Gary Baker: The Annuity Wizard Behind the Curtain

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welcome to

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fun with annuities with your host me

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stan

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the annuity man america's annuity agent

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can annuities be fun

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can contractual guarantees be fun

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absolutely they can find out the brutal

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facts about annuities

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with no sales pitches or high pressure

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nonsense

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just the brutal and factual annuity

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truth which is all you need to hear

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let's have some fun with annuities and

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let's have that fun

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start right now

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[Music]

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welcome to fun with annuities with your

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host me stan the annuity man america's

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annuity agent license in all 50 states

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i want to welcome everybody on the uh

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the podcast platforms

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you know itunes and and spotify and all

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that welcome to you

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and also welcome to the fun with

0:56
annuities youtube channel viewers

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uh we're taping this today um and as you

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know it fun with annuities are saying

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here is live in the reality not the

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dream live in the contractual realities

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not the sales pitch

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dream and i do want to remind you that i

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do have another youtube channel called

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standing man where i've done

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pushing 400 videos on products and

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questions people ask and just you know

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they're five to eight minutes you'll

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love it it's me man it's me

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but getting back to the living the

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contractual

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living the reality not the dream today's

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guest is important

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because he's all about that i mean

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his company is um is one that we use

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here at the annuityman.com

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uh his name is gary baker he works with

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a company called canex c-a-n-n-e-x

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i've known him for a long time i

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consider him a friend and we're both

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kind of music junkies who like music so

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most of the time

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when we talk we're not talking annuities

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we're talking about

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music but um today's uh

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today's podcast is going to be a good

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one so hang in there because we're going

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to kind of get in the weeds

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and talk to you about how the sausage is

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made so when you go to

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the annuityman.com and we have the best

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calculators on the planet you can go

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there and run quotes for

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spea single premium immediate annuities

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diaz deferred income annuities and

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qualified longevity annuity contracts

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culax

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the the company behind that the machine

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behind that

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is canx so with that i want to welcome

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gary baker from canx welcome gary

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hey stan how you doing doing great so

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let's just jump in

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tell tell everyone a little bit about

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you and your background without getting

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too sappy about your your alma mater

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penn state

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okay now you know the tear comes to my

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eyes a little bit sometimes

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but yeah yeah we are penn state right uh

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yeah so tell us about you and just kind

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of your background and

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uh and then we'll just dive in from

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there yeah sure

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sure well uh i'll work backwards um you

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know i've been with canex now for about

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10 years

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and uh you know and roughly speaking and

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we'll get into

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what we do a little bit further down the

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road here but

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you know we we operate a pricing and and

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data and uh illustration business with

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some research involved

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um in supporting the annuity market so

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but um

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before that i was with mass mutual for

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about five years

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and ran their product and marketing for

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their retirement income business

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and then before that uh with ge capital

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for about 20 years

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uh doing a variety of of um

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positions and and business units there

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but about halfway through that

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stint with ge um kind of declared my

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major

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into the retirement market if you will

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uh

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with the bits and pieces that were uh

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purchased over time which eventually

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became

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genworth but before it was genworth it

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was ge financial and

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uh yeah i remember the whole gin worth

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thing yeah exactly yeah yeah so that

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that that's a story unto itself

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maybe that's a different podcast that's

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a different vodka yeah so but

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again getting back mechanics um you know

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really pricing and research around

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annuities what we do is

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um support uh service providers as well

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as distributors

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and carriers too and bringing them all

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together where we can

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actually normalize and standardize if

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you will

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the product offerings uh to demystify

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them

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uh for both consumers and advisors out

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in the market but at the same time

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you know insurance carriers need to

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provide value

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and and they work actually very hard on

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providing value to

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the policyholder or the client and in

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doing that they also have to

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differentiate amongst themselves so that

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and they have to maintain at least some

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form of profitability to maintain a

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business and

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anybody out there who runs a business

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you know you need to

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have more revenue than cost so i mean

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they're not any different than any other

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business out there but

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um but when they do that differentiation

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and when they try to create more value

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and be unique

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um unfortunately that creates some

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complexity right

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and um and some you know

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and really depends upon what you really

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want to get out of that annuity

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so uh what we try to do is really bridge

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the gap

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between the complexity that's actually

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somewhat required

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uh from the insurance carriers when they

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try to create that value

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and then the simplicity that you know

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you

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and your clients need as well as other

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financial professionals out in the

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market

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so we try to bridge that cap yeah and

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it's um

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what my listeners uh need to understand

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is is

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the work that they do is the heavy lift

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i mean you go to my site run the quotes

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and the quotes pop

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up um the heavy lifting is on gary's

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side with canex because they have to

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have relationships

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with all of the carriers they have to

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update the current numbers

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um they've done all of the hard

