019: The Safety & Suitability of Annuities

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welcome to

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fun with annuities with your host me

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stan

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the annuity man america's annuity agent

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can annuities be fun

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can contractual guarantees be fun

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absolutely they can find out the brutal

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facts about annuities

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with no sales pitches or high pressure

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nonsense

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just the brutal and factual annuity

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truth which is all you need to hear

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let's have some fun with annuities and

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let's have that fun start

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right now

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hey this is stan the annuity man and

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welcome to fun

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with annuities if you are a client

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listening i appreciate

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you tuning in and if you're not please

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feel free to contact us at the

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annuityman.com

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and we will put together a customized

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plan for you and listen to what you're

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trying to achieve

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and we will tell you if you don't need

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an annuity in a lot of cases

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that is the case you know it just

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depends on what you're trying to solve

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for

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so if you're not familiar with my site

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the annuityman.com i would encourage you

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to go there we also have a

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sister site called annuities.direct and

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just to explain a little bit about that

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is my vision for the annuity industry

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and how this should be done

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correctly is to give you the choice on

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how you want to shop for annuities so

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the annuityman.com is full service it's

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it's if you want

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an annuity advisor there is a handful of

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us

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and they're all filtered by me and me

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included i'm involved so you might get

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me

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when you choose to speak with somebody

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you know we understand what we're doing

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we're going to listen to you we're going

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to quote all carriers we're going to put

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together a customized plan

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that's the annuityman.com the other site

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annuities.direct and you can get there

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from

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the annuityman.com annuities.direct is

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for you the people out there that want

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to run their own quotes and

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do their own research and do their own

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thing and only engage with us

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if they're at the finish line and they

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want to make sure they're doing the

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right thing etc so there's two choices

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all run by me all owned by me

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all with my direction and fingerprints

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all over them and nothing

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in these either company happens without

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me knowing about it

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the annuityman.com and annuities.direct

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so hopefully you'll go to the

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annuityman.com and check them both out

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and

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you know i think you'll like what you

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see so today's topic

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is the safety and suitability of

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annuities

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which is dovetailing into

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the ad campaigns that everyone sees i

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hate all annuities or

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all annuities are expensive which is

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just garbage i keep

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covering that in a lot of my podcast

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because it's making the top of my head

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explode

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you know saying you hate all annuities

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is like saying you hate all restaurants

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it makes no

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sense there's many types of annuities

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and everybody in america owns an annuity

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every single person every working

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american every person with a social

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security number

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owns an annuity it's called social

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security so

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you can't hate all annuities and then

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love your social security payment so i i

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just laugh i think the industry

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should do a reverse ad back into

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thanking everybody for being an annuity

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owner and maybe you want another one

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i mean that's what i would do if i was

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the agent

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czar for the annuity industry that

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should actually be a smart thing for the

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industry to do but

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they don't like what i do out here

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because i tell the brutal truth and

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they're all trying to say i have the

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best product or my product's the best

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it's not true i mean they all have good

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products all carriers i represent them

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all

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but they're commodity products you need

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to shop all carriers for the highest

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contractual guarantee

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for your specific situation so

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i don't blame the carriers for a lot of

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the stuff that's going on they're trying

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to do the best they can but it's hard to

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regulate and oversee what an army of

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agents are saying every day

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to get the sale i mean it's impossible

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you can't blame the carriers

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i do think there should be more

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oversight and groups like the aarp are

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doing a great job

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sneaking in their little spies to the

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bad chicken dinner seminars and things

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like that i really applaud them for

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doing that good for you

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we need all the help we can get to clean

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it up because annuities have a very

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unique benefit proposition that no other

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product category has and that that

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benefit proposition

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monopoly is that annuities will pay a

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lifetime income stream regardless of how

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long you live

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no other product does that period so

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you know if you're looking for lifetime

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income stream annuities have to be where

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you head

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because that's the only product that

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does that in combination with your

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pension in combination with

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social security i say pension for people

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that are fortunate enough to have

