Best Performing Fee-Based Annuity

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Hi there, Stan the Annuity Man, America's annuity agent, licensed in all 50 states.

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Today's topic is, what is the best fee-based annuity out there? Oh boy,

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can't wait to chew on this one. This is going to be interesting. It's probably not what you're

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thinking, but maybe if you've seen some of my videos, I'm a little bit of a contrarian.

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Big C behind the camera looked at my hat and goes, "Stan, how old is the hat?" And I'm thinking,

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I don't know. I mean, I wear it to the beach sometimes, and this does look a little weathered,

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but you know, that distressed look is in. This is very popular, you know,

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with the kids. They like it to be — I guess if I tore a hole in it, it'd even get more, you know,

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thumbs up from the kids out there. But we're not talking to the kids out there. We're talking to

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the grownups. And we're going to talk about the best fee-based annuity out there. And,

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oh boy, this is going to be, as they say in the business, a whiz-banger after this.

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Alright, so, are you ready? Go ahead and

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sit down. You put the seat belt on. The best fee-based annuity.

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There is no best fee-based annuity because annuities shouldn't be charged a fee to manage.

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How about that? Bring it. All you know-it-all people in the industry, bring it. I'm ready. Come

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on. Come on. And there's a lot of companies out there that are like, "Oh, we're selling

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fee-based annuities." Give me a break. Okay. First, that's single premium immediate

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annuities, deferred income annuities, qualified longevity annuity contracts. Those are pensions.

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Hey, Chester, the advisor, what are you charging a fee for? Give me a break. That's

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a joke. Alright, so let's keep going. MYGAs, which is the annuity industry version of a CD,

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principle-protected with a contractual guaranteed interest rate for a specific period of time.

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What are you managing? What are you charging a fee for? Give me a break.

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Okay. Now, back in the day — and I'm old enough to say that because I understand what back

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in the day means — there were what was called no-load variable annuities. No-load meaning

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that agents couldn't sell it. And I'm an agent. Okay. The point is there were such things as

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no-load variable annuities, and fee-only advisors would manage that for tax-deferred growth.

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The problem with that is the best ones that were out there are no longer available. Period.

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I'm not going to mention the company names. I used to refer so many people to that. "Well,

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I'm just looking for tax-deferred growth, like market growth." Okay,

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great. Here's the fee-only variable annuity. But those things are gone.

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So, let's get to the other ones, which are indexed annuities — fixed index annuities — which

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were introduced in 1995 to compete with CD returns. Let me say it again. CD returns.

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Let me say it one more time. CD returns, not market returns. Fixed index annuities are not

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a market product. Not a market product. Never a market product. It's a fixed product sold at

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the state level. For anyone charging a fee to manage an indexed annuity is, my opinion — which

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I can say — a joke. If someone's saying, "I'm going to manage that indexed annuity because, you know,

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yeah, it only locks in one day per year, and the other 364 days there's nothing we can do,

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but I'm going to manage it for you." Give me a break. Okay.

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Which leads us to RILAs, which I don't sell. I don't have my securities license anymore.

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Registered index-linked annuities. Brokerage world, have at it. If you want to charge a fee,

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have at it. I don't even want to get into it. I don't even want to get into it with

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you guys. Okay? Do what you got to do. But I am going to talk to the consumer out there. If you

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want market growth, don't buy an annuity. If you want stock market participation, don't buy

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an annuity. If you want transfer of risk to solve for principle protection, income for life, legacy,

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and long-term care, and a non-correlated asset, then buy an annuity. But don't buy the hybrid.

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I hate the word hybrid. Hybrid's a plant. Hybrid's a car. Hybrid's even a mattress,

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I found out the other day. But hybrid's not an annuity. You can't have your cake and eat it, too.

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So, bottom line, what's the best fee-only annuity? None. Zero. In my opinion, zippo.

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And I can say that because I used to work for Dean Witter, PaineWebber, Morgan Stanley,

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UBS. I've been on that side of the ledger at the big — at that level. Okay? I've

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been there. Manage the money. Manage the money. Go with them or go with a registered investment

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advisor or whoever for growth, fee-only, whatever. But you don't need to be charged

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a fee for an annuity. And that should be my new rhyme: no fee for any annuity. Let's do it. No

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fee for any annuity. No fee for any annuity. No fee for any annuity. No fee. No wrap fee.

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Now, for all you little detailed people out there, annuities have built-in commissions.

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Life insurance companies issue annuities, like both life insurance and annuities have

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built-in commissions. It's a net transaction to you. The commissions are paid to the agent,

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the writing agent, from the operations account. But there should be no residual

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wrap fee on any annuity, in my opinion. Do you want me to do the chant again? I'll do

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the chant again. I'll throw a freestyle rap in there just to make it funky. But my point is,

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if you're sitting across from someone and they're saying, "Well, I don't care

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what the annuity type is. I don't care. Well, I'm in this annuity and this, and we're going

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to charge a fee for that." It should be like a record scratch. What? What are you talking about?

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Now, I've gotten in arguments with brokerage firm leaders of the annuity — you know, senior

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VP of annuity distribution — call me, go, "Well, you know, we really found it to be very advantageous

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for the client for us to charge a fee to manage the annuities." I'm like, bullshit, crapola. Give me

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a break. I was there. Okay. I was at Dean Witter when they started doing wrap fees. Before then,

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you know, you bought something, you sold something. It was a transactional fee. Then

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the industry went to wrapping the asset, okay? Charging a fee to manage the assets,

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okay? And the reason that companies — I'm not going to say the name — but there was a big company, big

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national distribution company, that decided not to sell annuities because they couldn't wrap it.

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They couldn't ethically put a wrap fee around it. And wrap fees were put in place for nothing more

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than brokerage firms to project future revenue. End of story. Period. That's the reason that they

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want to wrap the annuity, because it's an asset that's in the brokerage firm, okay, — or the

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RIA or whatever — that they want to wrap it so that they can project future revenue. Well, we've got

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100 million under management. If we're charging a 2% wrap fee, we're going to make $2 million next

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year in fees. Okay, that's fine, Johnny Appleseed, but it shouldn't involve any annuities. Annuities

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are contracts. They're turnkey. Contracts don't need to be managed because they're contracts.

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This one makes me mad. This one here — I see no reason at all. And bring it.

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[email protected]. [email protected].

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Bring it and try to justify why you are managing, for instance, an indexed annuity

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that only can be locked in — the gain — one day a year. Please tell me why you are getting the,

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the, the wrap fee for the other 364. Please explain to me why that's good for the client

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and in a fiduciary manner. You can't. This message is for the consumer. Be careful.

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Annuities are commodity products and they're contracts, and you shouldn't pay

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an annual fee for the management of it. The only exception I'm going to give — asterisk

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moment — would be a no-load variable annuity, and I'm going to punt on the RILAs. I'm

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going to punt because I'm no longer securities licensed. Have at it. Do whatever you justify,

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however you want to justify. But for the fixed side, no bueno. Okay. It ain't gonna work.

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Alright. Now that my blood pressure is down, because I can self-regulate that on cue. Above me

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is a video I did about contractual guarantees only. It's, it's important to our company,

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should be important to you, but it dovetails on what we're talking about. They're contracts,

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and you shouldn't be charged an ongoing fee for that contract. I think this was

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a cathartic moment for all of us. We learned a lot. We shared, you know,

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we cried, we laughed. At the end, it's all good. My name is Stan the Annuity Man.

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See you next time.