Moshe Milevsky: Learning from History with Annuities (From the Vault)

0:03
[music]

0:04
Welcome to Fun with Annuities, where

0:06
every single week I welcome a celebrity

0:08
guest expert that can help you maximize

0:11
chapter 2 of your [music] life. Listen,

0:14
learn, laugh, and love every minute of

0:17
the most unique financial podcast on the

0:20
planet. Let's get to it.

0:29
Welcome to Fun with Annuities. My name

0:31
is Stan the Annuity Man, America's

0:33
annuity agent. Yes, I am licensed in all

0:34
50 states. I'm so glad you joined me

0:37
today on all major podcast platforms.

0:40
And also, we have a Fun with Annuities

0:41
YouTube channel if you want to see me

0:42
and the guests interact and see our

0:44
facial expressions when one of us says

0:46
something that's funny or crazy or

0:48
something like that. But I'm going to

0:49
tell you something. Today is a special

0:51
day for me. Um, this is almost I'm

0:55
almost a fanboy at this point in time.

0:57
And what that means is I really look up

0:59
to my guest. He is a he is a person that

1:01
I follow. I read pretty much everything

1:04
that he writes. Um, if there was ever an

1:08
icon in the financial business and the

1:10
annuity business, it's our it's our

1:11
guest today. His name is Mosha Mleski.

1:13
And let me tell you a little bit about

1:14
him. He's a tenur professor of business

1:17
finance. He's a published author and a

1:19
well-known consultant. and he's based in

1:21
Toronto, Canada. He has an MA and he got

1:24
that in 1992 in mathematical statistics.

1:27
He has a PhD, got that in 1996 in

1:30
financial economics. Um, he is a 2002

1:34
fellow of the Fields Institute for

1:36
Research and Mathematical Sciences

1:38
Sciences. Now, now we get to the the fun

1:42
part, and this is where I start

1:43
following him because that other stuff's

1:44
way above my head. He's published 16

1:47
books translated into six languages and

1:50
has authored over 70 peer-reviewed

1:52
scholarly artic articles. I need you to

1:54
hang in there with me. Put your seatelt

1:56
on. This is important. One of his books

1:58
called King Williams Tantine, which

2:00
we're going to talk about is about why

2:02
the retirement annuity of the future

2:04
should resemble its past. And it's very,

2:06
very interesting. Has a new book coming

2:08
out uh this month and at the time of

2:11
this taping is June of 2022. and it's

2:14
called how to build a modern ton tantine

2:16
scripts tips and algorithms.

2:19
He is also a fintech entrepreneur. Yes,

2:21
he is very busy with a number of US

2:24
patents and and computational

2:26
innovations. In 2014, he sold a startup

2:29
company to a company that we use called

2:31
CANX that provides the fees to our

2:33
calculators. Um he was named by

2:36
Investment Advisor magazine as one of

2:37
the 35 most influential people in the US

2:41
financial advisory business over the

2:43
last 35 years. He's delivered over 1,500

2:47
presentations and keynote lectures

2:49
around the world including academic

2:52
seminars at Stanford, Colombia and MIT

2:56
etc etc. His current research is

3:00
fascinating because he's his interest

3:02
revolves around the history of how aging

3:06
consumers financed and paid for the last

3:08
few decades of their life. But he's

3:11
researching that on how that happened

3:12
over the last few centuries. It is my

3:16
absolute honor to have Mosha Malefki on

3:20
Fun with Annuities. Thank you so much

3:21
for being here

3:23
and you're very kind with your

3:25
introduction and your praise and uh as

3:28
you know uh you're quite the legend

3:30
yourself. So I appreciate being here and

3:33
uh hopefully I can ask you just a couple

3:35
of questions when you're asking me

3:37
questions so that we get a bit of a

3:38
dialogue going.

3:39
Absolutely. Obviously I went through

3:41
your background and and and your

3:42
education which is unmatched. Um how did

3:46
you land in the annuity space? I mean I

3:48
mean you have a you know an a masters in

3:51
mathematical sciences a PhD in financial

3:54
economics. How do you get to annuities?

3:57
How did that happen?

3:59
Yeah. So as as I'm sure you know

4:01
annuities are sort of a small part of

4:03
what I do my day is teaching

4:05
undergraduate and graduate students. Uh

4:07
my 22-year-old undergraduates don't

4:09
really care very much for annuities

4:11
sadly. They're 22 years old. They have

4:13
student loan debt. They're trying to

4:14
figure out what to do with their lives.

4:16
you know, if you talk about student

4:17
loans, they'll be interested. If you

4:19
talk about mortgages, housing, you know,

4:21
health insurance. So, it was there's

4:23
this enormous group of financial

4:25
products out there that consumers have

4:27
to be aware of. And as you get older and

4:29
as you get closer to retirement,

4:30
obviously annuities are a very very

4:32
important component. So uh you know I I

4:35
often tell people that uh when we have a

4:38
uh session for parents who want to send

4:40
their students or their kids to uh

4:43
university they come to our you know

4:45
gymnasium and they walk around and they

4:47
see the different areas that are

4:48
available and students come with their

4:49
parents you know these are high school

4:51
kids and they stop at my desk uh where

4:53
I'm selling the uh you know business

4:55
course and the students say so what do

4:57
you teach and I say well I teach

4:58
retirement income planning and then they

5:00
move right along you know 10 seconds

5:01
here the parent state. The parent state

5:06
the parent state. So you know clearly

5:09
this is something that is age specific.

5:11
So let me respond to your question how I

5:13
got into annuities. Sure. Uh I got into

5:15
annuities because uh I came face to face

5:18
with longevity risk at a very young age.

5:21
Longevity risk as you know is this

5:23
uncertainty about how long you're going

5:24
to live. So my dad passed away at a very

5:26
young age. He developed colon cancer and

5:29
passed away in his late 40s.

5:32
So you know that's one side of longevity

5:34
risk. My grandfather on the other hand

5:36
just passed away recently. He lived to

5:38
his late 90s.

5:39
So look at that divergence there

5:41
comparing.

5:42
So to me what interested we sort of I

5:45
looked at that and said okay so you know

5:46
there's got to be some way to manage

5:47
your financial affairs with that sort of

5:49
uncertainty. How do you manage your

5:50
financial affairs when you know it may

5:52
last as short as 45 years. it can go as

5:55
long as 95 years. So that sort of led me

5:58
to the insurance as a solution and

6:00
insurance as risk management. Uh that

6:02
that's sort of the short response to how

6:04
I got into it. Uh and you know I'd be

6:06
delighted to dig a little bit deeper.

6:08
But uh you know coming face to face with

6:10
longevity risk is something that alerted

6:12
me to the fact that there's a need for

6:14
uh the annuities solution. I also worked

6:17
as an intern for a while at a very large

6:20
uh insurance company in New York called

6:21
TIFF. you know, back in the 1980s and of

6:24
course they're very very big in in in

6:27
the in annuity space obviously for

6:30
qualified 401k, 403b plans, 401A plans.

