Branislav Nikolic: Annuities Are Math

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foreign

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listen learn laugh and love every minute

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of the most unique Financial podcast on

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welcome to fun with annuities my name is

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Stan the annuity man America's annuity

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agent licensing all 50 states

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I know that you're always saying Stan

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you know dumb it down dumb it down for

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us make it simple for us well today is

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going to be a tough one because we have

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a really smart dude with us uh and I'm

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so excited to have him on because I've

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been chasing him down for a while I mean

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he's avoided me as he probably should

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have

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um for a long time but uh he works with

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a company called canx you might be

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familiar with that because uh Gary Baker

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the Grand Puba of canx has been on this

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show numerous times and uh actually I

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asked Gary's permission if he could be

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on without further Ado let me explain

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who's on the program his name is

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branisloff nikolich right yeah

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Grandma's law is so good to to uh

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finally get you on the program I I have

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this instinct to call myself stanislav

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as we're doing this but I'm not going to

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do that so it's brown it's like a

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running joke for years now it has been

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it's appropriate right

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it really has been it's been one of

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those things

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um tell us a little bit about yourself I

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was going to read all of your your math

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accolades and academic accolades um tell

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the people who you are

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hi uh super happy to be here

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um so who I am um I run a research at

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canex canex's pricing analytics firm

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that operates both U.S and Canada and we

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pride ourselves in providing the

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comprehensive

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um annuities

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um exchange starting with the single

2:10
premium annuities and now expanding that

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into uh fixed index registered indexed

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and variable annuities so uh part of my

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role at canex is to help bring these

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platforms to to fruition uh the other

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part of my role is to um help do the

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research in everything retirement from

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the accumulation strategies inclusion of

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annuities

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um and and kind of optimization in

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retirement and this is where my um kind

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of other leg is in Academia and in a

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process of completing my uh my PhD in

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applied math where I really look into

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these um

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optimization algorithms to to make the

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retirement outcomes better from the from

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the math standpoint

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um the the Third Leg of what I what I do

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at canex is uh Consulting and really

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helping others develop their processes

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whether they're uh people like Houston

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and helping you with with your sales or

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helping platforms uh embed canics

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connects data and information and

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analytics into their their end-to-end

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processes so very multiple hats on on

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any given day and just a heads up for

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everybody when you run quotes on our

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side our calculators our speed accula

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calculators that that data is coming

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from canx and we do certainly trust them

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they um literally I mean well I wouldn't

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say literally but close to would have a

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monopoly in that data

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distribution space and the annuity uh

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annuity industry a couple thing about

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brandislav which is just I mean I'm an

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honored to be on with him I mean he has

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a um

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he's he didn't go deep into who he is

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but he has a master's degree in

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probability and financial engineering

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okay so you know we're talking about

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annuities I always say annuities are

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math and he's probably the first one to

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nod his head on that because they are

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and I think um what canx does is very

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important because not only do they

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provide the quotes but they start

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looking into the analytics of it and the

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and how people are buying we get all

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kinds of interesting studies from them

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Etc

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um I wanted I've read a couple of

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articles that you've been a part of one

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of the the

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guest celebrity Superstars has been on

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this podcast is David Blanchette and you

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did a a recent article was entitled some

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income guarantees are better or a better

4:42
deal than others

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can you dumb that down for our listeners

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and viewers on what that means to the

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consumer

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so so there are a few things and again

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it's it's always an honor and pleasure

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to work with David on on these these

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types of Articles and research and uh

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again just to go a little bit back to to

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my my history like I was really blessed

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to work and went in along industry

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superstars in my in my young career so I

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started uh as an intern with

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moshinjalevsky uh was with his startup

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initially then uh that started was

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acquired by kennex androcanics obviously

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Gary and Lowell and then Thomas later on

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so David Michael finka so I've been

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really blessed to get to participate in

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this research projects so I just wanted

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that to be an opening line sure sure

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motion has been on motion Moshe actually

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lowered himself to be on fun with

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annuities so we really enjoyed that that

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was great in fact he is funny you'll

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love this love so he we got him on it

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was you know he I'm sure he wanted to

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come on he just did it as a favor but

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after that he goes Stan that you know

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how he is he goes Stan that was

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surprisingly enjoyable

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conversation with Stan just recorded

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right

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so tell us about that article because I

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thought the title was intriguing some

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income guarantees are a better deal than

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others what does that mean for the

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consumer Reynolds law what we really

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wanted to achieve there and it was like

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a three-piece uh three-piece uh research

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that actually will culminate in a in a

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white paper but the piece that you're

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referring to is that there's some that a

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it you really have to look into shopping

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around for annuities and then when you

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look into the value that annuities are

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providing uh some annuities have all we

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like to call him research better

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economic value than the others so that's

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standard measure of how people evaluate

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whether something is a good deal or not

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and again it's dependent on your on your

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assumptions in a model but to dumb it

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down the bigger number the better so if

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you get if you get numbered it's around

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100 000 it means that you're getting

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your bang for a buck anything less than

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that there is some some dissipation of

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the value and what we're trying to show

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how that value changes if you choose

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annuities with a different referral

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periods so going from Spears all the way

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to uh late deferral ideas

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right and also trying to show that you

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you even though the value dissipates

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that doesn't necessarily have to be true

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if you shop around it you can always

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find an annuity that it's as close to a

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hundred percent of the value based on

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our model so that there is always a

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better deal or there's always one one

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better annuity than the others and you

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you should you should be looking for

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that constantly

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um and then let me interject real quick

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and we take that very high level

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approach that can X takes and branislav

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and Gary Baker and much Molasky and all

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those guys and and

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and what we do is we just say listen

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shop all carries for the highest

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contractual guarantee our calculators do

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that these are is fluid it's a fluid

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industry these are commodity type

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products and I think what brandisloff is

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saying in a very high level way that we

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sell in a very low level way is you know

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don't just let someone show you one

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product you know shop them all because

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they change and carriers are are trying

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to attract

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age age ranges they're filling tranches

