Gary Baker: The Growth of Group and Fee-Based Annuities

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[Music]

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welcome to fund with annuities where

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every single week I welcome a celebrity

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laugh and love every minute of the most

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let's get to

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[Music]

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it welcome to fun with annuities I'm

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your host Stan the annuity man America's

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annuity agent licensed in all 50 states

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so glad that you're with us on all major

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podcast platforms and for all you

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Maniacs watching us on the fun with

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anties YouTube channel do you see how

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gorgeous these two people are yes I

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including myself but the other person

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that you're seeing out there is is is

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I've got a new nickname for him I didn't

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even tell him his name is Gary Baker the

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annuity contractual guaranteed Dream

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Maker that's who he is he is CEO Grand

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poba of canx why does that matter why is

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that important Stan is because when you

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go to my site at the annuity man.com and

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you run quotes on my proprietary

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calculators The Man Behind all those

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contractual guaranteed numbers the man

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that's overseeing the hard work doing

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all the coding the man that gets the

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high five virtually is Gary Baker Gary

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thank you for joining us once again Stan

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it's my pleasure once again was that the

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best introduction you've ever had you

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know that's like the longest nickname

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name I ever got you know usually it's

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like bake or you know how about Gary

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Baker touchdown maker back in the early

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days you know touchdown maker there you

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go but it's Dream Maker you know the

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older you get you don't there's no

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functional things like touchdown you

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know it's Dream Maker it's conceptual

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Gary but actually down with annuities

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there we go that's the name of your

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newcast with

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score um with score with canx yeah yeah

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send the royalty checks my way Gary

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there's a lot happening in the uity

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world and I know people are saying you

2:02
maniac chose the annuity world for your

2:05
career and the answer is yes we like

2:07
pain we like to explain why to people

2:10
but Gary there's a lot going on in the

2:12
group Market can you explain when we're

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talking about annuities in the group

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Market what does that

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mean yeah um yeah the dust is really

2:21
flying there on a lot of activity um you

2:25
know at the end of the day annuities

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have traditionally been

2:30
more available to uh you know the

2:33
affluent Mass affluent High net worth

2:35
Market where there's a a lot of Need for

2:40
it's called you know annuities are

2:41
insurance right and and your your

2:44
financial planning becomes a little bit

2:45
more complicated and that's

2:47
traditionally where annuities have been

2:48
slotted in and but of course you know

2:50
through uh folks like yourself you know

2:53
you can really simplify that just get

2:55
like a contractual guarantee for a fixed

2:57
term or or just a regular guarantee

3:00
income like a pension so you can you

3:02
know they're built to be simple but they

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also built to be very complex so but in

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either case you're you're giving up some

3:08
liquidity for that insurance so

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traditionally it's it's been more

3:12
available to that to that uh more mass

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affluent High netw worth Market what's

3:16
really what's cool now and what's

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happening is that um you know back a few

3:21
years I would say maybe about four years

3:23
now um Department of Labor um the

3:27
government passed something called the

3:28
secure act which made it easier for

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employers to make decisions on making

3:34
annuities available within a 401k plan

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and what that really it does a couple

3:40
things number one is it makes annuities

3:42
more available to a broader part of the

3:45
market the Middle Market where people

3:47
may not have had access to annuities

3:49
before and that's an important thing um

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but uh more importantly it it allows the

3:55
employers some leeway to make those

3:58
decisions not take on allow that life

3:59
ability and work with insurers to be

4:02
able to build some type of option in the

4:04
plan um

4:06
traditionally income annuities spear

4:10
have always been available as a rollover

4:11
option coming out of a 401k plan when

4:14
you retire you you'll talk to a

4:15
distribution consultant and immediate

4:18
annuities for those out there that's

4:19
what that means single premium immediate

4:21
annuities a spia yeah so you know the

4:24
the the consultant say hey you're

4:26
retiring do you want the lum sum do you

4:27
want to roll over into an IRA or do you

4:29
want to roll over over into a an income

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annuity or a portion into an income

4:33
annuity and that's that's historically

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how they've been positioned up to this

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point um and and the industry's tried to

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come up with some designs to put them

4:40
inside of a 401k as an investment option

4:43
but they kind of up until this point um

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it just was more of a retail product

4:49
that was the you would consider maybe

4:52
more highly complex where you know folks

4:55
may be not likely to make a decision on

4:57
their own they're going to need the help

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of a of an advisor such as yourself um

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so I what's happened now is a new wave

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of innovation which is really cool so it

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provides liquidity both during your

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savings and contributions into the

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annuity option as well as liquidity

5:16
afterwards but um they're really being

5:19
they're being positioned as an

5:21
asset within a set of Investments and

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more specifically they're being

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positioned as a fixed asset within a

5:29
Target date fund and typically in a 401k

5:32
plan the most common option available to

5:35
you and especially as a qualified

5:37
default option what that means is that

5:39
when you enroll into a plan if you don't

5:42
make an investment decision the

5:43
company's just going to put you in the

5:44
default option which is usually a Target

5:46
date fund if you're retiring say 20

5:49
years from now they're going to put you

5:51
in the 20 you know 20 what's a what I

5:54
say they'll put you in a 2044 fund you

5:57
know right right right so

6:00
um but what they've done now is they'

6:02
they've taken the complexity away from

6:05
the book cover they kept it underneath

6:06
the covers and they'll manage a Glide if

6:09
you keep contributing into that Target

6:10
date fund there's a Glide path that will

6:13
gradually uh increase your allocation

6:16
into this guaranteed income option

6:18
within your target date fund and then by

6:21
the time you hit your retirement age in

6:22
the 401K you say okay you know dear

6:26
participant dear employee um here's how

6:28
much you've incl accumulated in your own

6:30
little personal pension bucket um do you

6:33
want to turn on that income guaranteed

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or again you want to take the lumpsum

