Annuity Illustration or Annuity Illusion?: Shootin' It Straight With Stan (TAM Classic)

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Welcome to Shooting It Straight with

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Stan. I'm your host Stan the Annuity

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Man, America's annuity agent, licensed

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in all 50 states. Today's topic is a

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barn burner, as they would say in the

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South. Know where that comes from. I'm

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assuming they're burning barns for

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whatever reason, but this is a barn

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burner. And the topic is annuity

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illustration or annuity

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illusion. Now, right at this point in

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time, at the time of this taping, the

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annuity industry and the life insurance

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industry and life insurance companies

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issue annuities, as you know after

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watching all of my videos, they have

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products that have potential returns

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like index universal life, which I don't

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sell, or index annuities, which I do

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sell, but I properly sell them as

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efficient delivery systems for income

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writer guarantees. And if someone wants

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to look at them for accumulation value,

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they are CD products. Let me repeat

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that. They are CD products. Yes, they

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are CD products. They are not market

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products. They were not put on the

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planet in 1995 when they're first

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introduced for market returns, market

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upside with no downside, market

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participation with with principal

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protection, sir. That crap that's being

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pitched out there. But addition to that

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crap sales [ __ ] which I just did in a

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very good southern kind of low

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IQ

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voice. What they also do is this. Mr.

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Jones, Mrs. Jones, please look at this

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proposal. Please look at these numbers

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that if you'd have owned it 10 years

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ago, if you'd have owned it whatever the

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eight years ago, these are the returns

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that you would have

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made. Okay? You've all seen that. Nod

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your head if you haven't. And you're

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going to be pitched that by somebody and

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they're going to say, "Look at this. If

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you'd have owned it like 10 years ago,

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you'd have made seven, 10, 11, 13, 14,

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six% returns with market with no with

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principal protection. And we're going to

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give you an up upfront bonus,

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too." That is getting ready to be a big

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issue in this industry. Now, I have been

2:05
pounding the table on this

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misleading pie in the sky, unicorn

2:11
chasing the butterflies, too good to be

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true nonsense, targeted at people in

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this country that are not sophisticated

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to understand that that doesn't exist or

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are so sophisticated that they think

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they're so smart that they've got gotten

2:26
something their neighbor doesn't know

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about. Either way, it's it's a problem.

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And now the lawyers and I love lawyers.

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A lot of good my my some of my best

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friends are lawyers. Dave who is one of

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my best friends in the world is a

2:40
lawyer. So I don't have anything against

2:42
lawyers but lawyers are capitalist and

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lawyers smell blood and lawyers are like

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sharks in the water. And lawyers like

2:49
like suing big companies and big inter

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industries with big pockets. Can I get a

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annuity amen and a hallelujah with that?

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We all know that. So, what's been

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happening in the industry and it's not I

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mean kudos to the annuity industry. I

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mean they do not allow a lot of

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information and details to come out

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about this and I'm sure they're going to

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say I really wish Stan would shut up and

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stop talking about this. But I consider

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myself the annuity consumer advocate,

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the annuity whisperer, the top agent in

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the country. And with that role,

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licensed in all 50 states, but with that

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role, it's my

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duty. It's my duty to tell you what's

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going on. So, right now, a lot of states

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don't even allow the back tested

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numbers. Well, sir, if you'd owned it 10

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years ago, look what you would have

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made. And there's a lot of indices,

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indexes, plural is what that is, that

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are made up out of thin air, you know,

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like three months ago, you've never

3:48
heard of it. And then they're going to

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show you they the agent advisor, what

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you would have made 10 years ago if

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you'd owned it, but it's only been

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around three months. Please explain to

3:56
me how that's rational. It's not

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rational. This is an easy fix. The

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annuity industry could do this easily.

