Moshe Milevsky: Learning from History with Annuities

About Fun With Annuities Episode #116

When Moshe Milevsky talks, the entire financial industry listens.  I’m not kidding.  He has been recognized as one of the 35 most influential people in the U.S. financial advisory business during the last 35 years.  So, to have him on Fun With Annuities was an absolute treat and honor.

Moshe is a tenured professor of business finance and a published author.  He has an M.A. in Mathematical Statistics and a Ph.D. in financial economics.  Got your attention yet?  Let me continue with the best bio on the planet.  Moshe has also published 16 books that have been translated into six languages and authored over 70 peer-reviewed scholarly articles.  In addition, he has delivered over 1,500 presentations and keynote lectures worldwide, including academic seminars at Stanford, Columbia, and MIT.

I’m not finished.  He is also a fin-tech entrepreneur with numerous U.S. patents and computational innovations and sold his start-up company in 2014.  His current research work and interests revolve around the history of how aging consumers financed and paid for the last few decades of their life. Still, Moshe is studying how that was done over the last few centuries.

Have I got your attention now?  Good.

We jumped in with Moshe’s current research and book on TONTINES (Google it).  He has spent months in Europe researching how annuities were used hundreds of years ago. Let’s just say he spent a lot of time in the archives of the Church of Scotland looking at their annuity programs back in the day.  I hope he scored some good Scotch while he was there.

Moshe calls “annuities” the world’s oldest financial product and has the facts to back that statement up.  His vision of the future of the annuity industry is fascinating, and he predicts serious product changes and offerings within the next five years.  That one even surprised America’s Annuity Agent!

This is a podcast you will have to listen to more than once.  There is that much information to digest from Moshe.  His new focus is on “Life Span vs. Health Span,” which totally blew me away, and will knock you on your seat as well.  I even took Moshe out of his comfort zone when I asked him what he would do if given the title and power of “Annuity Czar.”  His answer was gold and ironically aligned with my answer if I was given that job.  Great minds think alike!

I could keep going with everything we discussed, but I will leave you with one nugget that will make you hit “play.”  Moshe talked about a contractual way to have true lifetime income that increases over your life, is pro-client, and will be available sooner than I imagined.  Talk about bringing the IQ! All Hail the great Moshe Milevsky.  Enjoy!

"You have a product that’s meant to help people that are eventually going to cognitively decline and help them deal with the finances; there’s a higher burden of care there because you gotta make sure that they understand what they’re buying, they continue to understand what they’re buying and in many cases, annuities are quite complicated." —  Moshe Milevsky.

Brief Bio From Co-host: Moshe Milevsky

Moshe A. Milevsky is a finance professor at the Schulich School of Business at York University in Toronto. He is also a member of the graduate faculty in the Department of Mathematics and Statistics and Managing Director of PiLECo. Milevsky has published 15 books (translated into 6 languages) and over sixty peer-reviewed scholarly papers in addition to hundreds of popular articles and blog pieces. In addition to being an award-winning author, he is a fin-tech entrepreneur with a number of U.S. patents and computational innovations in the retirement income space. He was named by Investment Advisor magazine as one of the 35 most influential people in the U.S. financial advisory business during the last 35 years, and he received a lifetime achievement award from the Retirement Income Industry Association.

IN THIS EPISODE, THE ANNUITY MAN AND MOSHE MILEVSKY DISCUSS:

• Why annuities get a bad rep
• What’s a tontine?
• Beating inflation
• Planning for health decline

KEY TAKEAWAYS:

• Annuities are often complicated, and they are typically sold to a group of vulnerable people. That could be a recipe for disaster.
• A tontine was one of the many ways that people used to finance themselves in retirement; it was a scheme in which the longest living people got the most amount of people, and the people that didn’t live a long time got a small amount of income - it was a type of annuity.
• With a tontine scheme, the denominator keeps getting smaller as time goes by while the numerator stays the same - meaning the same amount of money is being split between fewer people. Mortality becomes a real interest rate. People don’t care much about this because inflation wasn’t that much of a hot topic, but nowadays, people should look into it.
• There’s a big difference between health span and life span, but they can have a short gap in between. Long-term health care is important because it allows you to use more of your lifetime income for things you like rather than split them between things you like and things you need.

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.

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