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one but today you know talking about the

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safety and suitability of annuities i

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always tell people there's really only

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five places on the planet that's

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for safe money and even the tinfoil hat

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conspiracy theorists can probably blow

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most of this up

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but this is as safe as it gets okay

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let's go through the five number one

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money markets number two

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cds number three united states

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treasuries

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number four triple a triple a municipal

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bonds and when i say triple a tripoli

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that means insured

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municipal bonds and then fixed annuities

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now of those five i would say fixed

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annuities ranks fifth

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you know treasuries i would say would be

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number one

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you know cds in money market two and

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three communities four

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and then fixed rate annuities five and

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fixed annuities when you say fixed

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annuities it's you know

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single premium immediate annuities

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deferred income annuities qualified

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longevity annuity contracts

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you know multi-year guarantee annuities

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and then and fixed index annuities are

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actually a fixed annuity

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issued by life insurance companies not a

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security so

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the safety and suitability of annuities

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really comes down to

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when you're looking at an annuity what

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makes it safe well the first thing you

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have to look at is the claims paying

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ability of the carrier

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you know what's their rating what's

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their comdex score and if for people out

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there that don't

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know what a comdex score is on my site

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at the annuityman.com

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we provide the comdex rankings for

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every single annuity company out there

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and comdex is a compilation score

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of one to a hundred a hundred being

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perfect

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and they're looking at all four major

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rating services that look at annuities

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am best moody's fitch and standard

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poor's those are the four primary

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ratings

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agencies that look at annuities and

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annuity companies and their financials

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what comdex has done which i love is

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make it easy to understand we all

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understand one to a hundred we all

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understand 100

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is perfect so what they've done is

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they have looked at all four rating

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services and then created a formula to

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create a score from 100 100 being

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perfect

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now it's not a perfect system condex is

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not perfect

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in other words if you as a carrier don't

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subscribe to all four rating services

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rating you then there's a little bit of

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a ding there but but i think it's a good

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way to look at

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all rating services you can look at you

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pull that pdf and we update it monthly

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off the site

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go to the annuityman.com under resources

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you can see

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the rating services that follow that

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specific carrier

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whether it's one or two or three or all

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four and then the comdex score

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as well and if you want to dig further

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if you say hey stan the annuity man i'd

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like to see the financials or i'd like

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to see more or

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i can get you what you need i have

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subscription services to

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organizations that can provide as much

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detailed financial background as you

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need to see to make an informed

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decision that makes you feel comfortable

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with that decision because in essence

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you're transferring the risk to the

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carrier so you have to understand that

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the other thing that backs up this from

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a safety standpoint from a fixed annuity

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world and fixed annuities are regulated

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at the state

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level so each state has what's called a

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state guarantee fund

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that backs annuities specifically up to

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a

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a certain level when i say specifically

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certain types of annuities

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like annuitization type products like

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immediate annuities are covered

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differently

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than deferred products like indexed

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annuities or multi-year guarantee

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annuities

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cd type annuities so that resource is

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www.nolhga.com i'll go slow

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nancy oscar larry harrygaryapple.com

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n o l h g a

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dot com and when you go there

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you can pull up your state guarantee

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fund under the frequently asked

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questions and see how much is covered

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and it's per owner per policy per

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company

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and you know the details will be there

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but you know i don't think you rely on

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that in essence

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the insurance industry does not want you

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to

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they actually prohibit agents from

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mentioning the state guarantee fund

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as part of the sales pitch for lack of a

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better phrase

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you can't say hey i need you to buy this

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i'd like for you to buy this

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company that's b plus ready because it's

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covered by the state guarantee fund

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that's not allowed

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so i think your primary rule of thumb is

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to look at the claims paying ability

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of the carrier there are governing

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bodies that oversee

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annuities you know there's you know

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national association of fixed annuities

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and there's a lot of good

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organizations out there that are doing

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their best to make sure that

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the consumer is protected throughout the

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process from start to finish and

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remember that annuities are the only

