Don't Buy Annuity Stories: Shootin' It Straight with Stan
The Man Who Cried Annuity
Today's topic is, "Don't buy annuity stories." That's a big one to unpack, but let's start unpacking it. In the world of sales, everybody that ever talked to me like a manager or salesperson, they're like, "Stories sell. You need to tell stories to the people because they can relate to it." Now, on my videos and podcasts and on these Shooting it Straight with Stan® videos, I'll tell you real-life stories about when clients call me. This is what actually happened when they called, and it might apply to you. It might not, but the stories I'm talking about, when I say, "Don't buy annuity stories," applies to a lot of things that are happening that are wrong in the annuity industry, and why the annuity industry has earned its bad reputation. People are like, "Annuities, that's a curse word." It's a curse word, because the majority of people that are selling them, they're selling stories that, most of the time, aren't true, and they're pushing the envelope to get the sale, and that's unfortunate.
That's the reason that I say, all the time, "Buy an annuity for what it will do, not what it might do®." What's the "will do®"? The "will do" is the contractual guarantee of the policy, and the reason I say that is, with annuities of any type, they're contracts. Don't believe it? Buy one. You're going to get something in the mail called a "policy." In the south, we'll call that a "contract." I mean, it is what it is, and guess what's going to happen with your money when you get an annuity of any type. What's in the contract?
So, make your decision on what's in the contract, not the story that's being told, and the stories are horrific out there. That's the reason I always say to people that, if you have to buy an annuity not from Stan The Annuity Man®, which I can't understand why you would do that, but what I would tell you to do is write down that sales pitch exactly how you hear it. Exactly how you understand it, exactly how they presented it to you. Write it down in detail and then sign and date it at the bottom, and flip it over to them and say, "Hey, by the way, that sounded really good, but can you sign and date it too, because if it's not what you say it is, I'm going to take you to court and get my money back, because you lied to me."
Understand It Thoroughly
That's the only protection you truly have is what I call a "statement of understanding" from the client's standpoint. In other words, if this is the sales pitch I heard, I'm going to write it down and I'm going to have them sign off on it. Typically, when you do that, the pen weighs 1,000 pounds. They're not going to sign it, or they'll go, "No, that's not what I was talking about," but the stories that are out there now are crazy, and let's go through some.
There're numerous Indexed Annuity-type products. We're not going to get into the details of them. Yes, I sell them. I have no problem with them, but they're CD products like Index Annuities, and Fixed Index Annuities, were designed in 1995 to compete with normal CD returns, and spoiler alert, that's what they do. But that's not the stories you're going to hear. The stories you're going to hear are, "Market upside with no downside, market participation with no market loss." Well, if that's the case, then I'm calling Chairman Powell, and he's head of the Fed, and I'm saying, "Hey, brother man! got it fixed. You just buy indexed annuities for the country, and everything is going to be perfect.” If it sounds too good to be true, it is. If you believe it's true, then you're the rube at the table and the sucker at the table.
The Story They Tell
Don't believe the story. If they're saying something, "Listen, what if it gets zero?" And they go, "Well, it never has gotten zero, because historically if you look at these returns that I'm showing you if you'd owned it 10 years ago..." That's a story. That's garbage. Never base your decision on a back-tested number. And what drives me crazy right now in the Indexed Annuity world, our Indices, Indexes, they're being created out of thin air based on an algorithm that's looking for an actual return. So, they create this X, Y, Z index and then they go, "If you were to own this X, Y, Z index 10 years ago, this would've been your return." "Well, how is that possible, Chester the Agent, because it's only been around for two months? How could I have owned it 10 years ago?" And by the way, you might want to check that specimen policy, and say, "Can they change those allocations internally?"
There're some games being played here. Now, I understand why the annuity carriers are doing that. They can get better option pricing on an annuity made up out of thin air as opposed to the S and P 500, but understand that all of these Indexed Annuities are designed to create a CD-type return of two to four percent. Anyone that tells you otherwise, it's like George Costanza said on Seinfeld, "If you believe it's the truth, then it's not a lie." That's what a lot of these agents have convinced themselves. It's like walking past a mirror, and you're 50 pounds overweight and you glance and you go, "Do you know what? I look pretty good." No, you don't. You're 50 pounds overweight. It's the same premise. So, the stories that they're going to tell, just don't believe them.