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infrastructure work now i pay

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gary a large fee for that for that

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information

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no it's very fair but um what we like

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about it

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uh at the annuityman.com is you know i

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always say annuities are commodity

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products you shop for them like you shop

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for a plane ticket and they

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um you know these quotes expires you

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know like a gallon of milk every seven

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to ten days

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um what gary provides to us which is

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which is fantastic is that

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all carriers all with quotation marks

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around it for the podcast listeners

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pretty much every carry on the planet

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um uses gary because they want their

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product

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or their spear or deer queue like in

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front of

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and other products too index annuities

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whatever but we primarily use gary for

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versailles diaz and culax they want

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those

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products in front of my clients eyes or

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prospects eyes

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um and so that's he and he

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his firm to me um i don't really think

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they have a

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competitors in my opinion because

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obviously i know the industry

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but the the work that they do is is

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groundbreaking

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and so let's kind of go into because i

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want my customers and clients and

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prospects and people listening to this

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podcast

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because you know gary as they say

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everyone hates all annuities right

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um which is crazy because it's like

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saying i hate all

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restaurants there's many different types

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of annuities

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with speas and diaz and culax these are

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transfer of risk lifetime income

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products in most cases people

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are setting up for lifetime income yes

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you can do period certains et cetera but

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we're not going to talk about that we're

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going to talk about lifetime income

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because that's what annuities were put

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on the planet

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talk about in a in a you're a smart guy

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kind of bring it down a little bit so

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people can understand

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the pricing of lifetime income

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sure so you know really what you're

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doing

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is you're buying insurance right and

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income insurance i call it lifetime

7:43
income insurance retirement

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right yeah you buy life and cut you buy

7:47
a life insurance contract in the event

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that you die too soon

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you buy an annuity an event that you

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live too long right

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so it's uh it's both ends of the

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spectrum and uh you know so

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theoretically

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you know you're running off the same

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risk pool for an insurance company to to

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be able to price for that

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you know in the in the case of a of uh

8:07
income insurance or an annuity

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uh you know you're looking at a couple

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factors one no

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one big factor is the mortality table so

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you know your life expectancy for for us

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for us peons that didn't go to penn

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state

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life expectancy okay so

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you know when you uh well it's let's

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bring back we when you uh

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when you have to do required minimum

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distributions and your retirement

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and uh you you have to go to the irs

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table and the irs

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gives you a uniform lifetime table which

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then you make your calculation of how

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much

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money or the minimum amount that you're

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going to

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allow uncle sam to tax you back because

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unfortunately the money back right right

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so it's a similar table that you run at

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the insurance company where

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it's a little bit more complex than the

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one you're going to pull up on the

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you know gov website to do your uh

8:59
requirement withdrawals but

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um you know but in that case it gets a

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little bit more fine-tuned because you

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can have a different mortality table for

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uh men versus women and

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uh and then in some cases certainly on

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life insurance they can get it down to

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zip codes

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to sort these days which as far as

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demographics you know as far as how

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they're going to predict how long you're

9:22
going to live but

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hey gary digressing a little bit do you

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think there's an evil plot out there for

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women to live longer than men yes or no

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um you know i have no comment on that

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it does seem though that uh when life

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insurance companies are pricing

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mortality tables life life expectancy

9:40
the females are projected to live longer

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i just

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you know me uh gary i wear a tinfoil hat

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most of the day

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um so that's my conspiracy so get back

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to

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the pricing of speakers news and people

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yeah so

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anyway um but in the case of annuities

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uh so let me let me i'll make that again

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i'll make the analogy back

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uh back to life insurance uh when you're

10:02
when you go buy a term life insurance or

10:04
even something more permanent

10:06
they're underwriting you based upon your

10:08
health right right

10:10
smoke um and and potentially other

10:13
factors right

10:14
they're gonna quote your rate you know

10:15
and you don't know what rate you're

10:16
gonna get until you

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get a blood test or a spit to a cup or

10:20
you know they kind of assess your

10:22
your general uh health um in annuities

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for the most part at least in the u.s

