5 Dumbest Annuity Questions According to The Annuity Man Part 2
Hi there, Stan The Annuity Man, America's Annuity Agent, licensed in all 50 states. I'm following up on what I was trying to finish the last time, which is the 10 dumbest annuity questions on the planet that have been asked to Stan The Annuity Man, the official scorekeeper of the annuity industry because I'm America's Annuity Agent.
By the way, the other five are linked right here, so if you want to see what the 10, 9, 8, 7, and 6 were, you can see that and go to that blog. But people went crazy. So, we released the blog, and now everyone's emailing me, "I think I know the other five, Stan. Here are the other five." And they actually came up with some really good ones, so maybe we should've had the top 20. But anyway, we're in the top 10.
So, what we're going to do now is do the top five because we did 10, 9, 8, 7, and 6 on the first blog, and I ran out of time. Now, we're going to do the remaining five. I know it's exciting. Hang in there.
The fifth-dumbest question I've ever heard, and I've been doing this a long time. I've got cowboy boots older than most annuity agents. I know I look vibrant and young, and you're saying, "There is no way, Stan, we're looking at you right now" You know what I'm saying. The fifth-dumbest question is, "Why wouldn't I choose the annuity with the highest upfront bonus?" Oh my gosh, that's the dumbest question of all. I mean, that is one of the dumbest questions of all time.
Let's talk about upfront bonuses, which drive me crazy. The upfront bonus drives me crazy because upfront bonuses, aka the shiny things, it's candy for the stupid. And there must be a lot of stupid people out there, and there must be a lot of annuity companies that think people are stupid, that there're philanthropists at annuity companies going, "You know what? I'm going to give away money, and I'm going to give away 35%, 25% of whatever upfront bonus." There are 100 pennies in the dollar.
So, when you say, "Why wouldn't I choose the one with the highest bonus?" You would if you're dumb and if you're stupid and if you left your IQ at the table when you went to the bad chicken dinner seminar.
You buy annuities for the contractual guarantees. You shop all carries for the highest contractual guarantee. If you said to me, "Hey Stan The Annuity Man, I need income in the future. Let's shop all Index Annuities with Income Riders, including the ones with upfront bonuses that sound very good, and you nudge Marge at the table and go, 'Hey, that's 35% sounds pretty good.'" Spoiler alert: they typically don't finish first from the highest contractual guarantee standpoint. I mean, it's three-card money. They're moving money around. If they're giving you this upfront bonus, they're taking something away from the policy, internally. Duh! You know that. So, don't ask that dumb question. And if the dumb agent's up there saying, "You need to buy this annuity because it has a 35%...," that's crazy. And if they follow that up with, "We need to transfer the annuity you have, and the bonus will make up for it," that's a misdemeanor in many cases. That's illegal. That should not be allowed in any stretch. You should never, ever, ever use that upfront bonus to transfer the annuity.
But getting back to the dumb question, bonuses, it's just part of the overall contractual guarantee. Don't put any weight on it. Put the weight on the contractual guaranteed number.
The fourth-dumbest question I've heard, and this happens a lot, "Why wouldn't I choose the highest income rider roll-up percentage, Stan?" Well, let's first talk about roll-up percentages. When you get pitched at the bad chicken dinner seminar, and the speaker says, "Well, it's going to grow at 8% every single year," and we're at 2% on the Treasury. You're thinking, how's some genius at that annuity company giving me 8 when the Treasury is at 2? It's because they're not. It's monopoly money. Yes, there are high percentages 5, 6, 7, 8 that it grows. Now stop, I know you're leaning and going, "That's fantastic, Stan!" No, it's not. Just because it's growing at 8%, that's not interest. You can't peel it off. You can't transfer it. You can't call them up and say, "Hey, that money that's been growing by 8%, can you send me that?" They can't. They, meaning the annuity company.
It's growing by that amount during the deferral time period until you turn on the income stream. Once you turn on the income stream, that fictitious, lovely Jimmy Carter-type growth goes away. It goes poof. But that highest roll-up number, "Why wouldn't I buy an annuity with the highest roll-up?" Because it doesn't matter. It is part of the overall contractual guarantee.
Spoiler alert, when we shop all Income Riders, and you can go to my site and use our proprietary Income Rider calculators and everyone can't believe that we pulled that off, but it's fantastic. And you're quoting Income Riders; spoiler alert: the ones with the highest roll-up rate a lot of times typically aren't the highest contractual guaranteed payout number. You're going, "How's that possible, Stan The Annuity Man?" Because the 8% or the 7% or whatever that percentage on that Income Rider roll-up amount, that's the shiny things for stupid people. Don't be the stupid people, and don't look at the shiny thing because you'll hurt your eyes. When you run Income Rider quotes, and when we're talking about these roll-up numbers, we're talking about Income Riders. When you run income rider quotes on my site, or if you want to customize it when you're going to talk to us, we're going to shop all carriers, regardless of the roll-up rate, for the highest contractual guaranteed number.