Another story, if they say to you, "Well, my mom owns this," or, "My uncle owns this," or, "I own this, and here is my statement. I want you to look at it." That's a story. That's crap. Do not allow them to do that, because you don't know if it's true or not. You don't know if they've doctored that PDF, or that hard copy. You have no idea. What are you going to ask? "Hey, what are the contractual guarantees?" They need to ask you two questions. "What do you want the money to contractually do, and when do you want those contractual guarantees to start?" From those two answers, we can determine whether you even need an annuity or, if you do need an annuity, which type will provide the highest contractual guarantees.
There are no stories with contractual guarantees. There are no stories when you run quotes how you can run on our site theannuityman.com, and you're running contractually guaranteed quotes. That's the reason that we allow you to do that on your terms. You can pull up MYGA fixed rate guarantees, and live feed on my site, for your specific state. There're no stories to that. That's a contractually guaranteed yield. With an Immediate Annuity, a Deferred Income Annuity, a Qualified Longevity Annuity Contract, or an Income Rider attached to an Indexed Annuity, there're no stories to that. That's a contractual guarantee, period. That's what it will do.
Everything on our site, and in my opinion, everything in the annuity industry, should be about what the policy will do, not what the policy might do, but the vast majority of policies being sold out there, which are Indexed Annuities, Variable Annuities, Buffer Annuities, whatever, those are all story-driven sales. They're not contractual-driven sales. "Well, Mr. Jones, if you had owned it here, you would've made seven percent every year, and you have principle protection. Mr. Jones, you get the upfront bonus." That's another story that's crazy. "Hey, if you signed here, you're going to get an upfront bonus. That's your money to keep for free. It's just fantastic. You get a 20% bonus or 30% bonus or 35% bonus…” whatever it is. You can't be that stupid. You're listening to Stan The Annuity Man. If someone has presented a bonus, you probably found me because you went, "Wait a minute. That doesn't sound right." Bonuses are stories.
To me, they're contractual guarantees. So, let me give you an example. If you said, "Stan, I need lifetime income to start later." Remember the two questions? "What do you want the money to contractually do?" "Lifetime income." "When do you want to start?" "Down the road." Then that can be an Income Rider. It also can be a Deferred Income Annuity, but let's just say we're focusing on the Income Rider. We're only going to look at the contractual guaranteed Income Rider, and we are going to shop every single company out there with an Income Rider, to find the highest contractual guarantee for your specific situation, and that includes companies that have bonuses. That's part of the offering of the Income Rider and, spoiler alert, most of the time, the companies that are offering these huge, chunky, upfront bonuses do not provide the highest contractual guarantee. It's a story.
There are 100 pennies in the dollar. So, if someone is offering you an upfront bonus, they're taking something away in the policy. Typically, it's on the payout on the back end, which is the most important part. So, if you're sitting at the bad chicken dinner seminar, and they say, "We're giving you a 20% upfront bonus to $200,000, where you'll get a $40,000 bonus." That's not free money. You know that. You've got to be smarter than that. You've got to filter out these sociopaths out there that say these things cavalierly, hoping that some part of your brain believes it's true and you're going to trust them. Don't trust anybody, including me. Trust the contract.
Don't Rush In
This leads me to my next point. With any policy that you're trying to make a decision on, first of all, there's never an urgency to buy an annuity, ever. The urgency is for you to fully understand it. And if that takes you reading the specimen policy, then ask us for the specimen policy and we'll send it to you, and you can read it, because why? Once again, stories sell, but you're going to buy contractual guarantees. I always say, "Don't buy the dream, because you're going to own the contractual reality. Don't buy the story, because you're buying a contract. So, buy the contract." So, be very careful out there in the hinterlands of unregulated internet promotions, unregulated bad chicken dinner and expensive steak dinner seminars, and unregulated people coming to your workplace as you retire and talking about one product. First of all, remember this. Annuities, there's not one product that's better than the other.
There are two questions that you have to answer. What do you want the money to contractually do? When do you want those contractual guarantees to start? From that, we shop all carriers for the highest contractual guarantee for your specific situation. And then we talk about who that company is, their ratings, the claim's paying ability, et cetera. Annuities are commodity products. There are no stories on commodity products. There're only contractual guarantees.
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.