6:38
out or do you just want to liquidate it

6:39
and put it in a regular rollover uh Ira

6:42
so it's really cool because it's um it's

6:45
taking a it's really simplifying it it's

6:48
taking away the complexity it's it's

6:50
kind of bolted together so that you know

6:53
it's it's a one-size fit all type of a

6:55
situation okay but it can be Mass

6:57
marketed and now you can make this you

7:00
can make guaranteed income available to

7:02
a much wider part of the population

7:04
what's the underlying chassis of the

7:06
product that's delivering the guaranteed

7:08
income what is that is that a variable

7:10
is that an index is that a specific new

7:12
product that that no one's ever seen is

7:15
it is it uh the new flexible annuity the

7:18
NFA as I just I just pointed what is it

7:22
um it's it's it's pretty much all the

7:25
above so depending upon the insurance

7:27
company that's providing that option

7:29
within the the target date fund um it

7:32
it's either a variable annuity chassis

7:34
with a income benefit an index annuity

7:38
chassis with an income benefit or even a

7:39
regular fixed or a MAA chassis with an

7:42
income benefit attached to it so um

7:45
they're coming in different flavors and

7:48
um there's different reasons why a plant

7:51
now what's really cool also is that

7:53
there's tools and help out there now um

7:56
that are providing training to plan

7:58
Consultants so they can sit down with

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the employer and say well what flavor of

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income do you want to provide to your