10:29
insurance company assumes you're healthy

10:32
right so they're going to assume that

10:34
uh you're going to live you know you

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lead a

10:37
healthy lifestyle nobody smokes and

10:40
you're going to live

10:40
to the absolute fullest to that

10:42
mortality table or to that life

10:44
expectancy

10:44
so the life insurance company thinks

10:46
everyone's living in a perfect world

10:48
in essence all kids aside they're taking

10:50
the 70 year old or the 75 year old

10:52
and they're grouping them with all other

10:54
75 year olds of that gender is that

10:56
correct

10:57
that's correct right and so uh over you

11:00
know with with

11:01
um the history of actuaries and being

11:04
able to predict these tables and these

11:05
tables do

11:06
these mortality tables or life

11:08
expectancy tables they do

11:09
get updated over time you know 100 years

11:12
ago

11:13
you know somebody like you or i you know

11:15
they're saying oh well

11:16
you know your life expectancy is

11:17
probably around 50 years old right

11:20
so uh since that time they have changed

11:22
dramatically

11:23
where then they're putting folks like

11:25
you and i up into the mid to late 80s

11:27
now as far as that type of like

11:29
life expectancy you could even argue

11:31
that 20 30 years from now

11:33
those those ages will continue to

11:35
increase to some degree

11:37
so life expectancy drives the pricing

11:39
train and in essence

11:41
when you buy a lifetime income annuity

11:43
you're saying to the carrier

11:45
i'll take that bet i think i'm going to

11:47
live longer than you predict i'm going

11:48
to live and if i do

11:50
live forever you the carrier on the hook

11:53
to pay

11:53
that's the reason i always say there's

11:55
no roi until you die because it's a pure

11:57
transfer of risk because people always

11:59
say well you know what's what's the

12:01
return on it i don't know that

12:03
gary doesn't know that until you die so

12:06
life expectancy

12:07
uh drives the train and i think one of

12:10
the things gary that

12:11
that people i get these calls all the

12:12
time well i'd never buy a lifetime

12:14
income annuity because

12:15
if i die the evil annuity company keeps

12:17
the money and

12:19
and if you as people know if they've

12:21
listened to my

12:22
my talks and videos you can structure

12:25
the lifetime income stream so that the

12:26
annuity company is on the hook to pay

12:28
regardless how long you live

12:30
but if you die in a fiery lear debt

12:32
crash if you go if you're on gary's

12:34
leader jet you die with gary

12:36
gary doesn't have literature i don't

12:37
think but the point is then

12:39
100 of any unused money would go to your

12:41
beneficiaries and the evil annuity

12:43
company doesn't keep a penny even though

12:44
they're on the hook

12:46
right how as an industry do you still

12:49
hear um you know from people that that

12:52
that's a

12:52
common belief because i know with

12:53
journalists a lot of financial

12:55
journalists believe that

12:57
everything is what's called life only

12:59
when you die the money goes poof but

13:01
that's just about 30 to 40

13:03
there's 30 to 40 different ways to

13:04
structure it right what's your comment

13:06
about about the structuring and maybe

13:09
you can talk about

13:10
life only versus say life with cash

13:12
refund

13:14
yeah so you know with with the

13:17
contract uh what you really have

13:20
available

13:21
is the option of a death benefit

13:24
so um so what what i would say is that

13:28
the academics when they look at the pure

13:30
annuity contract they're gonna look at

13:32
the

13:32
annuity contract without a death benefit

13:35
and that's the one where

13:37
you know if if if your leader jet hits

13:39
the mountain

13:40
uh the insurance company keeps the bet

13:43
so again getting back to that

13:44
lifetime table you know if your life

13:47
expectancy is 85 years old

13:49
half of you're going to live past that

13:54
half of you potentially girl uh died

13:56
before that time so it's not really a

13:57
bet on that but

13:59
you know getting back to to the death

14:00
benefit um

14:02
you know the insurance company is is is

14:05
gonna pull that risk

14:06
and and think about you know um you know

14:09
pricing to the fact that you're gonna

14:11
live to 85 but right

14:12
the fact of the matter is what's

14:14
available to you

14:16
as as an investor is that you can then

14:19
place a a death benefit or some

14:21
protection for you so that

14:23
if you do pass away before that time or

14:26
if you know earlier in your lifetime

14:29
um your beneficiaries can receive a

14:31
portion

14:32
of that you know at least getting the

14:34
rest of your premium back to your estate

14:36
um there's different variations of that

14:38
so if you're going to get that death

14:40
benefit on top of that

14:41
income payment um your income payments

14:44
could be a little bit less

14:46
than if you didn't have that death

14:47
benefit so for example if

14:49
you know they put 100 grand in and you

14:51
get uh you know 500 bucks a month

14:54
i'm just throwing that out there as an

14:55
example sure uh you know

14:57
for a life only or a no death benefit

15:00
type of contract that could be your

15:01
price

15:02
if you decide to get something like a

15:04
cash refund which is by

15:05
far the most common death benefit

15:08
purchase today

15:09
and i would say it's about over fifty

15:10
percent of the contracts purchased today

15:12
have a

15:13
have a cash refund option your you know

15:15
your income is going to be about

15:17
490 4.95 so you're taking a little bit

15:20
of a haircut

15:21
right off that monthly income payment uh

15:23
in return to protecting your estate to

15:25
make sure at least they get the rest of

15:27
your money back

15:27
as we say the annuity companies have the

15:29
big buildings for a reason and the

15:30
logo's on the plane for a reason they

15:32
don't give anything away so if you want

15:34
to attach

15:35
guarantees to that lifetime income

15:36
guarantee then they're going to just

15:38
simply lower the payment same thing

15:41
with um cost of living adjustment

15:43
increases that you can attach to the

15:44
policy

15:46
um that you know as as uh gary kind of

15:49
explain

15:50
cost of living increases and what what

15:53
the choices are

15:54
and how it's priced well actually that's

15:57
a really good question

15:58
um if anything those are starting to get

16:00
phased out today but a cost of living

16:02
increases

16:03
if you're worried about inflation so

16:05
again it's a it's a

16:06
feature of annuity that appeals

16:10
to um maybe some consumers who are

16:14
concerned about inflation

16:15
sure um and if that is a concern and if

16:18
you if you're truly concerned about what

16:20
the dollar your dollar is going to buy

16:22
10 years from now you can buy a contract

16:26
that will increase your monthly payment

16:28
by a particular percentage

16:29
but say two percent per year three

16:31
percent per year for

16:32
even five yeah or higher um if you do

16:36
that um again it's it's a seesaw effect

16:38
your initial monthly i'll go back to the

16:40
uh you know this example and pricing i

16:43
gave before

16:44
you know again instead of 490 or 500

16:47
bucks a month

16:48
you may start at 450 or 460.