6:33
So I learned a little bit about the

6:34
industry there as an actuarial trainee

6:37
many many years ago when I was trying to

6:38
figure out what I wanted to do with

6:40
myself. Uh so you know there are a lot

6:42
of paths that lead to it and recently

6:43
it's been an interest in history and the

6:45
fact that as I'm sure you know annuities

6:47
predate stocks and bonds. So you know

6:49
you think mutual funds have been around

6:51
forever. uh no actually annuities have

6:52
been and and that's the way people

6:54
finance their retirement.

6:56
Then my question to you being just

7:00
actually the thought leader in our space

7:03
is how has the annuity industry done

7:06
such a poor job in your opinion on

7:08
messaging the fact that we have the

7:10
monopoly that everybody wants the

7:12
product which is lifetime income. How

7:14
have we how have we messed that up as an

7:16
industry? because that just confounds me

7:17
every single day, especially when people

7:19
say, "Well, I hate all annuities." And

7:21
I'm like, "Well, that's stupid. That's

7:22
like saying you hate all restaurants."

7:24
Um, it makes no sense.

7:26
Yeah.

7:26
What has happened? How is the How have

7:28
we gotten here to where annuity is

7:31
actually a curse word in a lot of the

7:33
consumer circles and also un uneducated

7:37
financial circles,

7:39
right? So, you know, Stan, with every

7:40
question that you ask me, you have to

7:42
tell me whether you want the 10-second

7:43
response, the 10-minute response, or the

7:45
10-hour lecture series response. So, I

7:48
I want the consumer response. So, dig in

7:50
as long as you want to dig in.

7:51
Look, so let let me try to put this in

7:53
bite-sized pieces. I think there's a lot

7:55
of confusion over what an annuity really

7:57
is. The word annuity today is as

8:00
meaningless as fund. You called it

8:02
restaurants, I say funds. You know, when

8:03
a reporter calls me up and says, "What

8:05
do you think about annuities?" I say,

8:06
"What do you think about funds?" you

8:08
know, private equity funds, venture

8:10
capital funds, mutual funds, bond funds,

8:11
stock. It's a meaningless word. You can

8:13
attach it to almost anything. And uh

8:15
legally what an annuity is, it's very

8:17
different to what an economist would

8:18
call an annuity. It's certainly

8:19
different from what uh you know, a media

8:22
writer would call an annuity. It's just

8:24
there's this vagueness. What is it? Uh

8:26
and if you go back a few hundred years,

8:27
the annuity meant something very very

8:29
specific, very well-known, very defined.

8:32
And then for some reason, you know, 300

8:33
years later, it means almost anything to

8:35
anyone. So number one is confusion about

8:37
what this thing means

8:38
uh is number two I think that uh there

8:41
was a period in the late 80s possibly

8:44
early 90s where the commissions the fees

8:46
that people were paying uh for these uh

8:48
either as you know commissions that were

8:51
explicit where you know really only 80%

8:53
of your money goes to work or

8:54
commissions that were hidden and paid

8:57
because you couldn't surrender for 20

8:58
years uh were very very high atrociously

9:01
high unconscionably high and they gave

9:02
these instruments a very bad name Now,

9:05
those were very specific types of

9:06
annuities and they, you know, certainly

9:08
weren't all annuities. So, that that was

9:10
part of it. Uh, I think that another

9:13
problem with annuities, you know, this

9:15
will be my last point before I, you

9:16
know, sort of turn it back to you is

9:18
annuities are sold, annuities are sold

9:20
to a group of people that are

9:21
vulnerable. You know, they're sold to

9:23
older people. You know, we're not

9:24
selling it to 23 year olds. We're

9:26
selling it to people that are older. And

9:27
in some sense, you know, the point of

9:29
this product is to generate some sort of

9:31
predictable income when you're no longer

9:34
able to make decisions yourself,

9:36
cognitive decline. So when you have a

9:38
product that really is meant to help

9:40
people that are eventually going to

9:42
cognitively decline and help them deal

9:44
with the finances, you know, there's a

9:45
higher burden of care there because you

9:47
got to make sure that they understand

9:48
what they're buying, they continue to

9:50
understand what they're buying.

9:51
Sure.

9:51
And in many cases, annuities are quite

9:53
complicated. So you have something very

9:54
complicated going to someone whose

9:56
ability to make those decisions decline

9:58
over time and that's a recipe for

9:59
disaster. So in some sense there's a

10:01
whole bunch of reasons but I do agree

10:03
with your premise. There's a lot of

10:04
confusion. There's a lot of fear uh and

10:06
there's certainly a lot of backlash

10:08
against it. Hopefully that helps put

10:10
this in context.

10:11
And it does and I've and I've said to

10:14
industry leaders and and and CEOs of

10:17
carriers to say just just let's just get

10:19
it down to a couple of words. I'm you

10:21
I'm a marketer. I understand how to

10:23
brand things obviously and I think it

10:25
really comes down to um I I I go back to

10:28
the got milk ad where it just said got

10:31
milk. I think we should have one that

10:32
says got guarantees or got lifetime

10:34
income.

10:34
I really believe we can frame the value

10:37
proposition of what we're doing and what

10:40
we're offering which you know with

10:42
10,000 baby boomers hitting the age 65

10:45
they're not looking for the next Tesla

10:47
or the next Microsoft or the next growth

10:49
stock. They're looking for guarantees

10:51
and they're looking for lifestyles.

10:53
Which leads me to my next question and I

10:55
had this vision of you Mosha in the in

10:58
the boughels of some library in Europe

11:02
reading about tantines and doing your

11:04
research on where annuities first

11:06
started. But the reason I bring that up

11:09
is I want you to

11:11
correlate that to to the products that

11:14
are out there now and your hope to where

11:17
things are going to go. And maybe you

11:19
can just give a brief um history of of

11:23
tant because when you Google it, it's

11:26
amazing what comes up. One of the

11:27
questions that people have is are are

11:29
tant illegal? That's one of the main

11:31
questions that pop up. So give us the

11:34
the dumbed down version of what that is

11:36
and why you're attracted to that.

11:38
So you know, as usual, Stan, your

11:40
questions could could take me, you know,

11:43
five hours to answer. So I I I'm going

11:45
to selectively pick certain pieces of it

11:47
because for many of your viewers, this

11:49
may be the first time in their life

11:50
they've heard the word tantine. They

11:52
don't know how to spell it yet and and

11:53
maybe they're googling it right now. So

11:55
you know, there's a lot going on. So let

11:57
let me explain a little bit of

11:58
historical background and hopefully this

11:59
partially answers the many questions

12:01
you've just asked. What interests me,

12:03
why I'm fascinated with history is

12:05
because the narrative right now in the

12:07
financial industry is that pensions are

12:09
going away. Pensions are going away.