8:05
employees and these things because each

8:06
of those Che I'm liking the word flavor

8:08
Gary but it means nothing to me please

8:10
tell me what flavor means well one

8:13
flavor would be do you uh do you want

8:15
your guaranteed income just to be

8:18
flat you

8:19
know lifetime or would you like your

8:22
guaranteed income to maybe increase over

8:25
time potentially potentially increase

8:28
right potentially or or do they have a

8:30
guaranteed increase option as well there

8:33
could be guar there could be increases

8:35
that um like a yeah you can have Cola so

8:39
also living adjustment for people out

8:41
there yeah um there's some flavors that

8:44
say your income can go up or can go down

8:47
but not below a certain amount so okay

8:50
so it's it's really um and I guess it

8:52
really depends upon um how they want to

8:55
configure and embed that type of

8:57
guarantee or what type of decision the

8:58
employer once the May because if you

9:01
have I'll give you a good

9:02
example um if you buy um if you insert

9:07
guaranteed income off of index

9:10
chassis right uh you know that you're

9:13
you're dealing with some guard

9:15
rails and you know if if the S&P 500

9:20
does gang busters and and triples and

9:23
quadruples you know there's some limits

9:25
yeah there's there's there's limitations

9:27
on the upside regardless of what you

9:28
hear

9:29
and but on the flip side their trade-off

9:32
on that is it's not going to go you got

9:34
a guarantee it's not going to go below a

9:37
certain level if you put on a variable

9:39
chassis your guard rails will go there's

9:41
no guard rails right if the S&P

9:45
quadruples and if your alloc you know in

9:47
your equity and bond allocations are

9:49
following something like especially your

9:51
Equity

9:51
allocation you could you could do really

9:54
well and that that income could increase

9:56
almost through the roof but there's a

9:58
probably a low likelihood of that

10:00
actually happening and on the Flip Flip

10:03
Side you know you're going to your

10:05
guarantee may be lower you know if if

10:07
you um you know if it goes south on you

10:10
so there's a wider bandwidth with uh

10:12
variable anity and again you're making

10:15
that decision so that your employees

10:17
maybe have the opportunity to really do

10:19
very very very very well in those tail

10:21
in those um you know uh certain

10:25
situations or or unlikely situations on

10:28
the other hand if you're choos using an

10:29
index chassis you at least you're

10:31
putting a little some guard rails there

10:33
and you have a you know you're not going

10:36
to uh you might have a chance to on the

10:38
average outperform maybe something on

10:39
the variable chassis if you put on top

10:42
of a magga chassis you know you know

10:44
what you're going to get right it's

10:45
going to be pretty flat your traditional

10:47
uh single premium Medi annuity so it

10:50
really depends upon what how much risk

10:52
it's a risk of return you know when

10:53
you're an investment committee with a as

10:55
an employer you know you're going to

10:57
have some options for employees that are

10:59
risky and some are not so risky and then

11:02
you're ultimately choosing your flavor

11:05
or your risk element around guaranteed

11:08
lifetime income um but in all cases

11:10
there is a guaranteed floor around that

11:12
it really depends upon do you want to

11:14
just have it stay flat on the guarantee

11:16
or you want some variability for the

11:17
employees so they can maybe enjoy some

11:19
upside got it we're talking to Gary

11:21
Baker CEO of canx he's the one that if

11:23
you go to my site and run quotes on our

11:25
calculators um that's the company that

11:27
provides the quotes quoting all carriers

11:29
as I always say um but he is he is a

11:32
thought leader and an innovator and a

11:35
Pioneer in where the annuity space in

11:38
the industry is going because any ideas

11:40
that anyone has to implement something

11:42
like he's talking about they have to go

11:44
through Gary um because they're going to

11:47
be the ones that's going to actually

11:48
provide the structure and the

11:51
implementation to get this done which

11:53
kind of leads me to my next question on

11:55
the group side and just as a um

11:57
disclaimer I'm not my company the

11:59
annuity man is not in the group side as

12:02
of yet we are not there obviously we're

12:04
we're looking at it we're you know but

12:06
it's one of those things where it's a

12:07
business decision right now we're just

12:09
straight direct to Consumer um but in

12:11
essence my concern with all of this is

12:16
um I look at annuities as commodity

12:17
products as you know you know you quote

12:19
them for the highest contractual

12:20
guarantee and you provide that for us

12:23
how are

12:24
companies um investment Boards of

12:27
companies over becoming the F-word in

12:30
this case fiduciary of providing enough

12:33
choices so they're not exposed for not

12:37
showing people the highest contractual

12:39
guarantee how are they combating that

12:41
they meaning the companies that are

12:43
actually providing these new choices

12:46
right well um there's um there's a set

12:51
of uh fiduciary practices that they have

12:53
to follow um they do that today so a an

12:57
employer will will

13:00
build a investment

13:02
policy you know that uh they they'll

13:05
create one that they will agree to

13:08
follow and that investment policy

13:10
statement you know States the the the

13:13
investment objectives for the company

13:15
and what they would uh provide with

13:17
these new options now um and maybe the

13:21
more I I think this is really kind of a

13:23
Tipping Point here as far as the

13:24
availability of these things they're

13:26
including now the annuity element into

13:30
these investment Pol policy statements

13:32
at the employer level so they're they're

13:34
writing them to ensure that um it

13:38
includes uh this type of new investment

13:40
especially if it's going to be embedded

13:41
in a Target date fund right and then um

13:44
there's prudent

13:45
practices that are spelled out um that

13:50
guide the advisor the plan advisor uh

13:53
along with the employer to ensure that

13:55
they make the right decision now um we

13:58
participate support something called the

14:00
lifetime income Consortium sure um it's

14:03
been it's been launched by broadridge

14:04
there's a number of member organizations

14:06
that contribute to this and and mostly

14:09
around a lot of these insurance carriers

14:10
and others and you know what they've

14:13
done is helped develop those set of

14:15
prudent practices that an advisor would

14:18
have to follow in guiding and providing

14:21
consultation to the employer to make

14:22
those decisions so um so there's a

14:26
there's belts and suspenders and bubble

14:27
wrap um that have also there needs to be

14:31
but but you know all of this comes down

14:34
to education not only education of the

14:36
company education of the board education

14:39
of the investment investment um group

14:42
but the key part of the education and

14:45
what I pride myself on is the actual in

14:48
user um I'm sure there are steps being

14:51
taken that but that's where that's where

14:53
the the that's where the concern comes

14:56
in in my case is is take taking the

14:59
person that's working getting them on a

15:02
lunch break and then trying to explain

15:04
to them lifetime income choices yeah

15:07
yeah yeah exactly um you know and when

15:10
it's embedded in the plan um you know

15:13
that becomes even more important and I

15:15
think historically education has always

15:17
played a big part in the uh purchasing

15:21
of annuities right it's huge because

15:24
you're you're trying

15:27
to uh have the investor wrestle with the

15:31
tradeoff

15:33
between their need or actually their

15:36