16:51
right right that income payment is going

16:53
to grow over

16:55
5 10 20 years you know the point where

16:58
you're going to get up into the 50s or

16:59
even 600s

17:00
you know depending on how how long you

17:02
live so right again it's a trade-off

17:05
um you know it's like a see-saw if you

17:07
will but i would say that

17:09
only about two or three percent of the

17:11
contracts purchased today

17:14
have that type of feature added into it

17:16
which kind of tells you that

17:18
people are really buying these contracts

17:21
for the floor

17:22
fixed guarantee they want to cover you

17:24
know

17:25
they want to cover the mortgage you know

17:27
the utilities the basics the essentials

17:29
and that's something they can budget to

17:31
and then any variable costs or any

17:34
inflation risk that they may see in the

17:36
future

17:37
they're going to cover maybe with other

17:38
assets in their portfolio

17:40
and we call that the income floor is the

17:42
income floor is the guaranteed amount

17:43
that's coming in

17:45
i always tell people inflation is always

17:46
the gorilla in the room when people talk

17:47
to me well what about inflation's bone

17:50
right um there's not a contract that

17:54
solves for it okay and i know

17:55
some agents will tell you they have it

17:57
they don't annuity companies don't give

17:58
that increase away typically we tell

18:00
people it's a six to nine year break

18:01
even point

18:02
and that's just ballpark of if you know

18:04
if you compare the same exact annuity

18:06
with and without

18:07
a cost of living increase and one thing

18:09
also gary um what we're seeing

18:11
uh is really people the carriers have

18:14
opted out of the cpi consumer price

18:16
index increases um i think the last

18:19
carrier bailed out

18:20
last year are we seeing any cpi

18:23
increases attached to diaz and spears

18:25
right now

18:25
at the time no there's none that that

18:28
exists

18:29
uh in the market from what we see for

18:31
the primary correct carries out there

18:33
i mean there's about i would say there's

18:35
about two dozen or more

18:37
carriers that are uh that really lean

18:39
into the income annuity market

18:42
you know right parties like yourself

18:44
that that market them

18:46
and um none of them have a cpi today

18:49
love the contractual guarantees as you

18:51
know that's that's all we do you own an

18:52
annuity for it will do what it

18:54
not what it might do that's our i mean

18:56
the heck that's the same on my hat for

18:57
gosh

18:59
we'll do is on that side right there so

19:02
i wear it on my sleeve i wear it on my

19:03
hat

19:04
um gary where do you think i mean

19:07
there's ten thousand baby boomers that

19:09
hit retirement age every single day

19:11
um for for smart people like me and you

19:13
and yes i'm i'm

19:14
grouping myself with you at this point

19:16
we you know we consider that a

19:18
demographic tidal wave

19:19
right right do you think the annuity

19:22
industry industry's

19:23
doing a good job addressing that because

19:26
i don't personally i feel sometimes like

19:29
i'm a

19:29
i'm screaming into a hurricane

19:32
talking about contractual guarantees

19:34
what's your feeling on how

19:36
because let's let's stop for a second

19:38
and just explain that lifetime income

19:41
the transfer risk of lifetime income is

19:43
a monopoly that only annuities can

19:44
provide

19:45
right tell me your opinion without

19:48
making anyone mad

19:50
about how this message is not being

19:53
conveyed

19:54
to people that need these transfer of

19:56
risk products

19:59
well that's a loaded question yes that's

20:01
why you're here gary

20:02
this isn't easy man come on well you

20:05
know

20:07
at a very high level it has to do with

20:09
behavioral finance

20:11
i i would say so no further no further

20:14
i want to hear it well you know there's

20:17
the technical answer right

20:19
right but there's human nature and you

20:22
know when you talk about

20:23
any type of guarantee or your viewpoint

20:25
of how you

20:27
view your own money um

20:30
either today or in the future or your

20:34
savings behavior

20:35
or whether or not you can even

20:38
cognitively

20:39
think about what life is going to be

20:41
like 10 20 years from now

20:43
right now i think many people just have

20:45
a difficult time

20:47
um having that view that you know

20:50
most most of us live in the moment you

20:52
know you know

20:53
are we eat the chocolate cake or do we

20:56
go to the fruit

20:57
cup well in an enraging bull market

21:00
that's the biggest chocolate cake i've

21:01
ever seen gary i mean it's hard to take

21:04
money off the table fear of missing out

21:06
fomo whatever you want to call it

21:08
and then lock it into a contractually

21:11
guaranteed product because

21:13
i think one of the things you know if i

21:15
was an annuities are for

21:16
annuities are annuity god whatever well

21:18
