Mr. FIA-X: The Truth About Current Fixed Index Annuities
About Fun With Annuities Episode #118
Mr. FIA-X is one of the most popular guests on my Fun With Annuities podcast because he is an indexed annuity insider, truth teller, and factual flame thrower. He has unique and high-level insights into what’s happening in the FIA industry that is unmatched by anyone I’ve run across in my three decades of experience as The Annuity Man. He wears a mask while we film for my Fun With Annuities YouTube channel, and we alter his voice for all podcast platforms so that his identity will never be revealed. That should tell you all you need to know, and why you should listen to Mr. FIA-X every time he is on. The industry hates what he says, meaning the consumers must hear it in full.
I invited Mr. FIA-X back to provide mid-year insight into the indexed annuity space. He initially took a victory lap from his predictions last year about the ridiculous “upfront bonus season” that proliferated the first quarter of 2022. As I always say, an upfront bonus attached to an FIA is “candy for the stupid.” No philanthropists at annuity companies give money away, but the bad chicken dinner annuity agents still love pitching that upfront bonus to the uninformed annuity dreamers.
Mr. FIA-X went off again on the complexity of the majority of index options currently offered in the FIA space. Most agents selling FIAs can’t even explain what they are selling, and Mr. FIA-X is anxiously waiting on a carrier to come forward with an easy-to-understand/efficient call option that is pro-consumer. He revealed that he is working on that solution right now. As I always say, if you can’t explain it to a nine-year-old, then don’t buy it—no offense to 9-year-olds.
We then pivoted to comparing FIAs to the currently popular “buffer annuities,” which I call “co-pay” annuities. One of the positive features of FIAs is that there is no downside. There are no market losses. The worst return you will ever get is zero. That’s a good thing in these current volatile markets. Mr. FIA-X commented that buffer annuities have somewhat of a margin call if the account goes below a certain percentage. That means the consumer has to come out of pocket in some down-market scenarios, which is nuts. He also revealed that his staff is currently running comparison studies between these two strategies, and FIAs are looking to be a better deal at this point.
Time always flies with Mr. FIA-X. You can’t teach IQ; he is the smart guy in the room regarding indexed annuities. Get educated. Get informed. Don’t buy the dream. Enjoy!
"I think simple is better, I also think they need to be careful when they explain all these wonderful things that the annuity can do. Just because they can do these wonderful things doesn’t mean there’s not a cost for it. You’re paying for it somewhere. If it does this wonderful thing, it means you have something less wonderful somewhere else for them to afford that one wonderful thing." — Mr. FIA-X
In this episode, The Annuity Man and Mr. FIA-X discuss:
- Annuity companies do not give free money
- Ways to know if you’re dealing with a qualified advisor
- Sales pitches that you should watch out for
- Buying a product that you understand
- Upfront bonuses are candy for the stupid. There are no philanthropists in annuity offices giving out free money to clients. They’ll chip away at you in different ways to recoup those dollars. They haven’t been around for hundreds of years because they gave money away.
- If your advisor says “guarantee your principal” and “rider” in the same sentence, that disqualifies them. They are not capable or qualified to be your advisor.
- Hypotheticals are hypotheticals for a reason. Zero is not your hero. There’s no such thing as a hybrid annuity. When given a participation rate, ask the advisor what you’re participating in.
- Do not buy a product if you don’t understand it, and definitely don’t buy it when you can see that even the agent doesn’t understand it. Simple is always better.
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.