They were very trusting of the advise they received. Long story short. He sold them a Hartford Leaders Variable Annuity, with a DCA (bonus) and earned them 3.1% fixed (fixed sub-account) as a fixed annuity. I helped him divide the principle by the account value to see what he as earned, well its not 3.1% because it cost over 2% a year to own. The jerk is still in business, but has never called them in 5 years even though that "fixed" annuity earned him 9500 bucks.

I know I am ranting, but I just tired of these type jerks ruining our industry.

[/quote]

You're lying. Anyone who understands annuities knows that the money in the fixed bucket isn't exposed to M&E charges. Please tell us another story that "really happened."

This is the truth, how could I make something like this up? How could you justify this behavior. Is this a method you used Bobby? I will give you the figures later, they do equate to below 3% annual rate of return. Also, how does the broker get paid if there are no underling charges. In your mind are you justifing the insanity of all things annuities? Annuities are not bad, it's just bad people or sometimes desperate people use them the wrong way. Bobby you are a proponent for annuities you should be the first to denounce the abuse.

[quote=Bamzor]

This is the truth, how could I make something like this up? How could you justify this behavior. Is this a method you used Bobby? I will give you the figures later, they do equate to below 3% annual rate of return. Also, how does the broker get paid if there are no underling charges. In your mind are you justifing the insanity of all things annuities? Annuities are not bad, it's just bad people or sometimes desperate people use them the wrong way. Bobby you are a proponent for annuities you should be the first to denounce the abuse.

[/quote]

You could make this up the same way that any liar makes things up....you make it up! There are no fees charged to fixed buckets. If you're going to run your mouth about annuities, you ought to know something about them. Especially, if you're going to make up a story.

Last time, it is the truth.  Answer this, have you sold a variable annuity under the pretence it is a fixed annuity?  The only reason I put it in the post is that this is the first time I have ever seen or ever heard of someone using it this way.