i kind of am the new to right never mind

21:20
if i was in charge of the annuity

21:22
industry um

21:23
you know i would talk about you know the

21:26
guarantees the transfer of risk the

21:28
pensions that no one has

21:30
right any anymore because we live in a

21:33
pensionless world i think less than 10

21:34
percent of private companies even offer

21:36
a pension so um and and gary

21:40
baker the uh the annuity data maker

21:44
is what i'm going to call him um he

21:46
provides

21:48
the contractual guarantees and and that

21:50
those

21:51
numbers so that people can make those

21:53
decisions

21:54
so um

21:57
what else about kind of the future of

22:00
the industry like if you

22:01
where do you think it's headed i know

22:03
right now annuities are a niche industry

22:06
which is fine but but if you look at the

22:08
demographics it really shouldn't be a

22:10
niche industry

22:11
right where do you think the future is

22:13
headed especially with an aging

22:14
population

22:16
yeah i mean look at the end of the day

22:18
um people have to rely on an advisor

22:21
or a financial professional or somebody

22:23
like yourself uh

22:24
to kind of guide them through that

22:25
conversation um look an annuity

22:28
is a complex instrument or a candy

22:32
and it needs to be configured to the

22:35
need

22:37
of of a particular situation or for the

22:40
individual

22:41
correct um i think in the past you know

22:44
uh

22:45
in some cases um it got sold as a as a

22:48
swiss army knife

22:49
it's going to do everything for you but

22:51
the reality is

22:52
um you know based upon what your value

22:55
is and the fact that you're configuring

22:57
these contracts specific to the

22:59
guarantees is

23:00
is one thing you know the annuity

23:03
contract has been built to

23:05
either provide insurance um you know

23:08
basically four basic types of insurance

23:10
there's a tax deferral if you want to

23:12
call that

23:12
protecting from uncle sam insurance

23:15
right um

23:16
there's the death benefit that we talked

23:18
about there's a

23:20
income benefit which you know

23:23
is a little bit different than income

23:24
annuity because an income annuity which

23:26
is

23:27
the pure essence of annuitizing your

23:29
contract

23:30
but if you want your cake and eat it too

23:32
uh having access to your

23:34
liquidity to your account while also

23:36
having a guaranteed income

23:38
then you have these income benefits

23:39
that's another form of insurance those

23:41
are called

23:41
income writers i've written a book on

23:42
that if you want to get the book go to

23:44
my site and get it

23:45
but that's what gary's talking about

23:46
income benefits are income riders

23:47
attached

23:48
to policies that offer a lifetime income

23:51
stream

23:52
starting at a future date of your choice

23:54
right

23:55
yep and then finally um some contracts

23:58
have what i'll call growth insurance

24:00
so if you actually want to invest money

24:02
into the

24:04
into the shell of the insurance contract

24:06
um there's some floor protections that

24:08
make sure

24:08
you know if the market goes south um

24:11
your your exposure is limited

24:13
you know to those losses so and what

24:14
he's talking about there is indexed

24:16
annuities and what i call buffer

24:17
annuities or

24:18
i've named them copay annuities but

24:21
those are

24:22
a little bit those are products that

24:25
allow some

24:26
some upside lock-ins with some

24:28
limitations on that upside

24:31
but yeah there's a lot of you know

24:32
there's a lot of new products that are

24:34
coming out

24:34
a lot of them are complex i always tell

24:36
people if you can't explain it to a

24:38
nine-year-old don't buy it no offense to

24:39
nine-year-olds

24:41
but um do you gary do you think

24:44
well i guess what i want to do is i i

24:45
set the stage for that because oh my

24:47
gosh i don't want to get in front of the

24:48
stage go

24:49
that's okay but the reason i mention

24:50
those four types of insurance and about

24:52
where the annuities are going in the

24:53
future

24:54
you know i think in the past um you know

24:58
you could argue that you know some

25:00
people bought all four of those combined

25:02
in one particular contract and you could

25:04
say well

25:05
you know that's not necessary and i

25:06
think what's i think

25:08
where the future of it's going is that

25:10
um

25:12
the need to really figure out what you

25:14
want you know what do you want to

25:15
protect this is insurance so

25:17
you know what is it that you're looking

25:18
specifically to protect

25:20
and then frame the purchase of that

25:22
annuity or the components

25:24
that you want to fit your overall plan

25:26
and what your overall objective is

25:28
if you will you know and when you talk

25:30
about contractual guarantees as

25:32
a basis for that you know that's a very

25:34
simple proposition

25:35
you know it's easier for you to get your