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They could fix

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it. If my name was Stannislov, the

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annuity zar, I would fix it. I would not

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allow it. But I think what's getting

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ready to come down the pike because the

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lawyers are sniffing blood. They money

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blood. They have found out that are a

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lot of Americans, hardworking Americans,

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that put a lot of their retirement money

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into a product that they believed was

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going to get them market upside with no

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downside. That they believed was going

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to get them market participation with

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principal protection. That they believed

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they were going to get 9 10 11 13%

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return that they believed the sales

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pitch. That they believe the

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hypotheticals. And oh, by the way, what

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the lawyers have found out, those

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hypotheticals were in writing and were

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on the company issuing an annuity

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company paper. Now, yes, to to the

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annuity company's defense, and I will

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defend them because when they put out

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products, they're not trying to

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bamboozle anyone. But the problem is

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once the agent army gets a hold of it,

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then the annuity company, the annuity

5:08
carrier can't regulate what's being said

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or shown. Now, the way to combat that is

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don't show these hypothetical

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theoretical numbers. And I think after

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this these legal things that are coming

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down the pike,

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um I'm not sure they're going to be

5:24
around too much longer. Thank goodness.

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I've only been pounding the table on

5:28
this for over a decade of please stop

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showing this. Please stop convincing

5:33
people to buy potential. You know, my

5:36
saying is you own an annuity for what it

5:37
will do, not what it might do. When the

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might do are these hypothetical,

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theoretical, projected, backtested

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unicorns chasing the darn butterfly

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proposals that sound too good to be true

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because they are. So, is it an annuity

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illustration or an annuity illusion?

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Most of the time, it's an

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illusion. There's a very smart lady in

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the in the annuity business who I have

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tons of respect for and she focuses on

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the index annuity space. She said a long

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time ago, she's never seen one of those

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proposals come true. She's never seen a

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hypothetical or theoretical illustration

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come true. When I read that from her a

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long time ago, that was it for me cuz

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she's the source. And I was like, "Okay,

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she said it. I'm done. I'm done."

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Because all of this

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stuff makes no sense. I got a call the

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other day and a gentleman's like, "Well,

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you know, Stan, I'm I'm you I'm looking

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at the mas uh because those are

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guaranteed interest rate." Yes, thank

6:37
you. And I'm looking at this index

6:38
annuity that was presented to me, but

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you know, they're telling me I'm getting

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seven n 10%. I'm like, "What's your

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goal?" Well, I'd like to get 9 to 10%. I

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You're I don't want to call you an

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idiot, but you're delusional. You're

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delusional. It's not going to happen.

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And all of the agents and advisers out

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there, please don't send me that that

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thing that your mom owned or you own or

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your brother owns. By the way, if any if

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any agent goes, you know, you really you

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really should buy this because look, my

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mom owns this, my uncle Bob owns this,

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stop. If they're having to sell that to

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their mom and their uncle Bob, they need

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to get out of the business. Period.

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Don't do I mean, for all the agent

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advisors out there, don't do business

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with family. I don't do business with

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family. I don't want to talk to family

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at the family reunion about annuities or

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money. I I want to talk about the the

7:27
deiled eggs and the potato salad,

7:29
mayonnaise based, of course, not musket

7:31
based, if you know what I mean. But the

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point is this. These annuity

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illustrations are really annuity

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illusions in most cases, whether it's

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index universal life, which is pitched

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out there like, well, you can get this

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and you can get and you can get a a

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tax-free income. No, you can't because

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it's a loan on the policy and all loans

7:48
are taxree. Why? Good question. because

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they're loans. Okay, there's a fee for

7:53
the loan. So, I'm getting taxfree

7:55
income. No, you're not. You're getting a

7:56
loan and congratulations on the loan and

7:58
maybe the loan works out, but I'm just

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going to tell you it's not taxfree

8:02
income. So, annuity illustration or

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annuity illusion. See, I believe that

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the annuity industry could really clean

8:10
this up and do themselves a favor from a

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PR standpoint. Again, if I was

8:14
Stannislav, my name was

8:16
Stannislav and I I was annuity zar, I

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would clean this up. I would say, "We're

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not showing back tested numbers. We're

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not going to show all of that." You

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know, listen, the world would be perfect

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if we could all go back and make