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there's capacity issues so don't get

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enamored with the television commercial

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in a name you know shop all carriers

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I'll throw a ball back to you

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this is this is again one message

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through consumer the other messages for

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someone like like you who doesn't have

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all the older carriers and all the

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products on on the Shelf I got most of

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them

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make the Shelf as broad as possible

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because the best deal may be somewhere

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when you're looking right so other piece

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of the research that that uh we did was

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and again this was surprising on how

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does the ranking of a payout really go

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go into play so you would always expect

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that uh very highly rated company will

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offer you the lowest payer I mean that

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that just makes sense right if I have

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like a high credit rating sometimes you

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know we're seeing some anomalies yes

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correct you know we've seen a lot of

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anomalies that's what I wanted to to to

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to put a highlight on that I would

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expect that AAA company has a luxury of

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not giving you the best cloud then when

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you go dig deep into the data you see

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that the AAA company is giving you the

9:22
best quote right for me that's that's

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again

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calling a nerd word but that's that's

9:27
Arbitrage like you're getting that's

9:29
correct you're getting the best payoff

9:31
payout and you're getting uh getting it

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from a highly reputable organization so

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kind of reeling it back in it always

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pays to shop around

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I agree with that and the word arbitrage

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is interesting because that's thrown

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around in the stock world where I came

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from everyone's looking for The Sweet

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Spot in Arbitrage Etc and I always tell

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people with annuity quotes like we're

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doing spia D A culac type quotes we even

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have income router quotes on our site

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um you know the the Arbitrage is quoting

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all carriers and knowing that these um

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quotes are kind of like a gallon of milk

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and they expire every seven to ten days

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so

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um it's a very interesting Marketplace

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and with the demographic tidal wave of

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10 to 11 000 Baby Boomers in 65. it's

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getting competitive what else did you

10:19
and David Blanchette find within this

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study or finding

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what what interesting thing that uh that

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I forgot to mesh initially is the spread

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of the best and worst quote and uh

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Moshe and others did some research way

10:34
back and showing that uh annuity

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carriers respond differently to changes

10:39
in interest rates that the response

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could be sluggish for some more more

10:44
quick for the others but we always saw

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again historically uh that around 10

10:49
percent uh difference between between

10:51
the the worst and best quote on canix

10:54
and again you said like not really a

10:55
monopoly but most of most of the market

10:58
is is uncannex correct so this summer

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for the first time around you see that

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grow and it grew all the way to 30

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percent uh for for for some payouts

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again what can you tell is that you can

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tell us that the top the top is sure was

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really chasing the business the bottom

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issue really didn't want to be there but

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if you are really looking into

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few you could really end up with uh with

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a with a with a not not such a

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competitive quote and that can cost you

11:28
um again going forward

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no absolutely one of the paragraphs that

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kind of popped at me was not going to

11:34
read it word for word but the bottom

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line was the median economic value

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uh suggested that that you know these

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annuities for Lifetime income are

11:44
attractively priced when you look at it

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from the perspective of the consumer

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um I believe that to me that's because

11:52
these income annuities that in this BSD

11:55
as in culax are very very transparent

11:57
and simple products do you agree with

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that

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I would say so

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um I think that the key

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the key thing that has to be kept in

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mind is that most of the time these are

12:12
nominal income products basically a flat

12:16
dollar value for life and how does that

12:18
go how to that kind of factor into into

12:20
planning

12:21
other than that fact uh that's not kind

12:23
of always abundantly clear and made

12:25
always abundantly clear I I think it's

12:27
as simple as it gets I hand you the bag

12:29
of money you hand me the payments on

12:31
some some frequency now what's what's

12:34
interesting and again this is kind of

12:35
like

12:36
me having kind of one like in Academia

12:39
one like in the in the industry is that

12:41
a lot of academic research is is done

12:44
and again David and I in in this

12:47
particular piece also kind of did that

12:49
we did it for a life-only annuities in

12:51
other words annuities did not provide

12:53
any debt benefit if you get hit by that

12:55
proverbial boss that everyone's talking

12:57
about sure sure

12:58
um so the the ra the rise of the cash

13:02
guarantees in terms of a get a cash

13:04
refund or sure refund I think warrants

13:07
more look into into that especially than

13:10
that you don't see the much of a

13:11
difference in uh in what you get for

13:13
your money from these two things and the

13:15
value proposition is vastly different

13:17
and you again you don't have to talk

13:19
about what if I get hit by the bus

13:21
tomorrow like that conversation goes

13:23
straight out of the window

13:24
yeah what's interesting right now at the

13:26
time of this taping

13:27
um we're sometimes finding the life with

13:30
cash refund quotes are better than the

13:33
life only quotes which just means that

13:34
you know carriers are trying to attract

13:36
that attack attract that tranche and

13:39
that specific guarantee in that age

13:40
range

13:42
um which is interesting which is why I

13:43
say let's quote them all if we're going

13:45
to quote life only and you don't want to

13:46
leave a legacy let's at least quote the

13:48
other just to see where the um where The

13:51
Sweet Spot is if it makes more sense

13:52
mathematically for you I you know you

13:55
are also talking about is your profile

13:57
just to interject profile of an

13:59
individual drill that's looking for a

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lightweight cash refund or lap only uh

14:05
but again if you have super healthy

14:06
individual warring that are going to

14:07
live to like 120 that's fine even if you

14:11
get a better quote uh with a with a cash

14:13
refund I think the the flip side is that

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I think with a cash uh cash refund or

14:18
installment of refund quotes you're

14:20
trying to attract someone who doesn't

14:21
really believe that longevity runs in

14:24
their family I don't think that's 100

14:26
true brandislav I think that and I would

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encourage you you you smart Academia

14:33
high IQ people to look at it a different

14:35
way

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um most people that get to retirement

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chapter two of their lives you know they