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product on the planet

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also that has what's called a free look

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period

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meaning that you can get your money back

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you don't have to give him a reason you

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know you just get your money back and

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each state has a specific free look

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time period it ranges from 10 to 30 days

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depending on your state

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but in essence you can test drive the

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policy while it's in force and get your

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money back within that time frame

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i think that's fantastic who does that

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if i'm annuities are for the day i'm

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i'm pounding two things number one

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lifetime income is a monopoly we have

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and number two

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we have the only product you can test

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drive that's all i would say

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over and over and over i think those are

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so pro customer you can't see straight

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i mean that's the most pro customer dual

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benefit package of all time

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lifetime income that you can never

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outlive no other product does that

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and no other product allows you to test

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drive it own it test drive it have the

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policy in hand

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and regardless of reason you don't have

10:23
to give a reason you can get your money

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back

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if you tell the carrier within that

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specific time frame or the free look

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time period so

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that's looking at it from the safety

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standpoint variable annuities which i

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don't sell just disclaimer i don't do

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anything variable i do everything that's

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guaranteed

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that i mean i don't like variable

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annuities i think they have their space

10:41
1955 they're put on the planet for tax

10:43
deferred growth

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and in some cases it does fit i just i

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look at the contractual guarantees only

10:48
so that's not my lane

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but those because those are securities

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they're regulated by finra

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the scc it's a whole different ball game

10:56
but but there's some safety there too

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if you're buying it from a um brokerage

11:00
firm is you know sipc type coverage it's

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good coverage so

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there's some safety there as well but

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again all annuities regardless of type

11:08
are issued

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by life insurance companies the other

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thing from a suitability let's talk

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about suitability so safety is kind of

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covered

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and you can do your own research there

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but suitability is where the rubber

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meets the road

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and i applaud the annuity industry

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because they're really working hard

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on trying to get this right and

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everything from the application process

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to the questions being asked

11:28
to when you do an annuity annuity 1035

11:31
transfer or direct transfer annuity to

11:33
annuity

11:34
they have a side-by-side comparison

11:36
mathematically to make sure that the

11:38
annuity you're transferring to

11:39
is better mathematically for you not the

11:42
agent for you

11:44
than the annuity that you're coming from

11:46
so in other words they want to make sure

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if you're transferring from

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x annuity to y they want to make sure

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that the y annuity the one you're going

11:52
to

11:52
is mathematically better than the one

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you're leaving

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in a lot of cases it's not a lot of

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cases that we have

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that people say i'd like to transfer

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this annuity and we'll say well you know

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email us your statement

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pdf your statement to us and we will do

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a side-by-side comparison and

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if you're leaving too many benefits on

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the table and you can maximize that

12:11
older policy

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we'll tell you how to do that so that's

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part of the application process

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so if you want to see the application or

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specimen policy before you buy

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we can provide that in any agent worth

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their

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salt worth anything will provide a copy

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of the application and a copy of the

12:29
specimen policy now specimen policy

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doesn't have

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your specific numbers in there but it

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does have the verbiage

12:35
that will be in your policy so if you

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want to see that

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you can do that as well also from a

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suitability standpoint

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in most cases the annuity industry does

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not like to see you

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as a consumer put more than 50 percent

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of your investable assets not home

12:54
investable assets into an annuity of any

12:58
type

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so i got a phone this morning with the

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guy and he said

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i put all my annuity i mean all my ira

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100 of my ira

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an indexed annuity and i just went what

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huh

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how unless unless the the because he

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told me his entire picture and

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that ira represented way more than 50

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of his investable assets and i went

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that's impossible unless the agent

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fudged on the application and that

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sometimes happens i've seen that i'm not

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accusing i'm

13:28
seeing it there's bad apples in every

13:30
industry okay

13:32
but he should have never been allowed to

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put 100 of his ira

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into that annuity based upon the

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investable assets that he told me so the

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industry is really cognizant of that but

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once again

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you can't blame the carriers because

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when the application comes in

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the annuity carrier all they're doing is