12:11
defined benefit pensions are no longer

12:13
the norm for employees. Social security,

12:16
the trust fund in the US is, you know,

12:18
on its way down. So, there's questions

12:20
about sustainability and uh employers

12:23
don't really care about their employees

12:25
once they retire. So, you're on your

12:26
own, buddy. Ergo, we must all move into

12:29
the annuity space. What interests me is

12:32
what in the world did people do prior to

12:34
defined benefit pensions? Not what are

12:37
they going to do in the demise and

12:38
decline of defined benefit. what did

12:40
they do before? And uh you know, if you

12:42
take a look at when defined benefit

12:43
pensions started, you know, we're

12:44
talking about the beginning of the 20th

12:45
century, Social Security, FDR, the

12:48
1930s. Uh if you're really familiar with

12:50
pension history, then you'll know the

12:51
name Bismar. You know, the German

12:53
chancellor, he starts pensions in 1880.

12:56
And and everybody's entitled when they

12:58
get old to get a pension. What did old

13:00
people do before these state programs?

13:04
Now, the the ignorant response is that

13:06
there were no old people prior to 1880

13:09
and that Bismar somehow discovered that

13:11
there's old people and we need to give

13:12
them pensions. That is simply not true.

13:14
Life expectancy at birth might have been

13:16
very low. There were many old people. In

13:19
fact, if you go back to the archives,

13:21
there are people that made it into their

13:22
80s and 90s. And I could spend an entire

13:24
hour going through all the famous

13:26
philosophers and statesmen and you know

13:29
US presidents from the revolution onward

13:31
that lived far beyond life expectancy.

13:34
What did they do? How did they get to

13:37
retirement stop being able to work and

13:40
how did they get an income? And the next

13:42
response tends to be well their f family

13:44
supported them. They lived at home and

13:46
they didn't need it. That's also not

13:47
true because of the fact that not all of

13:49
them had families and and many of the

13:51
families had moved away. So once you

13:53
sort of eliminate all the nonsense,

13:54
you're left with to how did they finance

13:56
their retirement? And the answer is they

13:58
went out and they bought annuities. They

14:01
went to the state, they went to the

14:03
government, they went to early insurance

14:05
companies, they went to their local

14:06
church, they went to their parish, and

14:08
they entered into a scheme where they

14:10
would be receiving an income for the

14:11
rest of their life guaranteed a word

14:13
that you like as long as they live in

14:16
exchange for a lump sum right now. Uh in

14:18
fact the earliest nursing homes were uh

14:20
monasteries where people would go in

14:22
they were called karotis where you go

14:24
into the monastery and say look I got a

14:25
bunch of money this is my nest egg you

14:27
take it take care of me for the rest of

14:28
my life and they would in a sense issue

14:30
an annuity and the annuity would be paid

14:33
not just in in in living somewhere uh

14:35
they'd be paid in beer and bread and

14:38
wine and you know a shirt once a year

14:41
and and that would be your annuity would

14:42
be paid in goods and services part of

14:45
the products that people bought hundreds

14:48
of years ago to maintain themselves in

14:49
retirement was a name, a word that you

14:52
just mentioned called a tantine. A

14:54
tantine was one of the many schemes that

14:56
people used to finance themselves in

14:58
retirement. It was a scheme in which the

15:00
longest living people got the most

15:02
amount of income. The people that didn't

15:04
live a long time got a smaller amount of

15:06
income. It was a type of an annuity. And

15:08
I think that, you know, with that

15:09
background, we we understand that there

15:10
are many different ways to finance

15:12
retirement in the Middle Ages. And and

15:15
that was one of them. And I find the

15:16
tantine an interesting scheme and I

15:18
think that there's more discussion about

15:19
bringing it back. That's sort of the

15:21
three minute summary.

15:23
No, I I got you. One of the words that

15:24
popped out when you use is the word

15:26
scheme. And in the United States, scheme

15:29
is a bad word. Scheme means we're taking

15:32
advantage of you. Scheme means you're um

15:35
you there's something we're not telling

15:37
you. And I think that that word attached

15:40
to annuity

15:42
um even though you know and I know

15:45
that's not the intended use, people go,

15:48
"Yeah, see it's a scheme." It's not a

15:50
scheme. What he's saying is this was the

15:52
strategy that people were using at that

15:55
point in time. Um but even when you

15:58
Google tantine, it says a scheme used,

16:01
you know, hundreds of years ago, etc.

16:04
Um, that's an interesting word, but

16:07
don't you agree that that word has some

16:09
connotation that's negative that people

16:11
that aren't up to speed on the history,

16:15
they say, "Well, you know, scheme means

16:17
scheme's bad, right?"

16:18
Yeah. So, I'm a mathematical economist,

16:21
so I can use the word scheme because,

16:23
you know, I I don't answer to that. I

16:25
don't answer to that crowd. I'm not a

16:27
politician running for office trying to

16:29
figure out, you know, let's test 10

16:31
different words and see which one the

16:33
public likes. And I'm describing it the

16:35
way, you know, is described

16:37
historically. You go back to the

16:38
documents, that was the one. But I I

16:40
certainly agree with you is that if I'm

16:42
a marketing department in a modern

16:43
insurance company, right? I I will

16:46
stress test every word I use with focus

16:48
groups and you know, I'm not even sure

16:50
I'd use the word tanteen. Stan since you

16:52
brought this up many of the tant that

16:55
are emerging around the world and they

16:57
are emerging there are many examples of

16:59
it if I were to take a look at the

17:00
common denominator of all of them uh

17:03
there is certainly a very successful one

17:04
that was just launched in Australia uh

17:07
there was one in South Africa I was

17:08
involved with there's some in Canada all

17:10
of them all of them the common theme is

17:13
they don't use the word tantine and they

17:16
certainly don't use the word scheme they

17:19
use the thinking behind it they use the

17:21
pooling and the risk sharing. Uh, but

17:23
they don't use the word because they

17:24
feel that like you, you know, people

17:26
Google it and and they hear that, you

17:27
know, Homer Simpson in an episode of The

17:30
Simpsons lost money on a taunt. So, hey,

17:32
if Homer Simpson law, I don't want Marge

17:34
yelling at me if I, you know, or or they

17:37
hear that it's illegal because the state

17:38
of New York in 1906 banned Taine. So I

17:42
agree with you that words matter and we

17:44
don't want to use scheme and maybe not

17:46
even use tantine but the thinking behind

17:49
it namely that people that live a long

17:51
time are subsidized by people who don't

17:53
and as you live longer your income goes

17:55
up. Uh that's something that uh that

17:58
makes sense and you know to get to a

17:59
point that you made earlier. We all like

18:01
the word guaranteed. It's it's an

18:03
important word, you know, that's a word

18:04
we use, scheme, we don't use, guarantee,

18:06
we use. But the problem is is that

18:08
what's guaranteed in today's lexicon,

18:10
what's guaranteed is a nominal cash

18:13
flow. Nominal. Nominal means I have no

18:16
idea what this is going to buy me in

18:18
real terms. Nominal usually means it's

18:21
not adjusted for inflation. Nominal

18:23
means we have no idea what goods and

18:25
services I'm going to be able to buy

18:26
with it. I mean, honestly, if I

18:28
guarantee you $1,000 a week for the rest

18:31
of your life, do you really know 20

18:33
years from now what you'll be able to do

18:34
with $1,000? I mean, we really don't.