desire for guaranteed income or

15:39
guaranteed return versus control their

15:42
money or liquidity and it's a spectrum

15:44
so that education kind of helps them

15:46
navigate along that Spectrum so they can

15:48
make the right choice you know what I

15:50
will say though

15:51
is you know at the end of the day you

15:54
know a lot of people just want their

15:55
money back out of the 401K right so what

15:58
we don't know is

15:59
uh what's going to ha what's the true

16:01
experience when they hit 65 or whatever

16:03
the when they do retire and do they want

16:06
to let it ride with the 401K plan or The

16:09
Record Keeper there or do they want to

16:11
bring it back into their own portfolio

16:13
and what I what I also believe is that

16:16
you know if you're able to save enough

16:18
your needs are more specific so you may

16:21
need to move out of a one- siiz fitall

16:24
fits all retirement option within a

16:26
401k if you've been able to save at

16:29
least a decent chunk to help you support

16:31
your retirement you're probably going to

16:33
you're at that point where you need your

16:35
own customized financial plan that's

16:36
probably where you're going to want to

16:37
pull into something with an advisor and

16:40
then be able to U and that alone takes

16:43
education right so I think your needs

16:45
become a little bit more non one-sized

16:49
fits-all right uh once you once you get

16:52
to that point so who know I mean it's

16:54
still early in the game as far

16:57
as side but

16:59
um I I've always been a firm believer at

17:01
the end of the day people want their

17:02
money back so it's the first thing it

17:05
hit me is like this is like the covid

17:07
shots no one really knew what the what's

17:09
going to happen at the end of day we're

17:10
just kind of finding out what's

17:11
happening with all the co shots that

17:12
were taking um but but my concern is

17:16
most of the people that have 401ks and

17:19
we saw this last year during some some

17:21
hard Economic Times people start cashing

17:23
in the 401ks there's a lot of

17:25
redemptions of 401ks I know that um part

17:28
of of the filtering of of companies that

17:31
they're going to have to choose to

17:32
implement this type of strategy are

17:33
companies that can absorb that Ty that

17:35
type of customer pivot that have the

17:37
administrative ability to push that

17:40
paper and and take care of the client

17:42
there's a lot there's a lot involved

17:45
here um that you you can't predict the

17:49
future and you can't predict how people

17:50
are going to um make their choices but I

17:54
think this is the another um Choice

17:57
along the line of qualif ified longevity

17:59
annuity contracts that were put on the

18:01
planet in 2014 by the IRS and Department

18:04
of the treasury who designed it and

18:06
implemented it so people would start

18:08
thinking about lifetime income other

18:10
than Social Security I think this is the

18:12
next logical step uh 401ks and Def and

18:16
Define contribution plans which is what

18:18
they're called 457 403bs

18:22
Etc um are going to have to you know

18:26
they're going to have to offer these

18:28
type of things with the government

18:30
encouraging them to do that because I

18:32
think it's a competitive if I'm a if I'm

18:34
an employer it's a competitive thing as

18:36
well and I'm trying to attract people I

18:39
think that should be a choice for

18:41
Lifetime income um I I think people are

18:45
thinking about that more and more when

18:47
it comes to chapter 2 and with people

18:49
out here like me pounding the table

18:50
about you know chapter 2 is all about

18:52
you they're starting to think it is all

18:53
about income it's all about income

18:55
floor um what do you advising some of

18:59
these people that are going into this

19:02
space um to look out for what are your

19:05
concerns having been in the industry as

19:07
long as me forever even though we look

19:09
vibrant and young of course um what are

19:12
you telling them what's your what's your

19:14
proactive advice for a lot of these

19:17
people

19:19
well you know I think what's interesting

19:23
about the annuity industry in general is

19:26
that the innovation or new

19:30
designs um that bring more value

19:34
potentially but you know depending upon

19:36
situation but these new designs um

19:40
they're they kind of outpaced technology

19:43
to support them so even

19:46
though uh for again in a 401k situation

19:51
your typical Record Keeper you know you

19:53
you have some very large ones out there

19:55
right EMP power Fidelity you know

19:59
you a lot of these huge record Keepers

20:01
with millions of participants right um

20:03
but there's a lot of those are those are

20:05
that's the top but you have a lot of

20:06
midsize record Keepers their their

20:09
administrative systems aren't used to

20:12
dealing with

20:14
tracking pension units and annuity

20:17
paperwork an paperwork yeah and that's

20:20
that's always been a that's always been

20:21
a big boulder on the road right so um so

20:25
I think the industry uh still needs to

20:27
catch up on the ability for record

20:30
Keepers to be able to account for this

20:33
stuff next to Investments and there is

20:35
Solutions and there are solutions out

20:37
there there are uh uh there are services

20:42
that help record Keepers translate the

20:44
insurance aspects from the insurance

20:46
company Into The Record Keeper kind of

20:48
like a middle man if you will I would

20:50
think that that would be a growing

20:52
market for the techies out there

20:54
definitely yeah yeah exactly so there's

20:55
a lot of movement in in in that space so

20:57
that they can uh connect you know Mars

21:00
with Venus you know

21:02
absolutely um so I think um it's it's

21:07
the operational challenges are still

21:08
there and and there's the deployment of

21:10
technology to really kind of overcome

21:12
that so there's still a lot of

21:14
technology that has to be deployed in

21:16
the regular or the traditional annuity

21:17
Market with with advisor such as

21:19
yourself so yeah annuity companies were

21:22
kind of drug across the Finish Line

21:23
during Co to be more

21:25
techy yeah I mean they really were they

21:28
had they were forced to spend money on

21:30
Tech and I think that was a good thing

21:33
um if there was a silver lining out of

21:35
the co thing that was a good thing for

21:37
the industry but they I would think this

21:38
is the next hurdle and Mountain for them

21:41
to climb if they want to participate in

21:43
this market and obviously if I own an

21:45
annuity company out there I want to be

21:47
in this market because the numbers are

21:49
staggering I'm assuming yeah you know

21:52
and well if you look at a traditional

21:54
insurance company

21:56
um you know with thousands of employees

21:59
you would think oh most of them are

22:01
actuaries um the reality is over 50% of

22:04
the headcount in any insurance company

22:07
is pretty much the technology department

22:09
so it's a very

22:11
technology yeah it's it's a very

22:13
technology heavy uh business already um

22:16
and uh this just puts a little bit you

22:18
know oh they're dealing with life

22:19
insurance and you know they're they're

22:22
things and they got real estate

22:23
portfolios and they're doing all sorts

22:25
of stuff right and you know and they've

22:26
even ventured into their own brokerage

22:28
you know and and provide some of that

22:30
support so but uh yeah no it's there

22:33
there's already been a big spend you

22:34
know and um this you know around

22:37
annuities you have to you know it the

22:39
spend keeps going and and just even

22:41
during covid and even what we ched about

22:43
before yeah you know you would thought

22:46
all that would have died down a little

22:47
bit you know just given that but if

22:49
anything it's just it it's just been

