Branislav Nikolic: Looking Forward With Fixed Index Annuities
About Fun With Annuities Episode #147
I have always said that the annuity industry has earned a bad reputation, and it continues to create an unneeded black mark with how many current Indexed Annuity products are sold. For the record, I am a huge fan of the Indexed Annuity strategy. It was created in 1995 to offer potential "better than CD" returns while offering full principal protection. FIAs (Fixed Index Annuities) are not market return products but are pushed that way by too many agents showing overblown and misleading back-tested return scenarios to convince retirees to buy.
In my opinion, these back-tested, hypothetical, theoretical, hopeful agent, non-guaranteed return scenarios are a huge problem in the annuity industry and should be immediately removed from any carrier proposals. Some states are proactively banning this ridiculous sales practice, and class action lawsuits are already being formed by lawyers that see a big payday from annuity carriers pushing this information to consumers. It will be a costly legal mess, and it could have been prevented if the industry had listened to me for the past decade.
Branislav Nikolic joined my Fun With Annuities podcast to offer a common sense and pro-consumer solution to this back-tested madness. He works for The Index Standard with his partners (Jay Watson & Laurence Black) to offer a sane alternative to back-testing when evaluating an index purchase. They don't look backward, their process looks forward.
You might remember Branislav from a previous Fun With Annuities podcast when he was with annuity data monster, CANNEX. His new gig still works with CANNEX and other firms to provide legitimate index data that hopefully trickles down to the consumer through their agent or advisor. That's a big wish, in my opinion, but an obvious good start.
We dug deep into the facts during this podcast, and I really pushed Branislav on how their proprietary system works and why it should replace the current back-testing sales practice. We discussed carrier cost for index call options, renewal rates, and the discretion carriers have to change the rules after issuing the FIA policy.
Branislav pointed out that their current business model is not business to consumer, but the consumer is who their unique work is designed for. They depend on agents and advisors to share this valuable index information with their clients.
As you will hear, I told Branislav that this distribution strategy is unacceptable in the direct-to-consumer annuity world that I dominate, control, and direct. I hope to work with Branislav and his company to provide this index information to the consumer in an easy to understand format. As former Apple computer founder Steve Jobs said..." simple is complex." It's going to be a lot of work to get this information in a consumer friendly format, but I'm on a mission to change the ways FIAs are sold, and I think The Index Standard could help me with this huge goal.
Branislav and "Stan-is-lav" are teaming up to change the Indexed Annuity world. I'm all in if he is. You are going to really learn something with this podcast, and also get a glimpse into the annuity future that I want to positively mold for the consumer. Enjoy!
"I go back to the word of the day, ‘caution’. I would caution against using last 10 years as an indication of a performance of any kind. Inside of annuity or outside of annuity." — Branislav Nikolic
IN THIS EPISODE, THE ANNUITY MAN AND BRANSILAV NIKOLIC DISCUSS:
- Why you should be cautious of backtested numbers
- Being a smart and cautious consumer
- The importance of transparency and consumer-advantage
- Backtested numbers are based on hindsight. The numbers may go flat or go down, but they will not skyrocket as is shown in the projection. Be cautious of people showing you backtested numbers. These numbers are not real, they are hypothetical.
- If your agent offers market rate returns with principal protection, ask them to detail how exactly they are able to do that and when they start showing backtested numbers, dismiss them outright.
- The future of annuities should be that the industry would shift to a more pro-consumer model. That clients will be able to buy direct and that they’ll be able to completely understand what they are getting into.
Connect with Branislav Nikolic:
Website: The Index Standard
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Fun With Annuities Podcast is hosted by America’s Annuity Agent®, Stan Haithcock, The Annuity Man®. Hear brutal annuity facts with no sales pitches from the top independent agent in the country, licensed in all 50 states. Author of 7 books, Stan dives deep on all annuity types and strategies. It’s fun, learning the contractual truths on how annuities actually work and if they’ll fit your personal retirement lifestyle.