18:38
So, we use the word guaranteed, but in

18:39
some sense, it's a guarantee of a

18:41
something, but anything that I want to

18:43
buy with that is not guaranteed. So, one

18:46
of the reasons that the tantine concept,

18:48
whatever you call it, is gaining

18:50
credence is the idea is, hey, the longer

18:51
I live, I want those payments to go up.

18:53
I'm not interested in guarantees, but I

18:56
want something that keeps up with the

18:57
cost of living, roughly speaking. And I

18:59
think that's one of the appeals. But to

19:01
sort of wrap this up and to answer your

19:03
question, I think there are lessons to

19:04
be learned from how people financed

19:07
themselves in their older age hundreds

19:09
of years ago. There are lessons to be

19:11
learned for today. I may not design an

19:13
iPad or an iPhone the way it was

19:15
designed 300 years ago. They didn't

19:17
exist. But when it comes to financing

19:19
retirement, there's something about the

19:21
way we did it in the past that might

19:22
resonate with the future.

19:24
And hold that thought for a second.

19:26
We're talking to Mosha Malefki, just an

19:28
icon in our business. Now, he's written

19:29
some fantastic books and we're going to

19:31
have those links on our site. He's going

19:33
to have his own page like like all of

19:34
our celebrity guests do. But some of the

19:36
books that I would tell you to to look

19:38
at is one of them that I love. The seven

19:40
most important equations for your

19:41
retirement was fantastic. Obviously,

19:44
I've talked about King Williams Tantine,

19:46
which is one of his books, recent books,

19:48
which I've read a couple of times. He

19:50
also has one called Pensionize Your Nest

19:52
Egg, which I think is very good. And

19:54
then one that I really like called

19:55
Longevity Insurance for a biological

19:57
age. So, he he brings it down to your

20:00
level. He can do that, but you can tell

20:02
by just him talking that he's at another

20:04
level. I think if there's ever an

20:06
annuity odd couple that gets along and

20:09
and is on the same page, it's us, you

20:12
know, because for me, I consider myself

20:14
the annuity whisperer that's that's

20:16
trying to dumb it down to a level that I

20:20
always tell people, if you can't explain

20:21
it to a nine-year-old, don't buy it. No

20:23
offense to nine-year-olds. Um, and I

20:26
think the great part about Mosha is he

20:29
he can change gears and bring it down to

20:32
a consumer level. And those books that I

20:34
just mentioned are are some of the ones

20:37
that I'm going to point you to and have

20:38
links to where you can go get them on

20:40
Amazon. Let's go back to the Tantines.

20:43
Mosha, I um I'm fascinated with this and

20:45
I'm always thinking, okay, where's the

20:47
puck going to be? I'm giving some hockey

20:49
analogies since you're a Canadian. Um,

20:52
instead of skating after it, where is it

20:54
going to be? Do you ever see tant

20:58
entering this country in a fashion that

21:00
it's the consumers can get it,

21:03
understand it, and then eagerly buy it?

21:06
So, you know, it it depends on who the

21:09
audience is that's listening to my

21:11
response. you know, if if this is

21:13
consumers, it I don't really if I don't

21:17
really see the word taunting catching on

21:20
uh and and becoming an alternative to an

21:23
annuity because of some of the

21:24
historical issues there. Um, but I do

21:27
think that here here's the the business

21:30
challenge. asset managers, large asset

21:33
managers are realizing that their

21:36
inability to offer guarantees might

21:39
hinder their asset gathering and

21:42
certainly assets under management uh

21:44
model.

21:45
So, people are moving into retirement

21:47
and they're saying, "All right, these

21:48
mutual funds, these ETFs were great to

21:50
help me accumulate wealth, but now I

21:53
need a stable, predictable, I like that

21:55
better than guaranteed stable and

21:57
predictable income for the rest of my

21:59
life. and I just can't get that from

22:00
this very volatile ETF or mutual fund.

22:03
And the asset managers are going to see

22:05
some of that money perhaps a lot of that

22:06
money leak and leave towards the type of

22:09
solutions that you've been discussing

22:11
whether it's the annuities or the migas

22:12
or the QAX or the Diaz and so on. So

22:15
there are two ways that uh from a

22:17
business point of view asset managers

22:19
can deal with that. They can say, "Well,

22:20
we're going to partner with insurance

22:22
companies and we're going to somehow try

22:24
to share revenue or we're going to try

22:26
to, you know, keep some of the assets

22:28
and and and partner with insurance

22:30
companies because people like the

22:32
predictability and stability." Or they

22:34
might say, you know what, maybe we can

22:35
enter into this business without

22:37
offering those guarantees and the only

22:39
way to do that would be taunting like

22:40
structures. So the short answer to your

22:43
question is I think that within five

22:44
years you're going to see asset managers

22:47
offering things that you and I would

22:49
call a tantine whether or not they use

22:51
that word as separate.

22:54
Fascinating. I think when pe when you

22:56
were initially describing tant I think

23:00
people stopped the car and jumped off

23:01
the treadmill when you said the word

23:04
increasing income because that's the

23:06
biggest question I get in this

23:09
inflationary world that we're living in

23:11
is you know how do we how do how do we

23:14
adjust for inflation how do we address

23:16
inflation and as you well know Mosha and

23:18
I'm just telling this for the consumers

23:20
that are listening to this when you

23:22
attach an increase to a current

23:23
commercial annuity

23:25
It's called a cost of living adjustment.

23:26
In the past, there was CPIU, consumer

23:28
price index increases. But annuity

23:31
companies had the big buildings for a

23:32
reason. As I always say, they don't give

23:33
that away. They just simply lower the

23:35
initial payment to make up for that. But

23:37
when you start talking about tant

23:39
adjusting and increasing, can you go

23:42
into that for the consumer on what that

23:45
might look like from a 30,000 foot view?

23:48
Yeah. So you understand that when I sit

23:51
here and we're having a conversation, I

23:53
have four hands tied behind my back. I

23:55
don't have a blackboard. I don't have my

23:56
slides. I don't have the the graphics. I

23:59
certainly can't do equations. You'd

24:00
probably shut me down. So [laughter]

24:02
there's a li there's a limit as to how

24:04
much this can be explained to the point

24:06
where the consumer says, "Ah, I get it.