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looking at the application and how it's

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filled in

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it's the agent's rear end that's on the

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line on how they filled it in

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okay it's not the carrier the carriers

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are doing a great job of

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filtering out a lot of the fraud or the

14:06
aggressive

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pushing of products but there's still

14:09
some you got to be real careful out

14:10
there so that from a from a suitability

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standpoint

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i would go as slow as humanly possible

14:16
i'd ask for all the information i'd ask

14:18
for information on the care if you want

14:19
it

14:20
the application if you want to see that

14:22
i'd ask for a copy of the application

14:24
from the

14:25
agent if you want to make sure that they

14:26
filled it out correctly from what you

14:28
told them

14:29
and the other thing and i think this is

14:30
the only true protection

14:32
that you have with a lot of these

14:35
annuity presentations is

14:36
when someone pitches you a product that

14:38
sounds too good to be true

14:40
and a lot of this happens in the indexed

14:41
or variable world primarily indexed i

14:44
mean i don't hear a lot of variable

14:45
stuff but

14:46
anytime there's potential growth on a

14:48
product

14:49
sometimes numbers are juiced and pushed

14:51
and dreams are

14:52
unicorns are chasing the butterflies and

14:54
you need to make sure that what you're

14:56
buying is real

14:57
write down exactly what that agent told

14:59
you exactly how you understand it every

15:01
single point as

15:02
detailed as you humanly can write it

15:04
down and then sign the data at the

15:06
bottom and have the agent sign and date

15:08
that as well

15:09
what will happen is if the agent has

15:11
told the truth they'll sign and date it

15:12
easily if they're a sociopath they'll

15:14
sign a date too but if they're

15:16
if it's truthful they'll sign it but if

15:18
they push the limit a little bit and

15:20
they notice that they push the limit a

15:22
little bit

15:22
then they'll reel back you know you

15:25
they'll reel back some of that

15:26
sales pitch which is good what you need

15:28
to start saying wait a minute

15:30
why would you pitch it and if it's not

15:32
all the way true but

15:33
that's truly the only consumer

15:34
protection that you have is really

15:36
to create a statement of understanding

15:39
based upon

15:40
how you understand it in other words

15:42
create your own statement of

15:43
understanding

15:44
you sign and date it have them sign and

15:46
date it and if they sign and date it

15:48
that agent owns that sales pitch if you

15:50
know what i mean

15:51
and so during the free look time period

15:53
if you buy it you call the carrier up

15:55
and say okay

15:56
this is what the agent signed doesn't do

15:58
this yes or no and and those people at

16:00
the carry will tell you the truth

16:01
and then you can make your decision from

16:04
there now the 50

16:05
rule did not come from it's amazing the

16:08
story behind that

16:09
about 10 years ago people started suing

16:12
annuity companies because

16:14
they were putting too much money into

16:16
annuities now the funny part about that

16:17
is it's typical consumers

16:19
the consumers were making their decision

16:21
there was no rule in place at that point

16:22
in time

16:23
but the consumers were making their

16:24
decision to put all of their money into

16:26
annuities

16:27
and then after the fact figured out i

16:28
guess with lawyers

16:30
nudging in help that they put too much

16:32
money and then they sued

16:33
the annuity carriers well the annuity

16:34
carriers are smart they're like wait a

16:36
minute

16:37
we're not going to allow that to happen

16:38
and that's how that 50 suitability rule

16:40
kind of

16:40
got put in place and then from there

16:42
they they've kept

16:44
aggressively thinking about how do we

16:47
protect the consumer

16:49
and so each year i'm applauding kind of

16:52
what they're doing to try to

16:53
reel it in and keep the consumers

16:57
protected because there's ten thousand

16:58
baby boomers retiring every single day

