Are Fixed Index Annuities Safe?

0:00
Hi there, Stan the Annuity Man,

0:02
America's annuity agent, licensed in all

0:03
50 states in Puerto Rico. Today's topic

0:07
is a good one. Kind of a I'm going to

0:10
take a different approach to this

0:11
answer. Are fixed indexed annuities

0:15
safe? Stan the annuity man. Everybody

0:17
and their brother's trying to sell me a

0:19
fixed index annuity. Are they safe? I

0:23
guess we got to redefine the word safe

0:25
[snorts] after this.

0:33
So fixed index annuities were put on the

0:35
planet in 1995 to compete with CD

0:37
returns, not the market. They're not

0:40
market products. They're fixed

0:41
annuities. They're life insurance

0:42
products. They're not a security.

0:44
They're not overseen by SEC or FIN or

0:48
anything like that. And I know what I'm

0:50
talking about because I I came from

0:52
Morgan Stanley and Dean Wood or Pay

0:53
Weber UBS long time ago. Um, and I'm

0:56
still shocked at a lot of the sales

0:58
pitches with fixed index annuities

1:00
because they're pitched as you can have

1:03
your cake and eat it too. They're

1:04
pitched as you can get market returns

1:06
and protect the principal. Well, if that

1:08
was true, that's all Goldman Sachs would

1:09
buy. I mean, it just it just doesn't

1:12
happen. Two seconds I have to sniffle.

1:14
[snorts] And I'm not crying, but I

1:16
should because the next part of this is

1:18
about the sales pitch. Um, fixed index

1:21
annuities are one of the most popular

1:23
products on the planet in the annuity

1:25
world because of the highest commission.

1:27
My opinion, if they were the same

1:30
commission as a MIGA or an immediate

1:32
annuity, low commission, very easy to

1:33
understand products. If they were low

1:36
commission, I don't think the sales

1:37
would be as high. Okay? Because fixed

1:41
index annuities, the the the short

1:44
answer is are they safe, Stan? The

1:46
answer is yes because they are fixed

1:49
annuities. So the answer internally that

1:52
is stand is my money safe with a fixed

1:55
index annuity. The answer is yes. It's a

1:57
fixed annuity. The worst you're going to

1:59
get is zero but you might get zero. Many

2:02
years you might get zero. Okay. Because

2:05
index annuities historically have not

2:07
returned market returns because they

2:08
weren't designed for that. since 1995

2:11
and the biggest raging bull market of

2:13
all time, CD type returns and not even

2:16
really good ones. Um, so are they safe

2:20
from a principal protection standpoint?

2:23
They are. But if you combined if you uh

2:26
compared them to, let's say, a

2:27
multi-year guarantee annuity, which is

2:28
the annuity industry version of a CD,

2:31
you'd buy that because the guaranteed um

2:33
rate is contractual. Whereas with an

2:35
index annuity, the returns aren't

2:37
guaranteed. They're hypothetical.

2:40
They're theoretical. They're back

2:41
tested. They're unicorns taste of the

2:42
butterflies. They're they're expensive

2:45
steak dinner seminar on the big screen

2:47
stuff.

2:49
You're smarter than that. Come on now.

2:51
Are they safe? Yeah, your principles are

2:54
protected, but are you safe from the

2:56
sales pitch?

2:58
Can you protect yourself from leaning in

3:00
and believing that it's too good to be

3:02
that this too good to be true thing that

3:04
I'm hearing is real? With annuities, if

3:07
it sounds too good to be true, it is

3:08
every single time without exception.

3:10
Period. Including index annuities. So,

3:13
you got to be saying, "Well, wait a

3:14
minute, Stan, you're just piling on here

3:15
on the index annuities. Do you not sell

3:17
them?" We do, but only if an income

3:20
writer is attached. We we ask two

3:22
questions when we talk to every single

3:23
person. What do you want the money to

3:25
contractually do and when do you want

3:26
those contractual guarantees to start?

3:27
If you said, "Me and the misses need

3:29
lifetime income. We want it to start

3:31
three years, two years, seven years, six

3:32
years, whatever down the road. Then

3:35
income writers attached to index

3:37
annuities would be one strategy we're

3:39
going to show you. But we're solely

3:41
focusing on the income writer. We don't

3:43
care about the index annuity

3:44
accumulation story. We use that only as

3:47
a efficient delivery system for the

3:49
income writer guarantee. So do we hate

3:52
them? No. [clears throat] Are they safe?

3:54
Yeah. They protect your principal on

3:56
this side and they deliver a guaranteed

3:58
income benefit on on the other side.

4:00
That's how we use them. And I'm assuming

4:03
we sell more than probably more than

4:05
anybody. But we never focus on the caps,

4:08
the spreads, the participation rates,

4:09
all that unicorn chasing the butterfly

4:11
nonsense. You're going to hear from the

4:13
local agent, the person at the seminar,

4:16
because that's all they're selling

4:17
because they need the seven to n% to pay

4:18
for the steak. You got to ask yourself,

4:20
if you're sitting there at a at a

4:22
steakhouse,

4:24
knowing that you're eating probably a

4:26
$200 meal of which you probably would

4:27
never go to, even though you should,

4:31
you got to ask yourself, how much

4:32
commission is this guy getting? A lot.