24:08
You I'm sorry. We need to explain

24:10
things, you know, using certain

24:11
techniques." But the idea here is is

24:12
that if you enter into an arrangement

24:16
where people that live a long time get

24:18
to share uh the benefits from something,

24:21
since there are less people living a

24:22
long time, they're going to share more

24:24
benefits. So, let let me try to put this

24:26
without any algebra. Imagine that you

24:29
and me and a group of our neighbors

24:32
decided to buy a 30-year Treasury bond

24:35
from the US Treasury. And it was a

24:38
unique type of bond that we all bought

24:40
together. Us, all our buddies, we bought

24:42
it. It's a bond that pays coupons for 30

24:45
years, but it never pays back the

24:47
principal at the end. Never pays back

24:49
the principal at the end. And you're

24:50
saying, Mosh, why would I buy something

24:52
that never pays back my principal at the

24:53
end? And the answer is because instead

24:54
they'll give you higher coupons. So, you

24:57
know, right now the 30-year rate would

24:58
be 3%, but you're getting your principal

25:00
back at the end. they'll give you seven

25:02
or six% and then you don't get the

25:04
principal back at the end, which is kind

25:06
of an evening out of your coupons. We

25:08
all all of us in the neighborhood decide

25:10
to buy one of these bonds that are

25:12
paying, you know, let's say 6% a year,

25:14
right? And here's what we do. We've

25:16
bought this bond and we enter into an

25:17
agreement. You and me and many others

25:19
and look, whoever is alive gets to share

25:22
those coupons. We at the end of every

25:25
year are going to go to the local golf

25:27
club or the local bar and we're gonna

25:29
all toast whoever's alive and we get to

25:31
split those coupons. But if you're not

25:33
around, you can't split the coupons. So

25:35
let's imagine what happens when all of

25:37
us have bought this bond that after one

25:40
year we're all healthy, we're good. We

25:41
all get 6%. We're getting the $6,000 a

25:44
year on our $100,000. And then in a year

25:47
from now we come back to celebrate. Are

25:49
we alive? And yeah, we're all alive. So

25:51
we're getting 6,000. But then at the end

25:53
of the third year, God forbid, one of us

25:55
has a heart attack or one of us has a

25:57
stroke or one of us is in a car

25:59
accident. We're not there to toast our

26:01
longevity and suddenly there are less of

26:03
us. There's less of us, but we still

26:05
have that $6,000 coupon. We're sharing

26:08
it over a smaller group. At the end of

26:11
the year, we have that $6,000 coupon

26:13
that's being paid, but it's being split

26:15
with a smaller group. How does this

26:17
work? We have the same amount of cash in

26:18
the numerator to use a mathematical term

26:21
but the denominator is shrinking. There

26:22
are less of us. And then 10 years later,

26:25
you know, say half of us are still

26:27
there. Other half if not many. Well, the

26:29
numerator is still exactly the same. The

26:31
denominator is shrinking. Each one of us

26:33
is getting a bigger and bigger payment.

26:35
Whoever's around 30 years from now,

26:37
whoever's around 30 years from now,

26:38
they're still giving out the 6,000, but

26:41
we're splitting it over a very, very

26:43
small group. We're getting a really big

26:45
coupon which is a naturally increasing

26:48
hedge in some sense against inflation

26:51
even though none of us bought an

26:52
inflation linked bond. Mortality becomes

26:56
a real interest rate mortality mortality

26:59
rate without having to worry about

27:01
buying inflation link bonds and tips and

27:03
I bonds and and reserves. So that is

27:06
incredibly uninteresting when

27:09
inflation's at 2% or less and nobody

27:12
knows what inflation is. But suddenly in

27:15
the last year or two, inflation is a

27:17
very hot topic on Google. You Google it

27:19
and you get, you know, the engram.

27:21
That's a that's a word that's coming up

27:22
a lot. President himself is using that

27:25
word. Maybe people start to get

27:27
interested in a scheme where there's

27:29
this natural increase. So that's one of

27:31
the reasons you're seeing more.

27:32
Hopefully I've explained why this is

27:34
increasing over time, but that's one of

27:36
the reasons you're seeing more of an

27:37
interest in this.

27:38
And I'm I guess in a glass half full

27:42
scenario, this rising inflation is is

27:46
pushing people to

27:49
talk to you, listen to you, read you,

27:51
and say, "Okay, let's let's look deeper

27:53
in this." I was writing down as my

27:56
marketing brain was rolling on what

27:58
could you call this and what could you

28:00
stamp this at and just the acronym to oi

28:04
came out which is transfer of risk

28:06
income which is that's what it is you're

28:09
transferring the risk and you're or

28:11
you're sharing the risk um for income

28:14
and you can add another eye on top of

28:16
that which is increasing income which I

28:19
think I think that's the part that

28:21
people will listen to because in essence

28:23
it sounds like to Hey, it's a life only

28:25
annuity that you're as long as you're

28:27
living your um people that that that

28:29
have followed my work that you know what

28:31
a life only annuity is. I always tell

28:33
people when you're le jet hits the

28:34
mountain money goes poof. Now Moses gave

28:37
a a much better um example of that but

28:41
it's a lifeonly

28:43
taunting shared pulled risk of which

28:46
income increases for the people that um

28:50
are still breathing. And I think if it

28:52
could be explained like that, I don't

28:54
think people in this country would have

28:56
a problem with doing a product like that

28:59
um or at least a portion of their what I

29:01
call their income floor, which is social

29:04
security, dividends, annuities,

29:07
commercial, and these type of new

29:08
annuities. The interesting part is going

29:10
to be how they're distributed

29:13
within the industry. And I think that's

29:15
going to be the challenge. Obviously,

29:17
you're you know that everyone else

29:18
looking at it knows that. But I think we

29:21
need as an industry to, hey, forget the

29:23
distribution. Let's put it out there.

29:24
Let's get it out there to where it's,

29:26
you know, and show people that it that

29:28
it works. And I think it would help the

29:30
annuity industry as a whole because

29:32
people would understand you're

29:33
transferring risk for lifetime income. I

29:34
always tell people I don't know the ROI

29:36
until you die.

29:38
You know, up until that point, it is a

29:40
is a transfer risk. Now, you find

29:42
yourself over in Europe a lot in in in

29:46
libraries. Am I correct? I'm envisioning

29:48
you over there all the time. Um,

29:50
actually you're you're you're catching

29:52
me when I just came back two days ago

29:54
from the archives in Edinburghough in

29:57
Scotland. Uh, I I don't want to bore

30:00
your audience to death, but the Church

30:02
of Scotland uh introduced one of the

30:04
first funded annuities in the early 18th

30:06
century. When you take a look at

30:08
annuities, it's one thing for me to

30:09
guarantee you a payment for the rest of

30:11
your life. But if you're smart, you're

30:13
going to say to me, Moa, how are you

30:14
going to make sure that that payment is

30:15
actually going to stay there for the

30:17
rest of my life? It's one thing for the

30:18
king to promise payments, but I want the

30:21
king to set aside some money to make

30:23
sure that those payments are going to be

30:25
made. That's called a funded annuity.

30:27
So, you can go back to biblical times.

30:29
Kings were promising annuities from

30:31
biblical times and then they defaulted

30:32
on them because they'd never set aside

30:34
any money for it. The first entity, the

30:37
first entity to actually set aside money

30:40
and say, "All right, we've just promised

30:41
annuities to ministers, we better make

30:43
sure we manage this money to pay those

30:45
annuities and we have to have a large

30:46
pool." The first entity that did that

30:48
was the Church of Scotland in the early

30:50
18th century. It's the first funded

30:52
annuity period. So I went and I was able

30:55
to gain access to their documents in

30:57
their archives to see how they designed

30:59
it. It's the subject of my next book.