17:01
and most of them are looking for

17:03
contractual guarantees of which

17:04
annuities are contracts or contractual

17:06
guaranteed transfer risk products

17:08
so the fit is perfect but also because

17:10
of that demographic tidal wave

17:12
there is a possibility for aggressive

17:15
sales techniques and the

17:17
industry is really wanting to to clamp

17:20
that down they just want the truth told

17:22
these are great products when you know

17:23
the benefits and the limitations and all

17:25
products have benefits and limitations

17:27
so

17:27
remember a couple things when you buy an

17:29
annuity ask two questions what do you

17:31
want the money to contractually do

17:33
and when do you want those contractual

17:34
guarantees to start

17:36
and then remember the acronym pill to

17:38
see if you even need an annuity

17:40
p is for principal protection eyes for

17:42
income for life l is for legacy and the

17:43
other l is for long term care

17:46
if you don't need to contractually

17:47
suffer one or more of those

17:49
solutions in the pill then you do not

17:51
need an annuity do not buy annuities for

17:53
market growth buy them for the

17:55
contractual guarantees

17:56
you can always do better market growth

17:58
wise with non-annuity products i know

18:00
the agents out there in the industry

18:02
hate me saying that

18:03
that's my opinion but i think i'm right

18:05
based upon where i've been in my life i

18:07
used to

18:07
work for dean witter and morgan stanley

18:09
painting wherever ubs i understand

18:10
markets and real growth and

18:12
i understand how things work so i think

18:14
annuities are transfer risk products and

18:16
that's where they fit in the portfolio

18:17
they're commodity products you own them

18:19
for what they will do

18:20
not what they might do so just remember

18:23
that as you're shopping but that's

18:24
safety and suitability of annuities

18:26
bottom line

18:27
whatever makes you feel comfortable to

18:29
make the decision on your terms in your

18:31
time frame

18:32
whatever information you need ask that

18:34
agent for it if it hopefully to me

18:36
hopefully i'm your agent at the

18:37
annuityman.com we'll provide whatever

18:39
you need

18:40
we'll dig in i mean if you need

18:42
financials we'll give the fund out if

18:43
you need the application we'll send the

18:44
application if you need the specimen

18:46
policy we'll send you that

18:48
we need you to have a full picture of

18:50
what you're going to own because you're

18:51
going to own

18:52
a contract so don't buy the sales pitch

18:55
because you're going to own the

18:55
contractual reality don't buy the dream

18:58
so with that being said a couple things

19:00
before we go

19:02
i do have a youtube channel stand the

19:03
annuity men youtube channel i'm

19:05
releasing a video every single day it's

19:06
about 8-10 minutes per video

19:08
very informative kind of like this

19:11
non-salesy and i do write

19:12
an article every day for some major

19:15
platform

19:17
right now i'm writing for thestreet.com

19:20
but i've written for marketwatch and all

19:22
kinds of other places as well

19:24
i am a writer i've written seven books

19:25
and you're welcome to get those for free

19:27
at my site the annuityman.com i'll ship

19:29
them to you if you

19:29
provide your shipping address no

19:31
obligation and no cost so

19:33
with that being said my name is standing

19:35
utman i am america's annuity agent

19:38
and i look forward to hopefully speaking

19:40
with you soon and thanks for joining me

19:42
on

19:42
fun with annuities thanks for listening

19:46
to fun

19:46
with annuities please hit the subscribe

19:48
button and make sure to go to my site

19:51
at the annuityman.com where you can run

19:54
your own

19:54
spea dia and culat quotes and see a live

19:57
feed of the best

19:58
mica fix rates in the country and even

20:01
get

20:01
indexed and income rider quotes as well

20:04
you can also

20:05
sign up for my six annuity owner's

20:07
manual books and i'll ship them for free

20:09
and under no

20:10
obligation i also encourage you to

20:13
schedule a one-on-one call with me

20:15
stan the annuity man so we can have a

20:17
full discussion

20:18
of your specific situation it will be

20:21
the best

20:22
brutally factual and truthful advice you

20:25
will ever get and that's one guarantee

20:27
you should definitely take advantage of

20:29
so join me next time for the number one

20:31
annuity podcast

20:32
on the planet fun with annuities

20:48
you