14:41
did not come from money or from means

14:43
they're like myself they they came from

14:45
very very low class Low Low Middle low

14:48
class America didn't have money and now

14:50
all of a sudden they have it and I don't

14:52
think they're looking at it from hey I'm

14:54
not sure my longevity is good I think

14:56
they're looking at it from I've worked

14:58
my ass off for this money excuse my

15:00
French and I want to make sure that 100

15:03
of it goes to somebody in my family even

15:05
though the annuity company is

15:06
contractually obligated to pay as long

15:08
as I'm breathing I really believe

15:11
that's the driving

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choice and reason people choose

15:16
installment refund or cash refund or

15:19
period certain attached to that life

15:21
contingency because they've come from

15:23
they've come from nothing and they've

15:25
made it I have to remind people a lot of

15:27
times around a slot that they've won the

15:28
game you've worked hard you put money

15:30
away but even then you have scars of

15:32
what I call scars of the lower class

15:34
scars of the middle class that that

15:36
money still means a lot to you even if

15:38
you have millions of dollars you you

15:40
know you don't want to see the money go

15:41
poof

15:42
so I think um from an academic

15:44
standpoint I would encourage you and

15:47
others to say hey it's not that static

15:50
they're not looking at it well you know

15:52
my my grandmother my grandfather had

15:54
life expectancy or didn't have life

15:55
expectancy I'm making my choice there I

15:57
really believe because I'm on the front

15:59
lines here with my team

16:01
they're making the decision that yeah I

16:03
want the like some income but I don't

16:05
want that evil annuity company to keep

16:06
it so that's just my take being in the

16:08
wars every day no I I I agree with you I

16:11
and I think that's that's the the bulk

16:14
of the reason is behavioral in a sense

16:18
I really have to give you give you the

16:21
bag of money the word it's emotional

16:24
brand of sloth it is emotional it is

16:26
emotional so I I see that I'm I'm

16:29
thinking from really on a pricing side

16:32
of what insurance insurance companies

16:34
are doing that are trying again to help

16:36
uh

16:37
they're pricing differently for

16:40
different people so that's what I'm

16:42
saying I I think that that could have

16:43
some some some sales appeal uh in

16:47
addition to again getting over the hump

16:49
of really handing over a large chunk of

16:52
chunk of money for for for a paycheck

16:55
every every so often it's funny I when I

16:58
talk to people and my team talks to

17:00
people we ask questions and and really

17:02
basic southernisms in English and we

17:04
always say so if your Learjet hits the

17:07
mountain with both of you in it and

17:08
money goes poof do you want it to go to

17:09
somebody in your family or do you care

17:11
and I would say 95 of the time they're

17:14
like oh no no we wanted to go to

17:15
somebody in our family so

17:18
um you know we break it down so people

17:19
understand what that means but um you

17:22
know I love I love the paper that the

17:25
research that you and David were working

17:26
on because you know people need to know

17:29
the benefits of these and understand

17:30
that annuities are math um this is not

17:32
an investment it's a transfer of risk

17:35
that's the most important thing to get

17:38
to emphasize that annuities are not

17:40
wealth maximizing you're not I mean

17:42
insurance is not about marketing you're

17:44
not buying Insurance to be to be better

17:47
off you'll be better off in the case of

17:50
an event uh for car policy that's if you

17:53
get into a crash for house policies if

17:56
you get if your cause burns like if for

17:59
annuity is if you live longer then

18:03
how much money you have to support

18:04
yourself so I think I think that that's

18:07
a that's a key first thing to be to be

18:09
understood and then

18:12
obviously understanding that it's not

18:16
All or Nothing that this is part of a

18:18
big bigger picture of uh having a

18:21
portfolio of things that work for you as

18:23
opposed to just portfolio stocks and

18:25
bonds sure it may work for you and just

18:28
to clarify you know always tell people

18:30
that annuities there's many types I love

18:33
when people say I hate all annuities

18:35
it's like saying I hate all restaurants

18:37
um or I hate old shoes

18:40
um you know they solve for four things

18:42
primarily the acronym I come up with

18:43
this pill principal protection income

18:45
for Life Legacy and long-term care what

18:47
brandislav and I are talking about are

18:48
is the income portion the income for

18:51
life which is really the reason

18:52
annuities were put on the planet a long

18:54
time ago as a transfer risk income

18:56
Solution that's what motion molesting

18:58
everybody and when you work with them

19:00
that's kind of the research and what

19:02
you're finding but it does solve for

19:04
other things but what we're primarily

19:05
talking about today is income for life

19:07
and within a pensionless world that we

19:10
live in unless you're a government

19:11
worker Etc or work for one of the eight

19:13
percent of the companies that provide

19:15
that private companies then you're going

19:17
to have to visit transferring risk for

19:20
an annuity because my friend Wade Fowler

19:23
your friend Wade foul he's completely

19:24
destroyed the four percent withdrawal

19:26
strategy with stocks and bonds that's

19:29
just dead and it's dead in a in a market

19:32
like this as well because of the of the

19:35
volatility that's getting ready to

19:37
happen I also wanted to ask you about

19:40
um you know you work with all the big

19:41
hitters and all these guys have been on

19:43
my my podcast Michael finka and David

19:45
and all this guys you did you did

19:48
something for uh I think a research

19:51
organization about how competitive our

19:54
income annuity providers over time and

19:58
it was done last year but it's always

20:00
fascinating

20:02
how you dug into that in and why that

20:05
title fascinated me how competitive our

20:07
income annuity providers the carriers

20:09
over time

20:11
hey what led you to for that to be the

20:15
drive to what you did and B what did you

20:16
find out

20:18
so what led us to it so it was it was

20:21
Michael David and myself so we were

20:24
having a lot of these conversations and

20:25
it started on a on an in-planned basis

20:28
so uh we were talking about

20:29
institutional market and people choosing

20:32
uh their Insurance Partners to provide

20:36
solutions to put them in plans to talk