31:01
And I don't want to give away too much,

31:02
but I found it fascinating how they set

31:05
that scheme up. And it was because

31:07
ministers and eventually university

31:09
professors said, "Hey man, I want an

31:11
annuity when I retire. I want an annuity

31:13
for my spouse. I want an annuity for my

31:15
kids. I don't want to give them money.

31:17
They're going to squander it. Somebody

31:19
will steal it from them. They don't know

31:20
how to manage money. Give them an

31:22
annuity. So that that was to me uh quite

31:24
interesting. And I spent a couple of

31:26
weeks there and they were very kind and

31:28
they gave me access to it. So uh the

31:30
short answer is yes. I do spend a lot of

31:32
time in archives and libraries.

31:34
When you don't give away the farm

31:35
because I want people to buy the book

31:36
because I'm going to buy it as well. But

31:39
were you surprised with some of the

31:41
things you found? Did you have any oh oh

31:44
oh oh oh oh oh oh oh oh oh oh oh oh oh

31:44
oh oh oh oh oh oh oh oh oh oh oh oh oh

31:44
oh oh oh oh oh oh oh oh oh oh oh oh oh

31:44
oh oh oh oh oh oh oh oh oh oh oh oh oh

31:44
oh oh oh oh oh oh oh my goodness moments

31:45
hitting your forehead when you found

31:46
stuff or was it predictable what you

31:49
found in the archives?

31:51
You know, to be honest, I thought I was

31:52
going there to cross the tees and dot

31:54
the eyes because like I know what I'm

31:55
going to find. It's going to be these

31:56
documents, but you know, you got to go

31:57
through, you got to do it, right? You

31:59
just got to make the pilgrimage. You got

32:00
to touch the documents and come home.

32:01
No, there was a lot of very shocking,

32:03
very interesting things in terms of how

32:04
they did things. Uh some of the

32:06
participants in these annuities I found

32:08
interesting the management of it. uh

32:10
some of the concerns around fraud, some

32:12
of the choices that people had. There

32:14
was a parallel to some of the things

32:15
that we see today in defined

32:16
contribution plans, there were defaults.

32:18
I one of the issues that they had to

32:20
contend with is, you know, this is in

32:21
Scotland. They are presbyteries uh

32:23
spread across the country. You know, how

32:26
do you do you force people into the plan

32:28
or do you just, you know, tell them if

32:30
you want you can join the annuity fund?

32:32
Uh which is sort of very similar to

32:33
defaults now in 401ks and DC plans. So

32:36
what they said was, "Well, you had a

32:37
year to to to default to say I'm not

32:40
interested." So they gave you a year

32:42
unless you were in the north of

32:43
Scotland, then they gave you two years

32:44
because, you know, it's a long time to

32:45
get your notice back there. But if we

32:47
didn't hear from you, we would default

32:49
you into the annuity. And this is

32:51
echoing some of the discussion now with

32:54
secure 2.0 about what should happen to a

32:57
plan as they approach retirement. Should

32:58
we default people into an annuity? And

33:01
they struggled with the same thing 280

33:03
years ago. I mean, you know, we're

33:04
forcing them into an annuity. It's a

33:06
lifetime income product. Are they going

33:07
to are the ministers going to complain?

33:09
How do we default them? So, what I found

33:11
interesting was a lot of the parallels

33:13
with some of the things we deal with

33:14
today. Uh they they dealt with at that

33:17
time and uh it was uh you know, that was

33:19
interesting to me. Some of the

33:20
administrative aspects of managing this,

33:22
you know, the actuarial theory is 3%.

33:25
The administration is 97%. How do you

33:28
get the lists of who's alive and who's

33:30
not alive and who's contributed and at

33:31
what rate did they contribute? How big

33:34
did their pool have to be? You know,

33:35
there weren't enough ministers in

33:36
parishes. So, they asked university

33:38
professors to join because they got a

33:40
couple hundred more people and now they

33:42
can use the law of large numbers.

33:44
Anyway, this is things that interest me.

33:45
I'm a professor. I can afford to have

33:47
that habit.

33:48
That is fantastic. No, I'm not a

33:51
professor and and you're sitting there.

33:52
I'm like, you know, listening intently

33:54
to every word because it just sounds

33:56
fascinating because my and I can't read

33:59
wait to read the book because I want to

34:01
hear how they dealt with these things,

34:02
how they dealt with the problems that

34:04
are similar in fashion to what we're

34:07
going to do now. Please tell me, Mosha,

34:09
that our government, the United States

34:11
government, is hiring you to help with

34:13
these types of ideas.

34:17
Look, I I've helped uh I have one foot

34:19
in the US, one foot in Canada. So, I I

34:21
spent time teaching here, but I have a

34:23
place in Florida. So, I've done a lot of

34:25
consulting work for the state of

34:26
Florida, the Florida State Board of

34:28
Administration. So, I spent quite a bit

34:29
of time in Tallahassee many years ago.

34:32
And uh that was about them converting

34:34
their defined benefit plan to defined

34:36
contribution because you know at the

34:37
time the governor Jeb Bush you may

34:39
recall uh one of his ideas was you know

34:42
we've got to give people choices and not

34:44
everybody wants a DB plan especially if

34:45
they're younger but the key was we

34:47
wanted to ensure the designers of the

34:49
fund wanted to ensure that uh people had

34:52
access to annuities at retirement. when

34:53
you take away someone's defined benefit

34:55
pension and you say to them, "No, you're

34:57
you're not going to get a guaranteed

34:58
income for life," you have to give them

35:00
something similar, which is an annuity.

35:01
So, I was there to help vet what

35:03
companies and what products would be

35:06
allowed into the plan, put it on the

35:08
shelf, so to speak, uh that people would

35:10
be able to select as they moved into

35:11
retirement. And you'll appreciate this,

35:13
the uh sponsors and certainly the

35:16
politicians didn't want complicated

35:17
annuities in there. They didn't want the

35:19
the the security type annuity. They

35:21
wanted simple DAS and SPAS and and QAX.

35:25
And the question was, you know, do you

35:26
go with the highest payout? Well, that's

35:29
not necessarily safe because sometimes

35:30
the highest payout isn't necessarily

35:32
from a credit quality that you want. Do

35:34
you go with the highest credit quality?

35:36
Well, the payout won't be high. What

35:37
sort of options do you give people? So

35:39
the short answer to your question is I

35:41
have been involved a little bit in some

35:43
localized projects, state projects, but

35:46
there are many brilliant minds in the US

35:48
in this space and I know that many of

35:50
them are helping uh whether it's the

35:53
Treasury or the or the Fed or certainly

35:55
the IRS in terms of the tax treatment of

35:57
these things. So the short answer is I

35:59
am one of many researchers that are

36:01
interested in these things and yes they

36:03
are being tapped as a group to help

36:05
governments although you know sometimes

36:06
there's a communication gap there. It

36:08
sounds too academic, too theoretical.

