Philo:

When you take into consideration the time value of money (the 10% invested now at say 6%), the difference is not that great, also if you consider that it takes much less work to sell an EIA and get paid now than to be on the hook for retaining a client for the next 10 years to receive a trail.  Much better to get paid now and move on, from Mr.10%'s perspective. 

I can't say that I blame him though, there are days when I think it would be better to just charge a big % now and move on.   Who know's what will happen over the next 5 to 10 years, death, unforseen circumstances, maybe I'll want to trade in my suit and tie for moccassins, tie die and a volkswagon van.  Tangible money now definitely has a value over intangible money in the future. 

I prefer to get paid today. Anything could happen. I could become disabled, I could die, I could start another business, etc... Why would I risk someone else getting paid for my sale?

Also, how much would they have to pay you to take assets out of your hands that you could be churning, I mean managing for a fee or commissions? I need to be paid at least a point per year.

[quote=BankFC]

Poor comparision.

If you can invest in two seperate contracts...each with guaranteed return of principle after x number of years....one with a single investment option (EIA), and one with many (VA)....which do you choose?

Me:  The VA, because of better performance potential

You:  The EIA, because of the higher payout to you

You make my job easier.

[/quote]

Comparing VA's to EIA's is really dumb. Two different products for two different objectives.

Dude, if you think an EIA is an easy sell, I congratulate you.

My use of EIAs is admittedly limited, but in learning the product, I found them to be complex, intricate and sophisticated investments.  Further, with a nod towards full disclosure, I spent quite a bit of time and effort to make sure the client fully understood what we were doing.

And no, TVM was and is not a consideration.

Of course EIA's are not an "easy sell", the tone of my post was comparing the effort and time of selling the EIA now v.s a VA.  the VA will require you to continue to provide good service to retain the client and receive the "higher payout" over the 10 year period, whereas once the EIA is sold, one can move on without their pay being affected.  I think my post was pretty clear on this point:

also if you consider that it takes much less work to sell an EIA and get paid now than to be on the hook for retaining a client for the next 10 years to receive a trail.

From a compensation and business standpoint, you'll make more $$ with the EIA 10% payout now, than 2.75% plus a 1% trail over the next 10 years, if you account not only for the time value of money but also the value of your time.  By selling th EIA you would have more time to go out and get new prospects and sell more PRODUCT.

2 cents (if it's worth that)

Dirk,

Please tell me the difference in the EIA client and the VA with principle guarantee client????

BankFC, I think you know the answer to that one.  Fish get the EIA, lizards get the VA, monkeys get the Fixed annuity and human beings get the stocks, bonds and mutual funds.  It's an evolutionary thing.

He may also use the gene pool depth guage.  The shallower the gene pool the client has, the more profitable the sale becomes.

Can someone recommend a GOOD Allianz EIA - I’ve read some negative comments on some of Allianz’ EIA’s and would like to know what EIA someone would recommend.   And Why?

[quote=milos]Can someone recommend a GOOD Allianz EIA - I've read some negative comments on some of Allianz' EIA's and would like to know what EIA someone would recommend.   And Why?[/quote]

I'm not crazy about allianz, but I've done a little of the Master Dex 5. Stay the hell away from the MasterDex 10. It gives the client a 10% bonus, but they HAVE to annuitize to get the interest that they've earned. That one is going to come back to bite a lot of people on the butt. I just met with  a couple who bought it and we had to take a surrender charge to get them into a VA, which is what the want/need. They had no idea how crappy it was.

What do you think is the best Equity Indexed Annuity - from the perspective of what is the best one for the client.   Thanks.

[quote=milos]What do you think is the best Equity Indexed Annuity - from the perspective of what is the best one for the client.   Thanks.[/quote]

Sorry to revive an old thread, but take a look at ING's Secure Index 5.  I have my 7 and my 66, but still use EIA's when needed (if an older client is freaked out by securities).

S&P Monthly Averaging, no caps, annual reset/lock in, 100% participation, only 5yr surrender (with 10% free annual wd).  The only moving part is the spread, which is only 0.25% for premiums over $75000 (0.75% for amounts under 75k)

It only pays 4% commission to the rep, but it's actually a very good product for the client (something rare in the EIA world).  For clients not looking for income guarantees (ie. perhaps a good VA w/ a 5% income rider) and want something more short-term (if they're coming from CD's), it's a very good product and simple to explain to them. 

Only one moving part, the spread, which is only 25 basis points, and no risk if the market has a down year.  Seems to be too good to be true when you see alot of the other garbage EIA's (American Equity comes to mind) out there that are 10-15 yr surrender's, with huge spreads or low caps (but pay the agent 12% commission of course). 

ING has a similar 5% bonus product if you need to 1035 out of a bad annuity still in it's surrender period, but it's a 10yr product and the spread is 55 basis points instead of 25 (but the commission is 8.5%).

AmerUS has some decent products too, but they are only A rated and typically have longer surrrenders (but higher commissions).