20:38
to plan sponsors and whatnot and that

20:41
was that was there was a conversation

20:42
starter and

20:44
well we have at 10x is the historical

20:47
data that goes back to early 2000s on on

20:50
annuity quotes and again people uh

20:52
people carriers were coming to the to

20:54
the platform leaving the platform but we

20:57
were able to find sizable portion where

20:59
you see the same same number of carriers

21:02
having different level of

21:04
competitiveness over time you had some

21:06
carriers who are bouncing from being at

21:09
the bottom of the pack to the top of the

21:11
pack and we tried to correlate that to

21:14
whether it's a mutual or a stock company

21:16
uh whether the credit rating mattered

21:19
what we what we chat about it initially

21:21
uh the you have carriers who are

21:24
constantly bouncing and have very

21:26
volatile rank or very volatile payouts

21:29
compared to the others on the platform

21:31
and you have some who are constantly

21:33
good or have some who are constantly

21:35
improving so we wanted to kind of

21:37
provide the uh again the notion that you

21:41
should always be looking that what was

21:43
good yesterday or the day before or may

21:45
not be good tomorrow and in one of our

21:48
findings was that even though companies

21:50
ranked number one today there is really

21:53
no uh ground no grounds in this data to

21:57
kind of believe that that's going to be

21:59
like that six months from now so the the

22:01
message is six months from now do your

22:03
quoting again

22:04
who's the best today and correct and go

22:07
over there because again different ways

22:09
that again companies operate based on

22:12
their structure sure

22:14
um different times of year

22:16
um again their sales budgets to be met

22:17
uh their reports to be filed so you can

22:21
as a consumer

22:22
really benefit from from from uh

22:25
querying the market

22:27
um before buying and that's why

22:31
um you know I developed my site and my

22:33
business model to cover all 50 states to

22:36
quote pretty much every carrier out

22:37
there and treat these as commodity

22:38
products for that reason right there we

22:41
don't know the internal workings of each

22:43
carrier and what their goals are what

22:44
their capacity limits are what their

22:46
profitability ranges are that they're

22:48
trying to hit

22:50
um so we don't look into that all we do

22:52
is we quote all carriers to see who is

22:54
trying to attract that premium I want

22:56
the consumer the listeners on all the

22:58
major podcast platforms on the YouTube

23:00
channel that are watching this

23:02
what when you run a quote and you see

23:04
ABC company whatever that company is we

23:06
don't mention company names

23:09
um at the top all that means is they

23:10
want you they're attracted to your age

23:13
range they're attracted they want to

23:15
fill that tranche up they have a

23:16
capacity limit that they're looking at

23:18
and they they want you to to choose them

23:21
not it's it's nothing it's the same

23:25
correlation as buying a plane ticket

23:27
when you go buy a plane ticket you put

23:29
in where you want to go how you want to

23:30
go you know your first class would be

23:33
life with cash refund you know economy

23:35
would be life only and then they bid on

23:38
it and you you really shouldn't make it

23:40
any more difficult than that it gets

23:42
more difficult

23:43
with the indexed annuities the register

23:45
the raila products Etc that you're doing

23:48
a lot of work on as well any comments to

23:51
that we're going to Pivot to that yes

23:54
and no so so again okay you're right

23:57
you're right in in principle you you put

23:59
yourself out there and see what's

24:01
available to you and again we've we've

24:03
seen that the the payout rank are varied

24:06
based on Age based on gender based on

24:09
company so it was it was

24:10
multi-dimensional we tried to we really

24:12
tried to quantify how much would you be

24:15
losing if you go with a single provider

24:18
all the time and try to kind of uh find

24:20
that ratio oh my yeah

24:23
versus versus the best the best best

24:26
quote and as you can see that see that

24:27
in the paper but the answer was

24:30
significant amount yeah we're just not

24:32
not doing the homework so that that's

24:34
the first one the other one is you kind

24:36
of touched on it a few minutes ago and

24:38
now you touched it again so

24:40
I I I gave a talk last week to to a

24:43
bunch of graduate students and

24:45
undergraduate students in uh Trail

24:46
science and what I said annuity everyone

24:50
kind of nodded her head I was like oh I

24:51
know what it is like that's a bag of

24:54
money give the payments back because

24:55
they don't know the annuities that we

24:57
worked on at kennex that's one kind but

24:59
there's all these other things that come

25:01
under the name of annuity sure that

25:03
really has the one portion the income

25:07
portion that kind of is talking about

25:08
the annuity everything else is an

25:11
investment vehicle in my mind tax

25:13
savings vehicle in my mind all the other

25:16
things that you can achieve with it and

25:18
the annuity is just one one part of it

25:20
so I wouldn't necessarily I wouldn't

25:22
necessarily think that um

25:25
if you are looking for a prospia quote

25:27
or you're looking for the income Rider

25:29
uh income guarantee from either a

25:31
variable or indexed annuity uh that it's

25:34
very much different again I think

25:36
they're they're priced differently one

25:39
is more tailored to a certain group one

25:42
changes more often than the other but I

25:44
still think that and then we did this

25:46
research few years back it was uh

25:49
topical myself and and a few others and

25:53
it was basically again the message is go

25:56
look around and see there was a period

25:58
of time where you can get the higher

26:00
income guarantee from an income Rider on

26:02
a fixed index annuity then what you

26:05
can get from the from the income annuity

26:07
that's true again

26:11
if you don't go into details why that

26:13
happens does it really make intuitive

26:15
sense one you're giving away your

26:17
liquidity your your parking the money

26:20
that one should be paying the most okay

26:21
that one but the key for that one is

26:24
that everyone who does that gets bad for

26:26
the income Riders that's not necessarily

26:28
the case a lot of these are kind of put

26:30
in as a as a throw-ins like when you're

26:32
buying the car I'll get you a floor mats

26:34
I'll get you the first aid kit but some

26:36
of these Riders never get used and

26:38
that's that's why the those who use them

26:41
uh yet to benefit a little bit more than