36:10
Politicians may not like it.

36:13
Yeah, it's it all comes down to

36:14
messaging when you're talking to the

36:15
consumer. The consumer is the the

36:17
listener to this podcast and and I think

36:19
that's one of the reasons this is one of

36:20
the fastest growing podcast in the

36:22
financial sector is because we're having

36:24
people on like you that's making people

36:26
think and they're hearing what you're

36:28
doing. [clears throat] I guarantee they

36:29
don't know what a ton tantine is. By the

36:31
way, it's spelled t n t i ne if you're

36:34
googling it. Um, but we'll have that

36:37
link on on the site for Mosha as well.

36:40
Um, so

36:43
for you, you're always, it seems like

36:45
you're always digging in and trying to

36:47
find the next blue water, as I call it,

36:50
you know, things that other people

36:51
aren't thinking about. What hit me when

36:53
you said, you know, I'm not I'm not

36:55
looking about what people are going to

36:57
do. I wanted to see what they were doing

36:58
back then. That's a contrarian thought.

37:01
That's not an a natural thought. Maybe

37:03
it is for an academian like you, but not

37:06
for the normal person out here. What's

37:09
the next

37:11
mountain you're looking to climb? Is

37:13
there something that's piqu your

37:14
interest that has caught your eye and

37:16
attention that you really want to dig

37:17
into because you've I know you can keep

37:19
digging into tant and and that, but is

37:22
there anything in the annuity space that

37:24
you're looking at that is new?

37:27
So, so look s you know it is when we

37:29
academic it's like watching a star that

37:31
exploded. The light that you're seeing

37:33
today was generated millions of light

37:35
years ago. Even the light that comes

37:36
from the sun came seven or eight minutes

37:38
ago. So, you know, the taunt stuff

37:40
that's coming out now, I worked on that

37:42
10 years ago. I'm not saying I'm bored

37:44
by it. I'm not saying I'm not interested

37:45
in it, but you know, that that's been

37:46
done. You can't sit, you know, your

37:48
entire life at the same well. What

37:50
interests me now once I get this uh

37:53
annuity fund out of the way, what

37:54
interests me now is long-term care.

37:57
namely that as people age as people age

38:00
it's not just that they want predictable

38:02
income for the rest of their life which

38:04
is great or guaranteed income they need

38:06
to know what will their expenditures be

38:09
and what will their health expenditures

38:11
be and how do they manage hedge and

38:13
ensure that so I have become interested

38:15
in the gap between lifespan and health

38:18
span lifespan is how long you live we've

38:21
talked about that longevity risk health

38:23
span is how long do you live healthy and

38:26
the gap between health span and lifespan

38:29
can be, you know, zero. You got hit by a

38:32
bus, sadly. And the gap between lifespan

38:34
and health span can be 20 years. You

38:37
know, you get hit with something, you're

38:38
just not in very good health anymore,

38:40
and now you got to manage for the next

38:42
20 years. I think long-term care

38:44
products, annuities that are linked to

38:46
long-term care, long-term hedges, long I

38:48
think that's something that that needs

38:50
to get more uh investigation. It needs

38:53
to get more attention. Uh, money doesn't

38:55
solve your problems. And I know that

38:57
sounds cliche. You You need to do

38:59
something with it to solve your

39:00
problems. How many times do you throw

39:02
money at a problem and it didn't solve

39:03
it? What do you mean? I fixed that

39:05
bloody air conditioner last year. Why

39:07
didn't it get fixed? And we got to throw

39:09
How do we throw money at things

39:11
efficiently when it comes to health

39:12
care? Is something that interests me?

39:13
Because as you age, that's going to be a

39:15
big deal. It's not the money. How do I

39:17
get better? How do I, you know, deal

39:18
with arthritis? Forget about the annuity

39:20
check. That's great. Thank you, Stan,

39:22
for the annuity check. I need to deal

39:23
with my arthritis. Can you give me some

39:25
suggestions? No, that's not my Bailey

39:27
Wick. I don't deal with it. Well, maybe

39:28
you should. Maybe you should get an

39:30
annuity that pays in arthritis

39:32
medication. And and I mean that just

39:33
sort of half as a joke, but that's

39:35
something that interests me now. How do

39:36
we deal with the long-term care

39:37
challenge?

39:39
Boy, that's a big one. I wasn't

39:41
expecting that from you, but I'm glad I

39:43
asked because I'm now feel comfortable

39:45
with you going at it and figuring it

39:47
out. Obviously, the long-term care space

39:49
is a different space because it's a

39:51
health insurance product, not a life

39:53
insurance product. A life insurance

39:55
products, life insurance companies issue

39:57
annuities for the people listening out

39:59
there. And there are some annuity types

40:01
that have what's called confinement care

40:03
or enhanced benefit type um guaranteed

40:06
issue u products out [snorts] there and

40:09
we certainly can show you those. But

40:11
that's not what he's talking about. He's

40:13
talking about literally

40:16
solving for specific things. Now, are

40:18
you thinking, and I'm I'm if I'm off

40:20
base, tell me, are you thinking that in

40:23
the future there will be annuity type

40:25
products that are addressing not only

40:28
income, but specific issues of health

40:31
and long-term care?

40:33
I do. And I I think that, you know, when

40:35
you think of activities of daily living

40:37
that trigger a long-term care policy,

40:39
why can't I why can't I buy a SPIA that

40:43
uh as soon as you're diagnosed with uh

40:45
you know, let's say you can't do three

40:47
of five activities of daily living, you

40:49
can't bathe, you can't clo yourself, you

40:51
can't walk to the bathroom. Like just,

40:53
you know, the payment triples. Why would

40:55
I want the payment to triple? Well,

40:56
because now you're going to have to hire

40:57
someone to help you with that. Mhm.

40:59
I mean, so because I it's not so much

41:01
the income that I want. It's the

41:03
services that I'm going to get. I I

41:04
really need the income. Income is just

41:06
part of it. I need the income to get

41:08
goods and services. You've solved part

41:10
of my problem, Stan. You're getting me

41:12
the income for the rest of my life. I

41:14
need to get services and I need to get

41:16
goods. Are you helping me with that? And

41:18
some people might say, "That's not my

41:20
problem. That, you know, go talk to a

41:21
medical professional. Go talk to a

41:22
social worker." And what I'm trying to

41:24
say is, no, I think this is going to be

41:25
part of the financing because if you

41:27
give me a sum of money that doesn't

41:29
quite cover the services and the goods

41:30
that I need, what's what's the point of

41:32
that sum of money, especially if it's

41:33
depreciating over time? So, the answer

41:35
to your question is yes, I see annuities

41:38
having long-term care writers, just like

41:39
a lot of the life insurance policies.