22:51
taken to a a new level now as far as the

22:53
investment into technology and and

22:56
actually in addition to the group Market

22:57
maybe not segue here but some of that

23:00
technology investment and uh another New

23:03
Market um or channel the insurance

23:06
companies are trying to crack is is the

23:08
fee based advisor before we go there and

23:10
I do want to go there what is your

23:12
guesstimate on um how many defined

23:17
contribution plans are op have opened

23:20
their offerings and choices to to this

23:23
annuity lifetime income Choice

23:25
percentage wise do you even have a gauge

23:27
on what that number could possibly be

23:29
won't hold you to

23:30
that uh that's a good question I I think

23:34
it's still relatively low now that being

23:36
said when they like like lower than 10%

23:38
in your in your guess won't hold you to

23:41
that that sounds about right W maybe it

23:44
maybe going up a bit the the interesting

23:47
thing is when a employer is shopping for

23:49
a new 401K program for their

23:52
business they'll put out a request for

23:55
proposal right rfps like with any any

23:58
type of business

23:59
one of the on that RFP that the employer

24:02
is putting out they're always going to

24:04
have does your plan offer a life

24:08
guaranteed

24:09
lifetime so that's new income option

24:11
it's it's there it's and the funny thing

24:14
is the the other thing that's always on

24:16
that RFP you know is there a brokerage

24:18
window available in your 401k plan

24:22
course check mark yes yes now on the

24:24
this brokerage window and if you have

24:27
your employer of like a uh several

24:29
hundred employees what invariably

24:31
happens is there's only one person that

24:33
ends up investing in that brokerage

24:34
window which is the

24:36
CEO right so yeah exactly uh you know

24:40
and that's that's been you know that's

24:41
been kind of a common experience so in

24:43
this case with uh guaranteed lifetime

24:45
income being an option of RFP it's there

24:48
they check the box good I'll pick you

24:50
and then the question is whether the

24:51
rubber hits the road you know are they

24:54
really ready to make the decision to put

24:56
something in now the secure act from 34

24:58
years ago helps with that but this is

25:00
like moving a tanker this just

25:03
isn't around this is turning around a

25:05
cruise ship you been on a cruise ship in

25:07
a port it takes him about four hours to

25:08
do it

25:10
um yeah this this is going to be

25:12
interesting interesting to watch from a

25:14
lot of cases just

25:16
because the vast majority of businesses

25:19
80% or more are small small meaning 10

25:22
or less employees so that's really the

25:25
market of which you then said you

25:28
there's the technology issue there with

25:30
those midlevel because the big boys

25:33
really don't want those type of plans

25:35
they take them they want the big ones

25:38
you know they want the the big you the

25:40
Fortune 500 company 401ks there's a

25:42
Feeding Frenzy for those because of the

25:44
volume but I think where this is going

25:48
the opportunity as an entrepreneur but

25:50
also that it's going to be hard is that

25:52
small employer yeah yeah and know and

25:56
you you see the some of the states

25:57
addressing this with uh state-based IAS

26:00
even for small employers that aren't

26:03
offering any type of retirement plan

26:05
yeah U there's been some moderate

26:07
success in a few States but you know

26:09
that that's a that's a tough road to

26:10
plow you know as well um and there are

26:13
insurers and platforms that are built to

26:16
take on those those smaller plans and uh

26:20
but you know with that they're going to

26:23
have to come up with more education and

26:25
and support to be able to uh make that

26:27
option more feasible for for adoption

26:31
you know for those smaller plans so and

26:33
for the smaller plan and the smaller

26:34
plan administrator they have to look at

26:36
you know liability and exposure and all

26:38
those things as well but I do think it's

26:40
it's a it's a growing Market I mean

26:42
we're probably less than 10% of the

26:43
market I would before we pivot to the

26:45
next topic if you're out there and

26:46
you're working um and you're still

26:48
working for someone um I would just and

26:51
you don't know if these these options

26:53
are available to you I'd love a call

26:55
into the administrator and just say hey

26:57
do we have have lifetime income options

26:59
inside of our defined contribution plan

27:02
and if the answer is no then your next

27:04
answer is why not your question is why

27:07
not because I think this is going to be

27:09
something that's going to be commonplace

27:11
I would say 10 years from now Gary when

27:13
you still have dark ha and mind's gray

27:16
will say okay look at you know there's

27:19
75%

27:20
participation or a big number into the

27:23
lifetime income component of a defined

27:25
contribution plan I think that is a

27:27
positive for the country

27:28
yeah and it and it will take a lot of

27:31
pressure off of Social Security in my

27:33
opinion because people will have

27:35
different buckets to to to go from so I

27:39
like that I like what I'm hearing and

27:41
and glad that you're involved if you're

27:42
involved I feel a lot more comfortable

27:44
with it um because because you know your

27:46
morals and ethics are are in line with

27:48
everyone out there which is you're

27:49
trying to do what's good for the the end

27:53
consumer while helping the companies and

27:55
the boards really that's kind of the you

27:58
know the Pyramid of what you are doing

28:01
you're saying Hey I want to take care of

28:02
the consumer but here's how I think we

28:05
can do it as an industry which I always

28:07
appreciate you were mentioning the the

28:10
the Feebas group and these are your

28:12
advisers that you know Char either uh

28:16
fee based or fee only advisors and under

28:19
those platforms masters of the universes

28:22
I call them in no pun intent I just have

28:24
some fun with them because I've been on

28:25
that side of the Ledger before yep tell

28:28
me what's going on in that space that

28:31
makes

28:32
you

28:35
optimistic

28:38
um what's optimistic is that there is in

28:42
the same way that there's a lot of

28:45
investment being made in the 401K Market

28:49
there's a lot of investment being made

28:52
to translate annuities for the fee based

28:58
advisor who has traditionally

29:01
shunned annuities for a number of

29:03
reasons um primarily because they can't

29:06
charge fees on them yeah I mean look at

29:08
the end of the day if you're if you're

29:10
buying if you're buying

29:12
Insurance yeah uh it comes with a cost

29:16
uh and you're paying that either through

29:18
a fee or commission at the end of the

29:21
day end up at the same spot now it just

29:24
really I think it's you know from a

29:27
price fee perspective generally over

29:31
time I I would think it it it somewhat

29:33
levels out I think the bigger issue is

29:35
the the nature of the business of a

29:37
fee-based advisor as you you know

29:40
whether they're master of universe or

29:41
not um they're all about ensuring that

29:45
they can rebalance and repurpose your

29:48
portfolio as you go through stages of

29:50
your life true if they were to put some

29:52
protection in annuity traditionally then

29:55
you know they don't have control of

29:56
those assets anymore even you know even

29:58
you lock in a seven-year guarantee as a

30:00
bond replacement on on one type of an

30:03
annuity right sure at seven years that

30:05
Feebas advisor is not going to be able

30:06
to touch that money um and so part I

30:10
think part of their value proposition is

30:12
that hey I'm there for you and I'm going

30:15
to take care of this for you over the

30:17
course of your financial life and we'll