25:37
head around but if you have more complex

25:39
estate issues or sure or or or

25:42
income plan um that that may be

25:46
a little bit more involved then you may

25:49
want to take some of these other

25:50
elements and plug it in and i think it

25:52
really takes it's not only the education

25:54
to the consumer but

25:55
education to advisors and and financial

25:58
professionals so

25:59
you know i think there's that's a good

26:01
statement that's a really good statement

26:03
because there's a lot of advisors out

26:05
there that they don't even know what a

26:07
queue like is

26:08
no exactly and i think if you really

26:10
look at even for certified financial

26:12
planners

26:12
if you look at their accreditation and

26:14
all the studying they have to do hours

26:16
and hours

26:17
and months years you know and volumes of

26:20
pages that they have to review

26:22
hundreds of thousands of of texts and

26:25
and uh as far as uh and even the books

26:28
and the tests they have to take

26:29
annuities are important on you know page

26:31
three hundred and

26:32
twenty seven and that's it it's written

26:35
poorly they didn't have me write it so

26:37
know i i totally uh i totally get it

26:41
from canex's standpoint on your day to

26:44
day and you're overseeing you know

26:45
obviously you're the grand pub and

26:47
you're kind of overseeing

26:49
um all of the people that work for you

26:50
and going in different directions

26:52
what's the biggest challenge for canex

26:55
at this point working with carriers in

26:57
your opinion

27:00
well um i think carriers

27:04
um you know again getting back to the

27:06
fact that they want to deliver value

27:09
um it's interesting um

27:13
there's there's a lot there's a there's

27:15
a lot of development a lot of investment

27:17
going into the industry right now to

27:19
simplify

27:20
the sale of an annuity so it's as easy

27:24
to get a hold of one uh like a mutual

27:27
fund

27:28
in order to simplify that you need to a

27:30
process by which people can

27:32
you know break these things down and

27:35
really understand

27:36
what is inside each contract in

27:39
in a in a concise manner basically in

27:42
apple's apple's view

27:44
so that you can make an informed

27:45
decision i think carriers

27:48
some carriers see the challenge that

27:50
well you're commoditizing my product

27:54
and that's not the case at all if

27:56
anything

27:57
by simplifying and breaking it down

28:00
you're actually exposing what the unique

28:04
value that they're

28:05
bringing to the table some carriers are

28:07
going to go for

28:08
72 year old women so i'm going to go for

28:11
45 year old males

28:12
so you know depending upon their

28:14
profitability model or

28:16
maybe i wouldn't that's a wrong term

28:17
that's used but basically what their

28:19
target

28:20
or their business plan is about how they

28:22
want to serve the market if you will

28:24
um and so they're they're they have

28:28
their own unique mission and what they

28:29
want to deliver and by simplifying that

28:32
you're able to highlight that

28:34
but um i think some carriers still

28:36
really wrestle with the fact that you're

28:39
peeling away the marking layer

28:40
showing exactly what's available and and

28:43
allowing people to make an informed

28:45
decision

28:46
i think that's going to continue to be a

28:48
you know kind of catch 22 out there

28:50
and i i would probably guess that that

28:53
when

28:54
you know the orbitz priceline type model

28:56
came out that was a consolidation of all

28:58
the plane

28:59
uh tickets and all that probably had

29:01
similar blowback at that point in time

29:03
because they didn't want to reveal

29:04
everything and but pro consumer

29:08
it has to be pro consumer i mean you

29:09
know one of the things i've trademarked

29:11
is annuities made

29:12
simple you know um you know we're trying

29:14
to simplify it as well

29:16
and i think it's important for the

29:17
carriers you know to simplify it

29:20
going forward um the direct to consumer

29:23
model gary is something that

29:25
that i and a handful of others are

29:27
trying to pioneer out here

29:29
um i think we're very early in the game

29:32
uh

29:33
i think it's uh you know it's something

29:35
that

29:36
with the sim the simple products even

29:38
the very simple product products

29:40
like you know spears and diaz and migas

29:42
which are the cd

29:43
alternative uh the annuity industry

29:45
version of the cd

29:46
even to this point those need

29:48
explanation and guidance

29:50
do you ever see a time in the annuity

29:53
industry where

29:54
it's maybe not a pure direct to consumer

29:57
but

29:58
as close as you can get um

30:01
i i think technology will have to be

30:03
involved in that

30:04
um again um

30:08
you know it's i'll make another analogy

30:11
i mean

30:13
can you fix your own car or do you have

30:15
to go to a mechanic

30:16