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decisions back in the day knowing the

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answers like Back to the Future Part Two

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when the when the the bully guy had the

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had the the book of all the scores and

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he was making money as a gambler. Watch

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it. I love Back to the Future. Anyway,

8:42
Michael J. Fox. But the point is I

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mean if the annuity industry with index

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universal life and indexed annuities and

8:52
buffer annuities whatever would say we

8:55
cannot show we cannot show back tested

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numbers but here here are the cap

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spreads and participation rates. And by

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the way for all of you out there those

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are the levers that limit the upside

9:07
that the annuity company controls and

9:09
can change and gives you multiple

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choices. And at the time of this taping,

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there's over

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700 index annuity index option choices.

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700. How about that? Now, spoiler alert,

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they're all they're all pretty much

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designed to give you the same type of

9:27
return. And when index annuities were

9:29
put on the planet in 1995, they were to

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compete with

9:33
CDs. CD returns, not market returns.

9:37
Okay? And if you attach an income writer

9:39
to an index annuity, then that fee for

9:41
the income writer is going to be

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deducted from the accumulation value.

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But if the annuity industry would just

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disallow the back tested numbers and

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just show I mean this is this is basic

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just show okay here's the cap spread

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participation rates for this first year.

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here's the carrier's renewal rate

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history because they can change the

10:02
rules but here's how they performed and

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have they pulled the contractual rug out

10:06
from other people show that and then

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have the people go well you know there's

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a 7% cap this year um and historically

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it's it's you know they have been fair

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to the client then make your decision

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there but don't don't make your decision

10:21
on the illustration because it's an

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illusion I really wish the annuity

10:27
industry would beat the lawyers to the

10:29
punch on this. It would be the best PR

10:32
ever if they came out as an industry and

10:35
said the National Association of

10:37
Insurance Commissioners, who I love

10:39
those people, I I think they need to be

10:41
proactive. They need to hold their press

10:42
conference and say, "We have looked at

10:44
these back tested numbers. We have

10:45
looked at the hypotheticals,

10:46
theoreticals, and unicorns chasing the

10:48
butterflies stuff out there, and no more

10:50
is that allowed. You cannot show that as

10:53
an agent. And if you do, you will lose

10:55
your license immediately and be fined

10:57
$10,000. that would solve it. Period.

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And then you would base your decision on

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what's in place contractually moving

11:04
forward and and the the way that the

11:06
annuity company changes those um caps

11:09
and spreads, their historical nature on

11:11
that. That's not a back tested. That's

11:13
that's saying, have they been fair to

11:15
the to the client? Have they been fair

11:17
to the policy holder? Because I always

11:19
say with let's just say you have a

11:20
one-year call option on an index annuity

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and the surrender charge is a 10-year

11:24
surrender charge. What in essence you're

11:26
buying is a one-year guarantee with a

11:28
10-year surrender charge because years

11:29
two through 10, the annuity company at

11:32
their discretion can change the rules on

11:34
the caps and the spreads and the

11:35
participation rates. Yes, there are a

11:37
handful that don't at this point in

11:40
time, but still you need to do your

11:43
homework on that. Do not believe the

11:46
sales pitch. Now, we can solve this a

11:48
couple ways in the industry. It's going

11:50
to get solved either way. This will be

11:53
solved this in the future. The back

11:55
tested numbers. My prediction is Stan

11:57
the Annuity Man, America's annuity

11:58
agent, licensed in all 50 states, the

12:01
brutal factual truth ta teller, walking

12:04
middle finger of annuity truth out here.

12:08
I know. I love that. Someone called me

12:09
that when they introduced me one time

12:11
and I've I've hung on to that. Here's

12:13
the point though. I think eventually

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it's going to go away. Either the

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lawyers are going to force that through

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a class action lawsuit or or the annuity

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industry is going to be proactive and

12:24
say no more. We're not doing that. From

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a PR standpoint, we're not going to do

12:28
that. We're not going to mislead in any

12:30
way the public. Now, again, the carriers

12:33
aren't trying to mislead, but the way

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it's being presented is misleading.