30:19
readjust and then as your needs and and

30:22
goals change we we'll we'll we'll modify

30:25
your portfolio as as as need be but you

30:28
know the the the annuity is not as you

30:32
know is not as moldable as what they're

30:34
used to dealing with and secondly and

30:36
you brought this up earlier in our

30:37
conversation today is the

30:40
paperwork it's horrendous in their

30:42
perspective right you know making a

30:45
trade after rebalancing your portfolio

30:47
that afternoon that's exactly right two

30:49
three weeks you know it's like you know

30:51
this is this is crazy I you know what I

30:53
can do better than any I'll be there and

30:54
I'll make sure I get them a you know

30:56
yeah you'll hear that from ADV visor say

30:58
you don't need an annuity I can manage

31:01
your money to create the annuity okay um

31:04
but guarantees are

31:06
guarantees uh there's two reasons this

31:08
is all happening in the Feebas space

31:10
number one the annuity companies want to

31:12
tap into those Feebas advisor because

31:14
they're managing a ton of money yeah

31:17
period yeah the reason that fee-based

31:19
advisors are now taking their fingers

31:21
off of their nose and and not vomiting

31:23
on the word annuity is the demographic

31:26
tital wave of 11,000 people turn 65

31:28
every single day and

31:30
wanting um guarantees with part of their

31:32
portfolio and and we're at a point now

31:35
that I don't think people the you know

31:38
the fee based or fee only advisers can

31:40
talk people out of that anymore just

31:42
because of the marketing that's going on

31:45
someone like me with thousands of videos

31:47
and seven books and all these podcasts

31:48
talking about guarantees that's going to

31:51
matriculate down to the ROI and there's

31:53
just so much that they can they can call

31:55
me Goofy and ugly but they can't knock

31:58
down my message my message is real it's

32:00
contractual guarantees so what we have

32:02
now is those two B Behemoth The annuity

32:07
companies wanting to get access to the

32:09
manage money with the ra type guys and

32:12
the ra is going oh my god I think I'm

32:15
gonna really have to look at these

32:16
annuities and then now that that is kind

32:19
of

32:21
happening what are the annuity companies

32:23
showing to the advisers out there that's

32:27
going to get them off go and and have

32:30
them eat their words that all annuities

32:31
are bad and they've been saying that for

32:33
two decades well you know I think

32:36
getting back to where the optimism here

32:38
is uh with the investment in technology

32:42
and we've been talking a number of these

32:44
firms

32:45
where they're in the same way right

32:48
there's there's this integration into

32:50
the 41k right turning this thing into a

32:53
asset within the tdf there's Tech tdf

32:56
tdf I'm sorry Target day fun in the 401K

32:58
plan in the in the fee base market right

33:01
and as you mentioned they're going after

33:02
high net worth they're going after these

33:04
chunks of money that uh the Boomers you

33:06
know here they come here comes the tail

33:08
end of them um they uh there's

33:12
technology that's continues to be

33:15
developed that will help the fee based

33:18
advisor treat that annuity like another

33:21
asset and be able to uh build portfolios

33:24
and manage that portfolio now there's

33:26
some aspects of the operation stuff on

33:28
the back end with that as well but it's

33:31
it's it's trying to uh position the

33:34
annuity as part of their existing

33:36
practice as opposed to making the Feebas

33:39
advisor try to learn a new trick you

33:41
know it's like no just in just

33:43
incorporate the annuity into the

33:46
processes and their practices as what

33:48
they do today and and make it more

33:51
streamlined so that it can be Auto

33:53
there's allocations and it's part of

33:55
efficient Frontiers and and those uh

33:58
elements that that fit nicely into the

34:01
fee based world so that's you know and

34:03
at the end of the day these are complex

34:06
when you get into the high Net War

34:07
situation annuities are configurable

34:09
they have so many different dials and

34:11
you're basically daing up that insurance

34:13
to fit a specific need in the financial

34:16
plan whether that's estate planning or

34:18
tax deferral right or even juicing up a

34:22
death benefit or what you want to do for

34:24
for other things right cor right one

34:27
single contract could probably do all

34:29
those things but you don't want it to do

34:30
all those things you don't want to you

34:32
can buy the Swiss army knife but don't

34:35
you only want to use one blade then buy

34:38
the blade buy the blade no I think I you

34:41
know I get asked a lot about this um you

34:44
know ra raas and and and now the group

34:46
I'm getting some questions about the

34:47
group stuff now and my comment is is

34:50
you're going to love this this um

34:52
correlation I'm getting ready to make

34:55
Ras are you know they're getting to the

34:58
point where they well you know I'd

34:59
rather sell it than than Stan get the

35:01
business because right now Stan's

35:02
getting the business so I I I got to

35:03
look at it because you know you I don't

35:05
want him to buy a second Lear jet I

35:07
don't have Lear jet but the way that I

35:09
look at it Gary and for all the people

35:11
out there going St what do you think

35:12
about this all these other people

35:13
selling annuities and aren't they going

35:15
to encroach on your space no here's the

35:18
way I look at it when you go buy a car I

35:20
want you to think about when you go byy

35:21
a car typically when you go to a car

35:23
dealership there's like seven other car

35:25
dealerships side by side by side the GM

35:29
whatever Mercedes why is that it's

35:32
because people are shopping okay people

35:35
need cars people are shopping so what

35:37
we're seeing here is a growth of an

35:39
industry organic growth organic meaning

35:43
people want guarantees people want

35:44
lifetime income people want principal

35:46
protection people want transfer of risk

35:48
strategies and so the the group plans

35:52
are starting to have it now great the

35:54
raas are starting to have it now great

35:57
and then you have the independence like

35:59
like me out here has been pounding the

36:00
table saying why why isn't everybody

36:02
looking at this now everyone's looking

36:04
at I think it's great because at the end

36:05
of the day I want the consumer to have

36:09
choices and I have no problem with

36:11
someone calling us up and saying you

36:12
know what Stan I've got my lifetime

36:14
income covered in my group plan or Stan

36:16
I've got my lifetime income covered with

36:18
my raia that I've been doing business

36:20
with 10 years great super that's

36:24
fantastic I'm all for that because

36:27
people need guarantees kudos to KX and

36:31
your leadership um as CEO of KX of I

36:35
don't know screaming into a hurricane

36:37
and saying you need to put this in there

36:39
if you don't put this in there you're

36:41
not going to have a competitive

36:42
Advantage as either a group plan 401k

36:45
403b or as a ra you can't keep saying I

36:50
hate all anties you can't keep saying

36:52
that when everyone owns one which is

36:54
social security right so what I'm happy

36:57
about for you as a friend and and been a

36:59
long-term friend and watching your

37:01
growth with canx is you are in front of

37:04
the demographic tidal wave you're just

37:05
trying to convince the the grand poas of

37:08
each industry that hey it's time to look

37:11
and it sounds like to me Gary they're

37:13
listening to you they're going yeah you

37:15
know what we probably do need to look

37:16
whereas I would say five six seven years

37:18
ago they're like nah no not right now I

37:21
mean it's been interesting right to

37:22
watch it where annuity went from a curse