or are you are you or do you have to go

30:19
to a doctor or are you going to perform

30:20
surgery yourself so

30:22
yeah again so there's there's simple

30:24
uses of annuities

30:26
and there's more complex uses of an

30:27
annuities right

30:29
i think for the simple application of an

30:31
annuity whether or not

30:32
i want an alternative to a bank cd yeah

30:35
i mean

30:36
i think that that's definitely a direct

30:37
proposition and that happens today

30:39
right right if you're looking to take

30:43
advantage of some of these other unique

30:45
features

30:47
again for maybe more uh complex

30:50
planning needs right um

30:53
you have to go to the specialist that's

30:55
gonna kind of configure

30:57
the product for you at the end of the

30:59
day now the question is with artificial

31:01
intelligence

31:02
could technology get to the point by you

31:04
know a

31:05
few software that could help you guide

31:08
yourself

31:09
you know through that well i don't know

31:11
i mean you got webmd right we're all

31:13
doctors now

31:14
but we still misdiagnose each other

31:17
right no

31:18
i no i no i get i think i think you know

31:20
i think you still need some

31:22
some human eyeball the eyeball contact

31:24
also with these products

31:26
um that's just the nature that gets back

31:28
to the behavioral finance

31:30
element of this you know and right and

31:32
if there's a trust me factor around

31:33
annuity too

31:35
let's face it because you're you know

31:37
it's insurance

31:38
and you have limited liquidity you know

31:41
regardless of the type

31:43
of contract that you hold and regardless

31:45
of what somebody may tell you that you

31:46
can get your money out and what i'm well

31:48
said

31:49
well so people want to know they need

31:52
that trust

31:53
you know that okay i'm giving you some

31:55
my money

31:56
i'm gonna be there for a while yeah uh

32:00
you know they they want the trust me

32:02
factor on that

32:03
and so it's tough to get that through a

32:05
robot

32:06
well the annuity industry has earned its

32:09
bad reputation

32:10
from a sales standpoint and it's not the

32:12
carrier's fault i say that all the time

32:15
the carriers put out the products they

32:16
put the disclaimers on the products they

32:17
put the sales

32:18
stuff out uh material but they cannot

32:21
regulate

32:22
or or oversee what every agent says

32:24
right and you know

32:25
we run across it every day when people

32:27
call up and give me the sales pitch i'm

32:28
like

32:29
either that guy's a sociopath or they

32:30
just really haven't done the research on

32:32
the product so

32:33
um but um in closing gary

32:37
um first of all thanks for being here

32:39
and i want you on

32:40
ongoing um

32:44
what would you tell people from the

32:45
standpoint of and this is a big one

32:47
that i get all the time and maybe we can

32:49
close with this this uh this answer

32:51
right timing the purchase with these

32:54
type of products especially when people

32:56
see the interest rates at perceived lows

32:59
when me and you both know the 10-year

33:00
treasury uh when looked upon

33:03
uh at with competing 10-year treasury

33:06
equivalents across across the globe

33:08
they're still it's still pretty high

33:10
what do you tell people about what would

33:11
you say to a person listening to this

33:13
podcast

33:14
that they're trying to time their spia

33:16
dia or q lak purchase

33:18
do you say that's a tough one you're a

33:20
fool or

33:21
maybe that works right well you know if

33:24
that's a concern

33:25
right you know for some people that's

33:27
not a concern right there's other

33:28
right factors that that's that's a

33:30
little bit lower on the list but if

33:32
that's a concern

33:33
there's there's two things that i'll tee

33:36
up to

33:37
to counter that one is you know if it's

33:40
an income annuity if you're buying

33:41
income guaranteed income

33:43
you're actually getting three forms of

33:45
return

33:46
you're getting your principal back

33:48
you're getting interest on top of that

33:50
and then you're getting the mortality

33:52
credit

33:53
right which you can't you know or the

33:55
last person standing credit

33:57
right which is part of that whole

33:58
lifetime income that

34:00
uh you're making and the insurance

34:02
company is pricing to

34:04
so any other like if you buy a bond you

34:07
know you only get the interest in

34:08
principal

34:09
you get income annuity you know you're

34:11
getting interest principal plus that

34:12
mortality credit so right so you can

34:15
never time that and that's always going

34:16
to

34:16
counter that now um you know certainly

34:20
uh great answer well thank you um

34:24
but uh you know the other element of

34:26
that is and maybe sticking with the

34:28
income annuity need with guaranteed

34:30
income

34:31
if that in fact is a concern with you

34:33
you don't have to buy it all one shot

34:35
right so you can ladder into these