26:44
everyone else who is annuitizing

26:46
throughout trending continuity so again

26:48
not even within a single category my

26:51
message would be look around there is

26:54
nothing nothing to lose and these are

26:56
again to begin with contractual

26:58
guarantees now this is where you and I

27:00
may may

27:02
um

27:03
differ just a bit I would like to go

27:05
step forward and say okay we know the

27:08
stake we know we notice what what's the

27:10
guarantee but let's look into a Sizzle

27:12
as well look let's oh no tell me no

27:16
you're drinking the Kool-Aid Brianna

27:18
stop come on go ahead I'm serious so so

27:21
that's that's that's basically saying

27:22
let's make sure that we get the best

27:24
guarantee out there sure and then let's

27:27
see what else we can get as a throw-ins

27:30
along with it keyword throw in

27:34
so I I just this is where we can

27:36
professionally disagree to disagree

27:39
um but that but I understand

27:41
a lot of the cells discussion no I

27:45
understand I understand I love it though

27:46
I mean this is why you're on

27:48
um and what branislav is talking about

27:50
there are some annuities that will say

27:52
hey

27:53
um this income will increase if the

27:55
indexes increase etc etc sounds really

27:58
good until you do the math and the

28:01
annuity companies don't give in any way

28:03
anything away for free and they have the

28:04
big buildings for a reason they just

28:06
simply lower that that didn't make them

28:08
bad but it's not ever revealed typically

28:12
in a sales

28:14
um presentation it's it's sold as hey

28:17
this income increases with inflation or

28:19
this income increases with uh with um

28:28
you said something this is how this is

28:31
in a sales presentation correct and I I

28:35
think that the sales presentation when

28:38
we are talking about livelihoods and

28:40
lifetime words of savings should be

28:43
better than looking in a rearview mirror

28:44
and Blasting forward uh that's that's

28:47
again that's that's that's how our

28:50
industry looks into sales sales

28:53
presentations

28:55
um I still want to want to go back so so

28:57
you're talking about someone giving you

28:59
less of a guarantee on a promise that

29:01
your income may be higher not a promise

29:04
that's not a promise it's a hope and a

29:06
Dream It's a unicorn Chasing a Butterfly

29:08
yes

29:09
yes what I was what I was really I was

29:12
really kind of one one step away from

29:14
that and saying that even though the

29:16
guarantees may be equal this is the time

29:20
where you had a chance to look into what

29:23
are the what are the underlying

29:24
offerings on indices strategies uh

29:27
additional Riders they will go together

29:30
with the income guarantee that that

29:32
you've selected again for me uh I think

29:35
the the key is that we need to

29:37
differentiate buying an annuity

29:41
for what it is which is guaranteed

29:44
income for life or what it should be or

29:47
buying an annuity as a tax deferred uh

29:50
investment vehicle I think that the if

29:53
if we just differentiate these two types

29:55
of types of consumers I think I think in

29:59
one in one everything is a fair game

30:01
you're chasing returns you have to look

30:03
into sure the into the the dream into

30:07
how can my money grow and again

30:09
understand certain limitations to it

30:11
sure on the other hand if you're looking

30:13
to get yourself a pension or a pension

30:16
equivalent

30:18
that's a different story then you really

30:20
need to go deep into what our guarantees

30:23
are sure and then look at the throw-ins

30:26
uh as as an added bonus to it I know

30:29
that you guys are doing a lot of work in

30:30
the index annuity space and people know

30:32
that my my take on that they're the most

30:35
horrifically sold products in the

30:37
history of mankind

30:39
um even though they're good products up

30:40
to this point I think we have a chance

30:42
to change that I totally agree and

30:44
that's the reason I want to have people

30:45
like you on because we need to clean up

30:47
space the space is ugly it's messy and

30:50
it's gonna it continues to create

30:52
problems unfortunately from a sales

30:55
um perception standpoint what's your

30:57
take on all of these companies making up

30:59
indices out of midair and then showing

31:01
back tested numbers on indexes indices

31:04
that didn't exist two months ago

31:09
I I I I think that that there's part of

31:12
that story that's perfectly fine and

31:14
legit and there's part of that story

31:16
that kind of

31:18
ties mean to not and let's start from a

31:21
thought I mean they're not like I I

31:23
don't think I don't think back testing

31:26
is is a good thing I think thank you for

31:28
that it serves it serves a purpose in

31:31
other words

31:33
if I'm creating an index that's

31:35
comprised of two things Apple and Google

31:39
and I'm saying this is how this would

31:42
have looked in the past

31:44
that's no guarantee or any indication

31:47
how this will look sure uh back test

31:50
doesn't doesn't tell you about how well

31:52
constructed this index is

31:54
what goes into it how transparent it is

31:57
uh it tells you nothing other than

32:02
looking backwards this is what it would

32:04
have been and to me that's that's

32:05
arithmetic overfitting and that that's

32:08
how they are created the danger I think

32:11
that that poses is that when you layer

32:13
another concept without pop of it which

32:16
is creating strategy and annuity and

32:19
then you start kind of looking backwards

32:22
and you get into a situation it's like

32:23
hey Brian is it is it is it really

32:25
possible that I I could get like 14 on

32:29
this fixed annuity or fixed index

32:31
annuity uh with this particular index I

32:33
was like

32:34
yeah if you're looking for that

32:36
particular year and if the annuity that

32:37
you're buying today was available back

32:40
then under the terms and conditions that

32:42
you're going in today then absolutely uh

32:44
says this did if anybody existed and if

32:47
returns panned out to be sure it wasn't

32:49
back then sure and then 14 is what what

32:52
you would have would have gotten uh it

32:55
would have gotten is is is the key

32:57
keyword here now I think that

33:00
there is there is a way there is a way

33:02
forward uh I think that again going back

33:05
to sales practices I think illustrations

33:08
should serve the purpose

33:10
did their name kind of carries

33:12
Illustrated basically showing you if

33:14
something goes up something goes down

33:16
this is how this product or Rider will

33:19
react

33:21
um I always joke that what we do at

33:23
canex

33:24