37:25
word to like I don't know to now it's

37:28
like yeah we probably need to look at

37:29
that I give me and you full

37:32
credit that's fine but I think there's

37:34
more more out there that we've been

37:37
pounding the table for a long time

37:39
man yeah look what we do as a business

37:42
is that um these are comple you know

37:44
these can be complex products yes right

37:47
um and what we the reason why people

37:50
call us is that they need a way to

37:53
demystify and um translate what each

37:57
these products does on a Level Playing

37:59
Field so they know what the you know how

38:02
many you know how many features how many

38:05
dials what they can do with each one in

38:07
a in a much more simple way because um

38:13
it you know there there's a lot there's

38:15
a lot of variation out

38:17
there um and it's sometimes it's not

38:20
like you can go um you know with with a

38:23
mutual fund right you know you get your

38:25
morning star report and you know it's a

38:28
four star it's a five- star it's in this

38:30
box and I oh okay this is what this is

38:33
how I can deploy this particular mutual

38:36
fund um that's tough to do when you're

38:38
looking you know when you're looking at

38:41
so much variation in the market and so

38:43
what we try to do is kind of bring

38:45
everything together normalize it and put

38:47
it into a common framework where you can

38:50
you can test it and and and see what you

38:53
can do with it and how it could fit into

38:55
a broader portfolio so what G I think

38:57
think what Gary's really doing that's

38:58
cool is he's providing those tools to

39:00
where the analytical fee based advisor

39:04
can be

39:05
analytical it's not don't take our word

39:07
for it here are the fact here are the

39:09
stats Etc here's what's happening who's

39:12
I got a huge question for you coming up

39:14
but the one question I wanted to ask

39:15
just hit me is in your mind who's being

39:18
more receptive now the group people or

39:21
the Feebas people or is it kind of

39:23
they're kind of both leaning in in an

39:25
equal term

39:30
um it's interesting I think I think the

39:32
group Market is more of a

39:36
topown

39:38
um uh situation where is that good or

39:42
bad it well it's I don't I don't say

39:46
it's it's a beauty contest but you know

39:49
it's coming down from usually I the

39:50
institutional Market you know in in

39:52
group Market driven by the do and that

39:55
the do's out there are saying dep lab

39:57
important yeah sorry about that um and

40:01
and there's a lot of um there's a lot of

40:03
committees and effort at the at the

40:05
industry level even leading up to the

40:07
government really pushing this down I

40:10
think on the raia the fee based Market

40:12
is exact opposite I think it's a Bottoms

40:16
Up um well put hand toand combat you

40:19
know well put one at a

40:21
time um even though there's some group

40:24
think in ra space feeb space the reason

40:26
that someone's fee based planner is

40:28
because they think they can do it better

40:30
so you almost have to go one onesie

40:33
onesies to each person that's the reason

40:35
I kind of you know call them Master of

40:37
the Universe I used to be one long time

40:39
ago um yeah and and and part of that

40:42
hand toand combat is that you know a lot

40:45
of those Feebas advisors are not

40:47
licensed to sell a life and health

40:48
product so oh good point some what some

40:51
providers do whether it's a advisory

40:54
firm or a um a u a support firm or or

40:59
the actual insurer they have what they

41:01
call

41:02
um like oid but what that really means

41:05
is they become they have a SE they have

41:08
a partner with them that is licensed

41:11
that partners with the Feebas advisor so

41:13
they can transact the sale and that

41:15
specialist if you will that helps the

41:17
Feebas advisor will kind of guide the

41:20
whole process from from that perspective

41:22
and more importantly their license so

41:24
the Feebas advisor can partner with

41:27
somebody who is licensed to make p to to

41:29
and once again you know if you're

41:31
listening as an entrepreneur which I'm

41:33
not Gary because I I am an entrepreneur

41:35
but I'm an old entrepreneur so but if if

41:38
you're a young entrepreneur he's giving

41:40
you some insights to where the

41:42
opportunity lies you know because we're

41:44
demographic tital

41:46
wave uh fee based planners that don't

41:48
have insurance license I mean they're

41:50
going to need some help going forward um

41:53
one thing I wanted to do uh because

41:55
people listen to you obviously we've got

41:57
gotten great comments when you've been

41:58
on before just wow I didn't know how

42:01
that worked and you're kind of The

42:02
Wizard Of The Wizard of the annuity Oz

42:05
behind the curtain can you give us

42:06
without giving any type of you know

42:09
competitive um stuff tell us a little

42:12
bit about canx and who's in the building

42:14
and what they're doing and you're

42:15
overseeing the the IQ in that

42:19
building it's you're you're kind of a

42:21
tech company aren't

42:25
you that's a good question we keep

42:27
asking ourselves that all the time well

42:30
let's face it any business today is a

42:32
tech company right you can say well you

42:34
know there but aren't you guys

42:36
more with each with every time I talk to

42:38
you you're hiring tech people you're

42:40
you're doing things in essence you're

42:43
You're Building platforms for people

42:45
like myself to access or or Feebas

42:47
planners to access or group plans to

42:49
access yeah aren't you aren't you KX the

42:52
platform Builder well I think the way I

42:56
see us is where was like we're the

42:58
electric company the industry

43:00
utility wow that's a great Point yeah

43:03
that's a good way to look at it you're

43:04
the utility so you know our our our

43:09
platform you know is

43:12
is stable and you know it's not a

43:17
speedboat no but it's you know but it's

43:21
it's robust and because we focus a lot

43:23
on making sure we we get this stuff

43:25
right but I would say a lot of our

43:26
investment in res

43:27
resources recently and we continue to

43:30
grow is um folks that translate these

43:33
products so whether that's on our

43:35
Consulting team if we do it on a on a

43:38
customized basis or translate meaning

43:41
explain or Implement so if a insurance

43:44
company comes up with a new annuity type

43:46
of product right in a particular

43:48
category they say okay we we got to get

43:50
that on the platform well okay let's

43:53
that's let pulled apart let's figure out

43:55
what it does and retranslate it and put

43:59
it into the industry utility platform so

44:02
that it can be accessible and so that

44:05
you can

44:07
then with you know through diligence be

44:10
able to put that up with other products

44:12
and then ensure that the advisor can be

44:15
able to

44:16
select if if that product is selected

44:19
that it's done within uh somewhat of a

44:21
compliant way right within a broader

44:24
utility so in doing that you you know

44:27
each insurance company may have their

44:28
different glossery of terms and way they

44:30
describe things you you translate that

44:33
say oh what they're really trying to do

44:35
it it works this way this feature

44:37
actually does this got it and now you

44:39
know how to put it into an Apples to

44:41
Apples platform so that you can it you

44:44
would still be able to um show its value

44:49
and how it is

44:51
differentiated but within a Common

44:53
Language across so we're we're I would

44:56
say we're spending you know some of our

44:58
resources you know inition technology is

45:00
really on our our Consulting side as

45:03
well as operationally implementing

45:06
products there's new products being

45:07
vented every day so it's yeah they're

45:09
trying to get St sh I'll tell you that