34:37
things

34:38
right or uh you know dollar cost

34:40
averaging i'll put some in this year

34:43
i'll put some in next year i'll put some

34:44
in the year after that and right over

34:46
those

34:46
purchases then you then you diminish

34:49
that that risk that perceived you know

34:51
you know interest rate risk um on the

34:54
investment side

34:55
as far as what you sold oh my goodness

34:57
right

34:58
the fact of the matter is the the fixed

35:00
rate still

35:01
at least in the united states because of

35:04
you know

35:05
the rules that that you have uh around

35:08
insurance

35:08
contracts um you're get the insurance

35:11
companies able to provide you a better

35:12
return than if you were to walk into the

35:15
and purchase a bank cd and by the way

35:17
the price

35:18
these are spread products right so you

35:21
know

35:21
it's you know when people say well

35:23
annuities are so expensive well

35:25
you know well it depends on which one

35:26
you're talking about yeah

35:29
that's that's priced the same way

35:31
essentially

35:33
uh as a bank cd which is you know are

35:36
you getting 3.2 percent

35:37
well it's actually you know they're

35:39
pricing it so it's returning 3.5

35:42
and they're taking point three off the

35:44
top to cover their administrative

35:46
expenses and distribution expenses

35:48
and then you get your net 3.2 i don't

35:50
know where you're going to find 3.2 but

35:52
um exactly but at the time of this table

35:56
maybe they'll find it for you well i

35:58
always tell people when the life

35:59
insurance companies price my guess

36:00
because people say well why is the cd

36:02
why can't

36:02
cds have this well it's a dynamic

36:04
pricing model i mean

36:05
life insurance companies sell life

36:07
insurance and life insurance companies

36:08
sell lifetime income products and then

36:10
life insurance companies sell

36:12
some sell these mygas and then in

36:14
addition to their barack obama

36:15
donald trump bill clinton and bush bonds

36:18
in the portfolio

36:20
then they can price things a little bit

36:21
more dynamically than a static

36:23
bank looking at a 10-year treasury note

36:25
and so i mean i just i think that's the

36:28
big thing

36:28
hey by the way for all the listeners

36:30
that just heard that jet go by that's

36:32
not a jet i think that's the lawn

36:33
service

36:35
around my office so good timing stan the

36:37
annuity man but hey

36:39
gary this is raw this is real this is

36:41
down and dirty

36:42
truth about annuities which is the

36:44
reason i'm i'm glad that you

36:46
you came on the program and once again

36:49
gary is the grand poobah

36:50
he oversees gary what is your title

36:53
you're president or

36:54
they call you grand pub what are you i

36:56
don't know it changes every day honestly

36:58
but he runs candidates

36:59
okay and canex is the data system that

37:02
uh when you go to the annuity man and

37:04
you get those quotes and you can run

37:05
them 24 7 365

37:07
and you say to yourself as you're

37:08
running them man i love stanley noodle

37:10
man for providing this

37:12
service to me so i don't have to talk to

37:13
him because he's a little intense

37:16
when you say that you're really saying

37:17
thank you gary that's really what you're

37:19
saying the translation is gary thank you

37:21
so much

37:22
that i don't have to speak this group

37:24
when i run these questions

37:26
it's way too much so

37:30
with that being said gary baker i really

37:32
appreciate you being on the number one

37:35
annuity podcast

37:36
on the planet and it just happens to be

37:38
called

37:39
fun with annuities and i'll see you next

37:43
week

37:48
thanks for listening to fun with

37:50
annuities please hit the subscribe

37:52
button and make sure to go to my site

37:54
at the annuityman.com where you can run

37:57
your own

37:57
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38:01
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38:02
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38:04
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38:07
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38:10
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38:12
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38:12
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38:15
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38:18
me

38:18
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38:20
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38:22
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38:24
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38:25
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38:28
will ever get and that's one guarantee

38:30
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38:32
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38:34
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38:36
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