we provide these annuity engines we can

33:27
pass the returns that you believe in we

33:29
can pass the returns that happened

33:30
before for for that matter we can pass a

33:33
sequence of heads and tails and see what

33:35
happens the key is to understand how the

33:39
product operates and if you are to put

33:42
any fuel into that engine make sure that

33:44
that fuel is is legit and it makes sense

33:47
in a broader in a broader sense

33:49
when Gary Baker I had dinner with him a

33:52
while back and he told me that you guys

33:53
are taking on this index annuity project

33:55
it was a while back because I know

33:56
you're deep into it now I'm like that's

33:59
got to be hard because rules change

34:01
every year and every carrier it's like a

34:05
moving Target you always tell people

34:07
when you buy an index annuity that has a

34:09
10-year surrender charge

34:11
with a one-year opt call option you're

34:13
really buying a one-year guarantee with

34:15
a 10-year surrender charge we we can

34:18
look back at the renewal rate history of

34:23
a carrier but we can't tell you that's

34:25
going to happen

34:26
can you actually

34:28
we have we have systems in place here

34:31
because I'm who I am

34:33
um that that we do track the the

34:36
pro-consumer favorability of some

34:38
carriers but like you said it's hard to

34:41
track and

34:43
so the reason the reason I'm saying that

34:45
is that a few years back and and again I

34:47
think this is still Project work while

34:49
doing but I think it's it has a

34:51
survivor's bias in it we tried to round

34:54
up carriers and ask them to give us this

34:57
uh renewal rate history on an anonymous

35:00
basis that will huddle over it drive

35:03
some conclusions and give back a report

35:05
in saying how is our industry doing

35:08
uh surprise I mean surprise surprise

35:11
I heard from some we don't hear from the

35:13
others some are very diligent in sending

35:15
their renewal yeah by the way

35:18
um point point taking went nowhere

35:21
because what we've seen was uh was uh

35:24
was a was it was a case of

35:26
carriers who really don't play into

35:29
changing the rates or changing the

35:31
parameters field gave us their data that

35:34
everyone was aware of

35:35
um I want to go back to to what would

35:37
you say like you know 10 years standard

35:39
period you're buying up buying a term

35:40
when you call option like sure thing

35:44
um I think we were in an environment

35:46
that weren't trying something other than

35:49
a fixed annuity for a long time and what

35:53
was your alternative you could run with

35:55
the bulls and say like all this this is

35:57
nonsense markets only go up it will

35:59
always go up and let let's ride it if

36:03
you were in the other camp and saying oh

36:05
I need to to mix mix up some some fixed

36:07
income or or you're getting not nothing

36:10
for it so this started to serve as a as

36:13
a fixed income replacement and I agree

36:15
with you private is change uh but if you

36:18
have made your decision that this is

36:20
type of the vehicle that you want to get

36:21
into now

36:24
assuming today that parameters will stay

36:26
where they are or be close by it's

36:30
honestly the best assumption you can

36:31
make I'm not saying it's a it's it's a

36:33
bulletproof one but what else can you do

36:35
and then choosing an annuity construct

36:37
that works better than the other based

36:39
on your your conviction so there's a lot

36:42
of things to go back there but point

36:43
being that if you are ordering the

36:45
market for it

36:46
and this gets us into the story are

36:48
people really in the market for it or

36:50
they have a Salesman at their door who's

36:52
trading market for them yeah that's a

36:54
that's a that's a different story but I

36:57
I think that there's only so much you

36:58
can do now what we do at Gen X we track

37:00
all of these these changes but for new

37:03
sales and we try to help you make an

37:06
informed Choice with all the information

37:08
that that you have now we do it one way

37:11
we support other platforms and services

37:14
that they want to do it their way but

37:16
the key is that at least the annuities

37:18
represented as close as possible to to

37:22
the one that's coded up in the admin

37:24
system of the of the carrier and again

37:27
help people understand how that works

37:30
what makes you get up in the morning and

37:32
want to be passionate like this about

37:34
annuities because people are saying Stan

37:36
what did you did you always plan to

37:38
become Stanley nude I mean nobody plans

37:40
to become stand the annuity man okay it

37:42
just happened and now I'm here but the

37:44
point is annuities are still the

37:46
financial curse word okay so what's the

37:50
passion here where did that come from or

37:52
did just mosh molefsky threaten you and

37:55
say you have to be passionate about no

37:57
kidding no no no no no

38:00
Moshe is one of the the the key reasons

38:05
why I end up where I'm so I'm going

38:08
going to to to to my math math

38:10
department and doing my my degrees I

38:13
always thought I would end up on a

38:14
trading floor be a proper Quant uh help

38:17
trade options sure sure and Bob's your

38:20
uncle right

38:21
then when I was looking for for my first

38:23
internship

38:25
um my current my PhD supervisor who was

38:29
moshe's Master supervisor as well a few

38:32
years back uh he had a hand in the

38:35
business

38:37
um that Moshe at Moshe had and he said

38:39
look we're working an interesting

38:40
project they're not flashy but the

38:42
problems are interesting and I was like

38:45
come on people like retirement yuck like

38:47
who does that and and I have to go back

38:50
to to my family to my friends and say oh

38:54
I'm really a retirement want right yeah

38:56
I thought that was that was that was a

38:58
bad thing yeah as I started working

39:00
working with them I see hey the problem

39:02
is extremely interesting the problems

39:04
are hard so the problems are not

39:06
something that's been sold the problems

39:09
are nasty and you have to kind of

39:11
wrestle day in and day out and I think

39:14
that he the key driver and again like

39:18
what what makes you wait what makes me

39:20
up

39:21
makes me wake up in the morning is the

39:24
fact that you have a human being in

39:28
their stage 2.0 of life that you're

39:30
you're you're you're calling it who

39:33
depends on how well you do you can help

39:36
a real human being who can be your your

39:40
uncle your your parent Your Grandparent

39:43
and that's the impact that I love to

39:47
I'll have to see of the work work that I

39:49
do so every everything that we do we do

39:52
that with with that in mind

39:54