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Okay? I'm on I'm on the carrier side

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here. The agents are the one that's

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taking the message and just ramping it

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up. You know, you know this this this

12:45
Ford Pinto will go 140 miles an hour,

12:47
sir. I'm I'm just telling you. 0 to 50

12:49
in 0 to 60 in two seconds. I mean, it's

12:52
that kind of sales pitch, but it's going

12:54
to get solved. It's either going to get

12:55
solved by the lawyers or it's going to

12:58
get solved by the industry. Now, here's

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the twist to the whole thing, which is

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insanity. When I read this, and I'm not

13:05
going to mention any names, and you can

13:07
dig it if you want to, but you know,

13:08
I've got I've got no beef against

13:10
anybody. I'm standing nudity. kind of a

13:11
lovable, huggable figure out here. Warm

13:13
fuzzball, right? Okay. Didn't Rush say

13:16
that? Like harmless fuzzball. Rush

13:18
Limbbo long time. I believe me, I'm not

13:20
a Rush Limbaugh fan. But he was

13:21
talented. We all have to, you know,

13:24
agree with that. I mean, was I was a

13:26
fan. I was a fan of his talent. How

13:27
about that? I just I'm just not

13:29
political. I don't, you know, I don't

13:30
care either way. I'm just a capitalist

13:32
who tries to play guitar. As you can see

13:35
in the background, they got four four

13:37
flying V's. But what was I talking

13:41
about? Yeah, I was talking about the

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industry. Oh, the the the the twist.

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Here's the twist. And here, this is

13:47
great. There are some agents that are

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now suing the

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carriers that gave them the prop the

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hypothetical and theoretical proposals

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to show to their clients. They're

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saying, "Well, they should have never

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they should have never provided that

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hypothetical for me to voluntarily

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show." Okay. Um, I think I'm gonna sue

14:09
um Crispy Cream Donuts for for the gut.

14:13
That's like me saying, you know, Crispy

14:15
Cream, put that in front of me. And

14:17
that's just not fair. And they shouldn't

14:19
do that because they know I'm from the

14:20
South and they know I suffer from the

14:22
sugars. Sugars, you know,

14:26
sugi-diabetes for all you people from

14:28
not from the South. And I'm going to sue

14:30
Crispy Cream Donuts because of that.

14:32
That's the stupidity of what I'm

14:34
reading. agents suing the carriers

14:37
because they were given this and then

14:40
they presented it because and now

14:42
they're suing the carriers because the

14:43
carriers gave it to them. H that's a

14:46
weird one. I mean that's that's that's

14:49
the best legal pivot I've ever seen in

14:51
my life. But here's the bottom line and

14:54
the takeaway. Do not put any faith,

14:58
credence, or credibility in any

15:01
backtested number that's shown to you.

15:04
any number of Mr. Jones, you to own it

15:06
10 years ago, you would have got this.

15:09
Why wouldn't you own it for the next 10

15:11
years because of those past 10 years? If

15:14
that's you, you are dumb as a box of

15:17
hair. You're stupid and you get what you

15:19
deserve and you if you've bought it

15:22
under that premise, you made a mistake.

15:24
And if you can get out, get

15:27
out. Period. I know that's harsh, but

15:30
all those back tested numbers don't come

15:32
true ever.

15:37
You know, I'm working on my breathing to

15:38
get my blood pressure down. But this

15:40
topic, annuity illustration or annuity

15:44
illusion, yeah, I had to wear the red

15:46
standing annuity man cap for a reason to

15:48
match my face, which is beat red because

15:53
this one drives me crazy because

15:56
consumers are making big-time mistakes

15:58
based upon these misleading

16:02
representations. Be careful out there.

16:05
Watch the news. This is going to get

16:08
interesting. And stay safe. Stay happy.

16:11
Stay healthy. Stay positive. And stay

16:14
tuned in to shooting it straight with

16:15
Stan. I'm Stan the annuity man. I'll see

16:18
you next week.