4:34
And why why are they only showing me one

4:37
product?

4:39
I don't know.

4:41
It's not right. It's not a fiduciary

4:42
move. It's not the right thing for you

4:44
because these are commodity products.

4:45
But maybe if they sell enough of it,

4:48
they get to go on a trip or they get

4:50
more commission from the carrier or

4:52
something.

4:53
Are fixed index annuities safe from a

4:56
principal protection standpoint? Yes.

4:58
Are there better places to protect your

4:59
principal and get a guaranteed interest

5:01
rate? Yes.

5:04
Are fixed annuities safe from a sales

5:06
pitch standpoint? No, they're not.

5:08
You're going to be inundated from your

5:11
broker to your banker to your CPA that

5:13
might try to sell them on the side.

5:15
Everybody's pitching them because in

5:17
their mind it's easy money. In my mind,

5:20
you're buying a product that probably

5:21
isn't going to work like you think it's

5:22
going to work. You're not owning it for

5:24
what it will do. You're owning it for

5:26
what it might do. And if you do that,

5:27
it's a mistake. You always own an

5:30
annuity for what it will do, not what it

5:32
might do. You never buy it for growth.

5:34
You never buy it for potential. You

5:35
never buy it because the agent advisor

5:38
said it's it's it's the way to go. You

5:39
never buy it if they say, "I've looked

5:41
at all of them. This is the best one."

5:43
You never buy it. If the person said,

5:44
"This one has an upfront bonus." You

5:46
never buy it for that. So, under those

5:48
scenarios, it's not safe. The sales

5:51
pitch is not safe. Your underlying money

5:52
is safe,

5:54
but it might be one of those things

5:56
where at the I had a guy call me the

5:57
other day. He had had an index annuity

6:00
for seven years. I think his he just I'm

6:02
not even going to say the return it was

6:03
so bad. And his comment was, "I could

6:05
have just put it in the back of the yard

6:07
and and dug a hole." Yeah, you could

6:09
have. and there wasn't any income writer

6:12
attached to it. He just bought it for

6:14
growth which was a colossal mistake. So

6:16
under that scenario it wasn't safe. Also

6:19
remember too the index options that they

6:21
always talk about those do not include

6:23
dividends. Why is that important? Well

6:24
the S&P 500 54% of the return

6:27
historically has been dividend based.

6:31
Also

6:33
index annuities they can only lock in

6:34
the gain typically with most of them one

6:36
day per year. The other 364 you're an

6:38
annuity unic. Look it up. spell it

6:40
right. But you know what I'm talking

6:42
about. You can't do anything. Is your

6:44
money safe? Yes. Are you safe from the

6:45
sales pitch? No. Are you safe from

6:47
someone saying, "Let me let me manage

6:49
your index annuity for you and charge a

6:51
fee." Fee fee for what? The one day.

6:53
They're a safe product. They're a CD

6:54
product. They're a fixed product.

6:56
They're a life insurance product.

6:59
Your money's safe, but it has to be

7:01
bigger than that for you. Okay? You have

7:04
to you have to figure out what you're

7:05
trying to achieve. What is the goal? And

7:07
if you say, "Well, I just want a

7:09
reasonable rate of return, son." Well,

7:11
then it's not an index annuity. Then

7:13
it's a MA. It's it's a multi-year

7:16
guarantee annuity. Well, I want 8 n 10%.

7:18
Yeah, I want six pack abs. That's not

7:20
going to happen either. All right. If

7:22
you want 8 n 10%, go buy the market.

7:23
Don't never ever buy an annuity. Now,

7:26
you you'll have the agents will email

7:28
say, "Well, this one specifically like

7:30
three years ago got this." Shut up. Just

7:31
shut just shut up. Go back to work.

7:34
Okay? I'm out working you. Don't buy

7:36
annuities for growth. Is it safe? Yeah,

7:39
the principle is safe. Are you safe from

7:40
the sales pitches? I hope so. After this

7:42
video, do me a favor. Go to my site. You

7:45
can schedule a call with me. You can get

7:47
me. I mean, half of my day is like, yes,

7:50
this is really Stan. No, this is not AI

7:52
stand. Yes, this is really Stan.

7:55
I'm I'm going to call you. I own the

7:56
company. It's the biggest biggest direct

7:58
to consumer company out there. But I

7:59
love what I do. I do it. I'm in it. I

8:02
own it.

8:04
I want to make sure you're making a good

8:06
decision. Hey, there's a video I did on

8:08
how annuities can protect your family,

8:10
help your family, and I give examples of

8:12
how I use annuities for my family,

8:14
specifically my two daughters, my wife,

8:16
and maybe you can get some information,

8:18
some ideas there, and book a call with

8:19
me. We can talk about your specific

8:22
situation and goals and what you might

8:23
want to use annuities to contractually

8:26
solve for from a legacy standpoint. It's

8:28
pretty cool. All right. Hey, good topic.

8:30
Glad you hung in there with me. Be safe

8:32
out there. If it sounds too good to be

8:34
true, guess what it is?