again helping the the end consumer the

39:57
end user understand what they're buying

39:59
provided with the ability to buy or buy

40:02
the best version and enjoy it in in in

40:07
in their in their um

40:09
again

40:10
and it's a demographic tidal wave of

40:12
people that need your research they need

40:14
this premise love I mean they need

40:16
people at your level

40:18
um working on these these things and

40:21
making it understandable so that they

40:23
can make good decisions on facts instead

40:26
of the sales pitch what frustrates you

40:28
that makes you happy what makes you what

40:31
makes you scratch your head and go holy

40:32
crap I need a beer

40:35
it's kind of a flip it's it's a flip

40:37
side of the of the same argument is that

40:42
I've I've spent almost 10 years in this

40:44
in this industry working on on

40:46
retirement I'm surrounded with people

40:49
who did this longer than me people who

40:52
have like Advanced degrees sure uh Ultra

40:56
smart people and every time we get into

40:58
the room to discuss the product or a

41:00
solution where we have to debate on

41:03
interpretation we have to debate on

41:05
how does it actually work I always think

41:08
of my my grandma and I'm saying like

41:12
she would be a candidate for buying one

41:14
of these and if all of us cannot

41:17
understand it like I'm certain that she

41:19
wouldn't and she would have fall prey to

41:22
something that's not a good deal or a

41:24
laptop with something that is a good

41:26
deal sure

41:28
sure

41:30
she wouldn't be able to to to to to to

41:33
to understand it and that that

41:35
frustrates me that we went from

41:38
something that's that's been hasn't been

41:41
a problem for for people this was a

41:44
problem for employers for companies and

41:46
pension plans sure it wasn't a problem

41:48
for people at all you were

41:50
when you stop working you have your

41:52
pension right here again then

41:55
that kind of started changing but I

41:57
don't think people have changed with it

41:59
and then we start introducing products

42:02
that

42:03
kind of help in this in this regard but

42:06
in a Sim in a simple way and then we got

42:09
into this point they have products

42:11
they're so complicated that we can't

42:14
understand them

42:16
and and again to understand something to

42:19
to explain something you have to

42:21
understand it well so if we as a as a

42:25
Brain Trust from from time to time when

42:26
we get together

42:27
cannot understand how it works how can

42:30
we accept it expected someone who is on

42:33
the other side of a kitchen table being

42:35
sold this can understand what they're

42:37
buying into and that's why you have like

42:39
that's why an annuity I think it's it's

42:42
become a curse word yes people are

42:45
saying oh annuities are bad I mean if

42:48
annuities were bad they wouldn't have

42:50
survived the the centuries of scrutiny

42:53
and we're going back to the the same or

42:56
similar versions of it I mean sure your

42:58
conversation I mean motion like they

43:00
they they created a taunting here in

43:03
Canada again very simple proposition you

43:06
you pull your your mortality risk to the

43:08
others and you benefit on top of the the

43:11
Investments easy simple

43:15
um but there there are products that

43:16
they're kind of going in the in the

43:18
opposite direction and that that

43:19
frustrates me because I'm not sure who

43:21
is the audience yeah sure PhD students

43:24
aren't to write thesis about it I always

43:27
tell people if you can't explain it to a

43:29
nine-year-old no offense to

43:30
nine-year-olds don't buy it and um and

43:34
you know the problem with some of these

43:36
complex products is the bullet points

43:37
are sold

43:38
and the bullet points aren't the

43:40
contract the bullet points are the sales

43:42
bullet points so yeah I I agree with you

43:45
hey what are you working on what's kind

43:48
of

43:48
new for canix are you guys just blocking

43:51
and tackling and you got so much on the

43:53
plate that you're busy forever is there

43:54
something on the horizon that's

43:56
exciting and you see coming down the

43:59
pike Moshe gave us a little bit of what

44:01
he's thinking the industry is going to

44:03
go toward

44:05
um anything that you can share or is it

44:07
all confidential and use on

44:08
non-disclosure agreements

44:10
yes

44:13
um

44:15
I think what we what we are trying to to

44:17
do currently at canex is to put all the

44:22
energy categories in one spot so that

44:24
you don't have to bounce around the

44:26
internet to to to to look for

44:28
Alternatives and we are looking to

44:31
enable others with again with a

44:33
Machinery that we that we have built and

44:35
are continuously building by adding

44:38
products and features adding different

44:40
types of analytics that you can run

44:41
against these products depending on your

44:43
your convictions

44:46
um enable others to to provide this

44:49
transparent uh buying experience good

44:54
Market uh I I think that we kind of

44:58
have our own view of how you do it you

45:01
have your own and other insurance your

45:02
own but we want to empower as many

45:05
parties as possible to at least have the

45:08
basics right

45:09
and then how they how they wrap it uh

45:12
will be will be there today I think that

45:13
that's that's a key key element

45:16
um again expanding from again bread and

45:19
butter of canex where Spears and Diaz uh

45:22
we expanded into fias fras uh we're

45:25
looking to rylas and va's now and trying

45:27
to simply pull that all that into into

45:29
into

45:30
um into one comprehensive platform that

45:33
would allow allow for for for

45:35
again

45:37
place where you know the products are

45:40
modeled as carriers intended them and

45:43
that there is a way to get to the bottom

45:46
of what my guarantee is compare that

45:48
across the category get to the bottom of

45:50
like oh if you want to do rate of return

45:52
calculation now we'll do that across the

45:55
board for you so you'll be able to

45:57
compare that Apples to Apples if you

45:59
wanna

46:00
do do your forecasting I think I think

46:03
that's that's really that's really the

46:05
the place where we'll have to partner

46:07
with others because we we choose to stay

46:10
in the annuity Lane

46:11
um most of the time

46:13
um and that's that that's great about it

46:15
so so and and still the annuity shop

46:19
yeah expanding expanding the the annuity

46:21
presence and I'm you know the person you

46:25
work with Gary Baker

46:26
um who I think he's the great I call him

46:28
the Grand Puba of canx he's not really

46:31
the official Grandpa he's he's kind of

46:33
the

46:34