45:12
no no I gotta um the other way I want

45:16
the listener and viewer to to think

45:17
about this is is I want you to Envision

45:20
every life insurance company that issues

45:23
annuities with a red phone on their desk

45:26
and it's got one line that can call one

45:28
person Gary has the red phone on the

45:30
other line so in other words he his

45:33
company is working there's there's no

45:35
animosity between canx and and Fillin

45:37
the blank annuity company they are

45:39
working together on your behalf to

45:43
provide you the products and show you

45:44
the guarantees and with some product the

45:46
potential past past performance so that

45:50
you can make a good decision or your fee

45:53
based or fee fee advisor can recommend

45:56
something based Bas on their analysis

45:59
that's who Gary is think of the red

46:00
phone on his desk and the red phone at

46:02
every CEO at every annuity company

46:04
that's the communication and they are

46:07
working together I think the interesting

46:09
part about the annuity industry it is a

46:11
competitive world but not in between the

46:15
carriers I mean they're trying to

46:17
attract product attract people to their

46:19
product but they kind of have to go

46:21
through Gary and his

46:23
organization to get there that's my

46:26
that's my Layman's version of you and

46:29
the only thing I would add to that is

46:30
that you know we're me more often than

46:34
not we're then the utility plugging into

46:36
other applications that are presenting

46:39
and and whether it's a financial

46:41
planning application or right other

46:45
types of front end so we you know again

46:47
that's where we're at utility we're just

46:49
plugging the rpvc pipe behind your

46:51
application and other applications and

46:53
and there's different types of um

46:55
processes and re search um you know

46:59
applications out there that that people

47:01
use and go to but those applications

47:03
don't have you know we're able to do

47:05
that translation and and and support

47:08
whatever their mission is in in

47:10
financial planning as a consumer you

47:12
should feel very fortunate that Gary is

47:15
behind all of this as a group or as a

47:18
fee based planner fee only planner you

47:20
should be happy that Gary's running the

47:21
show the only thing that I worry about

47:23
Gary every single year especially in the

47:26
fall is the Penn State nitty Lions of

47:29
which

47:30
Gary is a Alum proud Alum um but every

47:34
year Gary you know and I've been to a

47:37
game with Gary he took me tried to

47:39
freeze my feet off at a Wisconsin game

47:42
and um I'm now a you know I'm I'm now a

47:44
Penn State follower Gary we'll we'll

47:48
kind of close on this but how's next

47:50
year looking for the NIT

47:52
Lions well the issue is that

47:57
you know you want to be in the

47:59
playoffs right it's good to be one

48:01
through four we're we're always

48:03
somewhere between five to 10 that that's

48:06
that's haven't been able to make that

48:07
last step maybe the the expansion of the

48:10
playoffs Gary will put the NIT lines

48:13
with the fanciest hel with the fanciest

48:15
helments in the

48:17
business the playoffs sounds really good

48:19
to me um but I will say though um it is

48:24
being in the South here now and actually

48:26
I went to the peach ball um in Atlanta

48:30
we played Old Miss and uh that didn't go

48:33
well it means a whole lot more down

48:36
here it does man it does Gary is Gary is

48:40
uh he runs he runs numerous States but

48:43
right now he's in Charlotte North

48:44
Carolina my old stomping grounds and um

48:47
I'm envious a little bit just because of

48:48
the barbecue that's accessible there

48:50
that's not accessible here in Florida

48:52
I'm not in Vegas right now I'm in

48:53
Florida but um Gary uh any last words

48:57
might drop moment for the consumers

49:00
listeners and viewers on the annuity

49:02
industry because I think this has been a

49:04
great insight to where things are going

49:06
where the puck is headed as they say as

49:08
R Wayne grety says escape to where the

49:10
Puck's going to be not behind the puck

49:13
Gary is doing that any last

49:16
words I don't know the only thing I can

49:18
say is that at the end of the day you're

49:21
buying investment insurance right and so

49:24
you can buy you can buy a very simple

49:26
version of that which is easy to

49:29
understand just like a bank CD right

49:31
that's kind of like investment insurance

49:32
too but you probably get a better return

49:34
with a fixed annuity right

49:36
or you can buy more complex type of

49:40
insurance through an annuity investment

49:42
insurance and with that you need a

49:44
trained

49:45
profession you're not going to be able

49:47
to do it yourself and I think the the

49:48
real you know the the real trick is to

49:51
you know find an advisor that you trust

49:55
you work with and then knowing that that

49:58
adviser either directly or through their

50:00
team um has somebody that can configure

50:04
the dials of that annuity to fit your

50:07
specific plan so yep it's and an annuity

50:10
is not for everybody either right so you

50:13
don't listen to the Fisher investment

50:15
commercials you know we love them

50:16
disclaimer know Nathan great people I

50:19
mean I I ate at a great restaurant with

50:22
Nathan who is Ken's son so I've got

50:24
nothing against them they they're just

50:25
you know they're selling they're they're

50:27
selling their own story I always say

50:29
is I my intent when I talk to an advisor

50:33
an adviser says well I don't sell that

50:35
type of product or I don't sell that

50:36
type of product to my clients to me

50:40
that's a red flag because financial

50:42
advisor you should know all the tools

50:45
available to you correct and then

50:47
depending upon your client specific in

50:49
uh situation feel comfortable right and

50:51
putting in the right spot that's in

50:53
their best interest and the right thing

50:55
to do if you have advisor says well I

50:57
don't sell this or that I hate this or

50:59
that be careful I only sell this be

51:01
careful um just run as far as you just

51:05
run away run away I always tell people

51:07
yes I'm stand the annity man yes we only

51:08
sell fixed annuities but you need other

51:10
things now come on now I'm just a

51:12
specialist and you may not need to know

51:14
it either you might oh heck yeah I mean

51:16
that's that's don't no new just for a

51:19
specific purpose right and not everybody

51:20
needs them so exactly Gary the only last

51:24
thing is if you ever get come through

51:25
Florida or Vegas don't call me then I'm

51:27
going to I'm going to track you down I

51:29
mean it's straight up um Gary and our

51:31
big music fans we'll go into to that the

51:33
next podcast we don't have time today

51:35
but um I really appreciate you being on

51:37
and giving us some insight in these two

51:39
new newer markets that most people don't

51:42
know and and once again two things and

51:44
let's close with this if you have a

51:47
group plan that you're involved in

51:48
you're still working ask them if they

51:50
have income options available if not you

51:52
know they can get them number two if you

51:54
if you're with a a feed type planner and

51:58
they're not offering income type things

52:00
ask them why they can get them and the

52:03
guy that's on the on the line with us

52:05
now Gary Baker it his company canx who

52:08
he's CEO of they can provide this

52:10
platform or providing those platforms to

52:12
get you those contractual guarantees to

52:15
combine with the other contractual

52:16
guarantees that you have so with that

52:18
Gary thanks for joining us and thanks

52:20
for everyone joining the fun with

52:22
annuities podcast on all major platforms

52:24
and the fun with anui YouTube Channel

52:26
we'll see you next time

52:32
[Music]