The third-dumbest question, but very, very common, that I get is, "Why is my agent-advisor saying the exact opposite of what you're saying, Stan The Annuity Man, America's Annuity Agent, licensed in all 50 states? Why are they the exact opposite? They're telling me the upfront bonus is great. They're telling me the 8% is yield. They're telling me I'm going to get long-term care. They're telling me all the things I want to hear. They're telling me things that sound too good to be true. But when they tell me because I trust them, because I play golf with them, because I know them, and because they're friends. By the way, I'm never going to be your friend. I'll be the best agent-advisor you've ever had. You don't need friends when it comes to your money. Why, Stan, are you saying the opposite of what I'm getting pitched?"
I'm going to be nice here. I'm going to guess that the person who's trying to sell it to you really doesn't know what they're doing. They've just latched onto this product, and they're trying to sell it to you.
But number two, it might be the George Costanza effect. George Costanza from Seinfeld said, "Hey, if you believe it's the truth, then it's not a lie." A lot of agents out there believe what they're saying. They believe that, "Hey, you buy it for the upfront bonus, and you get free long-term care." No, none of that's true, and none of that is factual. You need to go into the policy to understand exactly how that's priced and then shop all carriers for the highest contractual guarantee.
The reason that I'm saying something different is I'm brutally factual. I'm going to only recommend the contractual guarantees, not some hypothetical, theoretical, back-tested unicorns chasing the butterflies-type return. I'm never, ever, ever going to say, "Well, Mr. Jones, if you'd have owned it 10 years ago, you would've gotten this." That's crapola, and I wish the annuity industry would do away with backtested-type proposals because it's garbage. I mean, that's crazy. That's like saying, "Well, if you'd have bought Bitcoin at 100, or if you'd have bought Apple at $15," and by the way, I was in the business a long time ago when Apple was at $15. I can look back at that. "Well, if I'd have bought Apple at 15," I wouldn't be in front of the camera. But the point is, you can't look back like that.
So, the question is, why are you telling me the exact opposite of what I'm hearing at the bad chicken dinner sales pitch or when I go to my trusted advisor, and they're saying, "You need this, and this is why you needed this." Those sales pitches aren't lining up with the videos and blogs that you're watching and reading with me and, the facts in my books and the facts on my podcast. Why? Because annuities are contracts. You buy them for the contractual guarantees, and you have to understand how that contract works. You buy it just for that. You don't buy it for anything other than that.
The second-dumbest question I hear is this. And it's sad actually, "Stan, why can't it be too good to be true? Why can't what I just heard be real? Why can't it be exactly what I want? Why can't it solve for everything I wanted to solve for? Why can't it be a one-size-fits-all? Why can't it be too good to be true?"
Very simple. Annuity companies are for-profit companies. There are no philanthropists at annuity companies. They're not going to design anything that's too good to be true. Annuities were put on the planet in Roman times to solve for lifetime income for the dutiful Roman soldiers and their families. To this day, the annuity category is the only product type that can pay you as long as you're breathing, regardless of whether there's money in the account or not. That's the transfer of risk-benefit proposition, solving for longevity risk, contractually.
There's no such thing as a too good to be true product. Yes, the industry tries to, even though I say this all the time and the industry hates it, but it's true that annuities are commodity products, regardless of the type. Now, the carriers will say, "No, no, no. Ours is a little bit better, and this is the reason you should sell ours." And many agents choose specific companies because they like the people there and they like to go on the trips to Bora Bora in Italy or wherever if they sell enough of it. But annuities are commodity products. Annuities are like plane tickets. So, if it sounds too good to be true, it is.
And the number one dumbest question of all time, and I've only had it asked probably 15 or 20 times, is, "Stan, why won't you be my friend and advisor?" Because you don't need any more friends and advisors shouldn't be friends.
Advisors should be brutally factual, walking middle fingers of annuity truth or whatever your advisor's doing. You do not want your cancer doctor to be your friend. I'm not going to be your friend. Never, ever.
Do I care about you? Yes. Am I going to do the right thing? Yes. Am I going to act like a fiduciary? Absolutely, every single time on your behalf, and put your best interest ahead of everything. But I'm never going to be a friend. I'm never going to ask about where you went to school and what kind of car you drive, and how's your golf game and all that crap. You do not need friends in the financial business. I'm not going to be your friend. And if you go, "Why won't you be?" I'm not going to be.
First of all, I probably wouldn't be the kind of friend you'd want to hang out with anyway because I'm always hyped and tense, and my wife's like, "You don't want him as a friend. He's kind of crazy." But I'm factual.
Hey, I think that's it. That's the top 10. I just did the top 10 dumbest questions about that! There's a lot more, and maybe we'll do more in the future. I really appreciate you joining me on these crazy two blogs that we've done, the dumbest questions. I hope this helped clarify some things for you.
Do me a favor, tell your friends and non-friends, and I'll see you on the next Stan The Annuity Man blog!
Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.