director of operations Grand Puba but I

46:36
always we're always talking about all of

46:38
the stuff that you have at canex and and

46:40
how to coordinate

46:42
that on our site which is a directive

46:45
consumer site and provide that

46:47
information that is easily accessible

46:50
and decipherable second one's tough

46:53
and we are going through um you know a

46:55
new website change over the next six

46:58
months it'll look the same for the six

46:59
months and then all of a sudden you're

47:00
going to flip it on one day and it's

47:02
going to be different

47:03
uh and the reason we're doing that

47:04
people always say well Stan why would

47:06
you do that you're like the top guy

47:07
because

47:09
my my goal is to educate the consumer

47:11
give them enough enough uh information

47:14
so that they make a good decision the

47:16
information part comes from canex and

47:18
people like branislav and his team

47:21
um but it's an ever-changing world and

47:24
there is a there's a thirst for

47:25
information so I'm glad that we're

47:27
partnering with you and I'm glad that

47:29
you are in the space that you are and

47:31
young and going to be here for a long

47:32
time because you are going to have

47:34
impact

47:35
on millions of people that don't know

47:38
your name and it's important what you

47:41
the work you're doing is important not

47:42
to get sappy but we need canex digging

47:46
in and hurting the cats of data as I

47:49
would say to make it understandable and

47:52
I guess that's your biggest challenge is

47:54
to take the data take the products that

47:57
can be complex and then deliver it in a

48:01
in a format that people

48:03
can understand is that that would assume

48:06
that's a huge challenge for you guys the

48:08
challenge that comes from doing that at

48:10
scale so if you think about it it's the

48:13
idea you have I don't know two dozen

48:15
carriers but each of them has like one

48:17
Spear and and sure different ways that

48:20
it will stay out but it's very simple

48:22
fits on the screen right with with let's

48:25
say fixed in extenduities you get into

48:27
this

48:28
sea of of carriers and then each carrier

48:32
has the array of products and each

48:35
product has a few ways that you can get

48:38
your income from it three ways they can

48:40
accumulate so the sheer volume is where

48:44
the challenge is coming coming from and

48:46
kind of keeping up with all that again

48:48
we have a technology to keep keep up

48:49
with all that the key is hurting the

48:52
cats as as you're saying convincing

48:54
people that it's in their best interest

48:56
in their in the best interest of their

48:58
their consumer to be on on candidates

49:01
because to my knowledge we are the only

49:03
place that get the information directly

49:05
updated from the care is now that we get

49:08
an email from the carrier now that we

49:10
are looking at a carrier's website no

49:11
we've got a data feed directly their

49:13
system into our system to get this uh

49:16
their own uh

49:19
kind of signed off set of parameters

49:22
calculations and so on and so forth one

49:24
thing that you've asked me again I don't

49:26
think it's applicable to our

49:27
conversation but we're kind of just

49:29
starting to play more of a role

49:31
is on the institutional side and helping

49:33
helping drive drive the drive the

49:35
message there so

49:37
um we are part of uh

49:39
uh retirement income Consortium that's

49:42
uh kind of over kind of overseen by by

49:45
broadridge they're they're the the party

49:48
that brought brought few few of us a few

49:50
of us together and we have uh

49:52
half dozen or so uh carrier or solution

49:55
providers as a members and again the key

49:59
the key mission is is there as well like

50:01
some of these Solutions are annuity

50:02
Solutions helping people understand why

50:05
the default solution is not a Target

50:07
date fund why you can do better if you

50:10
try to create a pension for yourself why

50:13
is it not only about accumulation how

50:15
does the accumulation come into play and

50:17
I think secure Act help helps there and

50:19
again a lot of a lot of research and

50:20
conversation that uh we are having with

50:22
others in the industry kind of is kind

50:25
of swinging this pendulum from uh what I

50:27
call retail market and and implant but

50:30
again the key is a need for guaranteed

50:33
income uh ability uh to to produce that

50:37
and provide that to individuals whether

50:39
that's in a Marketplace or to their

50:42
through their pension pension plans uh I

50:45
I think that that that's the mission

50:46
that we have to all kind of stand behind

50:49
together and push forward I agree

50:52
um we're coming up on the end of the

50:53
program obviously branislava I Want You

50:55
Back on down the road as things happen

50:57
and new things you want to talk about

50:58
and share with the consumers because

50:59
that's who's listening the consumers in

51:02
all 50 states uh we got a huge following

51:04
but I do this with all my celebrity

51:06
guests I don't tell them when I'm going

51:08
to do it but there's one here's how we

51:10
close the show it's called the mic drop

51:12
moment and what I'm going to do is I'm

51:14
going to count you down 54321 I'm going

51:17
to say go and you're going to say

51:18
something riveting inspirational

51:22
walk away moment

51:24
so branislav a college in 54321 mic drop

51:29
moment go

51:32
I think I think for me the the key and I

51:34
think what summarizes our conversation

51:36
is

51:38
we need to help the end user understand

51:41
apply and enjoy

51:44
Insurance products there are made for

51:48
their benefit annuities being achieved

51:51
category uh what do we do that to to a

51:54
plan whether we do that in a retail

51:55
Market uh I think

51:57
people need guaranteed sources of income

52:00
we are

52:02
turning into pensionless world we have

52:05
to keep making our own pensions so again

52:09
Stan thanks for having me I mean this

52:12
this conversation is great like this is

52:14
the first one that we recorded but

52:17
I think that that's the most important

52:19
message if you don't have a pension

52:21
again

52:23
in addition to your Social Security

52:26
create your own there are people there

52:29
are firms their insurance providers who

52:32
can help you create your own pension

52:34
pensions are good pensions are good and

52:37
I think that's a good way to close it I

52:38
want to thank everybody that joined us

52:40
on all of the major podcast platforms on

52:42
the fun with annuities YouTube channel

52:44
thank you so much apparentosloff thanks

52:46
for everybody for joining us and I will

52:48
see you next time

52:53
[Music]