41:41
You can buy a life insurance policy that

41:43
is going to pay out $100,000 as a death

41:45
benefit, but if you need long-term care,

41:47
they'll multiply it by five.

41:49
Let me say that again. You have life

41:51
insurance. If you die, the beneficiary

41:54
gets $100,000. But if you're still alive

41:56
and you need long-term care, you can

41:57
draw down like a bathtub $500,000 worth

42:00
of long-term care over time. And and I

42:03
could see a lot of people saying, "Yeah,

42:04
I want that. I want that. I need to deal

42:06
with aging. I need to deal with aging.

42:08
I've seen it with my parents. I need to

42:10
deal with myself." So, this is something

42:11
that interests me. You ask me, "What's

42:13
where's the puck going, right? I'm a

42:14
Canadian. I think it's great. Where's

42:15
the puck going?" Yeah.

42:16
No, I I love it. I think the um I think

42:18
the issue and I'm always thinking from

42:20
the consumer standpoint [snorts] how to

42:22
get the policy approved and to the

42:24
consumer and the benefits in place. So

42:27
when I'm thinking that I I'm thinking

42:29
okay underwriting issues if if there are

42:33
any uh pricing issues from the carrier

42:35
that's issuing the policy. But my hope

42:38
is that with this type of thought,

42:41
people that have diabetes or that have

42:45
pre pre-existing conditions, it would be

42:48
really nice if they could buy a

42:50
guaranteed issue product that addressed

42:52
that specific thing without having to go

42:56
and get underwritten, whether simplified

42:59
issue or full underwriting. Because, as

43:00
I always say, annuity or or long-term

43:04
care companies, they want to they want

43:05
to ensure young, healthy people. Um, I

43:08
think with 10,000 baby boomers hitting

43:10
65 every single day, most of us, and I'm

43:14
in I'm not that there yet, but I'm I'm

43:17
not going to tell everybody my age

43:18
because I look so vibrant and young,

43:19
right? Most of um but I I would want to

43:23
buy something for pre-diabetic, which is

43:25
who I am, you know? Can I buy an annuity

43:27
that addresses that? Boy, you talk about

43:30
opportunity

43:32
and a niche market because it sounds

43:34
like to me that you're thinking from the

43:37
life insurance standpoint that you can

43:39
buy if you're a smoker, you can buy life

43:41
insurance because you're a smoker. You

43:43
know, it might cost you a little bit

43:44
more, but it's never been addressed from

43:46
the standpoint of health issues from an

43:48
annuity standpoint. And that's what

43:50
you're talking about. That is absolutely

43:52
fascinating. Which means my my SPIA

43:55
calculator would be SPIA calculator

43:57
healthy, SPIA calculator pre-diabetic,

44:00
SPIA calculator cancer, SPIA calculator

44:03
whatever.

44:05
You know, St. One of the things that

44:06
I've been sort of puzzled by is why

44:09
people don't ask for underwritten

44:11
annuities uh more meaning look I want an

44:15
annuity but I'm not in good health. Pay

44:16
me more. I'm not going to cost you as

44:18
much. uh in the UK, in uh England,

44:21
Scotland, there's something called

44:23
impaired annuities where you say, "Look,

44:25
I want an annuity."

44:26
So, I I I could certainly see that. Uh

44:28
if we can dig just a little bit more

44:30
into the actuarial without turning off

44:32
your audience, when you buy an annuity

44:34
from an insurance company, they're

44:35
worried you're going to live a very very

44:37
long time. That's their fear. They've

44:38
got to set aside capital and reserves

44:40
for that. But if at the same time you

44:42
add to it something that pays out in the

44:45
event of a long-term care need, then

44:47
there's an internal hedge in there

44:49
because the actuaries are saying, "Look,

44:51
both aren't going to happen. This person

44:53
isn't moving into a nursing home

44:54
tomorrow and living 40 years." So they

44:56
can suddenly be a little bit better in

44:58
pricing. What I mean is usually you buy

45:01
a toaster and you buy a fax machine. You

45:03
know, using the historical analogy, you

45:05
never think of combining a toaster and a

45:07
fax machine. Like what? Yeah,

45:09
but what if I told you get a really

45:11
really cheap because the underlying

45:12
mechanism for the toaster and the fax

45:14
machine are exactly the same. We can

45:16
combine it. We can make it cheaper. I

45:17
think when it comes to long-term care,

45:19
you might be able to get a better SPIA

45:20
payout, a better pay. Your calculator

45:23
will show a higher payout if not

45:25
necessarily they come in and they say,

45:26
"I've got pre-diabetes." I say, "I also

45:29
want to buy a long-term care rider

45:31
attached to it. It'll be cheaper than

45:32
combining them together." I I I do think

45:34
that if you're in the annuity industry,

45:36
you have to have some conversations

45:37
around this. You have to be aware of it.

45:38
it's going on in the background. You

45:40
need to understand it's not the money

45:43
that people want, it's the stuff they're

45:45
going to do with it. I think that's the

45:47
key message here.

45:49
And I think the future of the annuity

45:50
industry is solving is right now the

45:53
annuity industry says we can solve the

45:55
income stream. Here's the income stream.

45:56
Then go solve whatever you got to solve.

45:59
And I think the future is like you're

46:00
saying,

46:02
here's the annuity income stream that

46:04
will also solve and and target what

46:08
you're worried about instead of just

46:10
throwing it at you and say go get it. I

46:12
think that's um

46:13
that's fascinating. Now to answer your

46:15
question about why don't people do um

46:18
underwritten spe there's just not many I

46:20
mean it's not competitive and the great

46:22
part about the annuity industry in my

46:23
opinion for most products SSDs QAX Mos

46:26
index annuities whatever these are

46:28
commodity products there's there's

46:29
there's bunches of them and you shop

46:31
them for the highest contractual

46:32
guarantee I always tell people to do

46:33
that you own annuity for what it will do

46:35
not what what it might do but if you're

46:37
doing an underwritten SPIA and for the

46:39
consumer out there what you're saying to

46:40
the annuity company is you're proving to

46:42
them that your life expectancy is

46:44
actually less which means that the

46:46
payments will be fewer which means that

46:48
the payments will be higher. That's what

46:50
that means. That's what Mosha is talking

46:51
about. The problem now is there's maybe

46:54
one or two maybe three tops companies

46:58
that are doing underwritten immediate

47:00
annuities at this time in the United

47:01
States. That is a problem big time. So I

47:05
would love that but I for whatever

47:07
reason companies have shied away from

47:08
that.

47:09
Yeah. So Stan, you know it's a chicken

47:10
and egg issue. You know what comes

47:12
first? I mean nobody's interested in it.

47:14
So companies don't find the need to

47:16
maintain an active line marketing

47:18
keeping your registrations you know

47:19
satisfying it's not worth it. Uh but

47:22
then if the demand comes there then they

47:24
the company see an opportunity. So you

47:27
know the question is what's going to

47:28
happen first? Is somebody going to get

47:29
up and say we're starting to offer

47:30
impaired annuities and just let's give

47:32
it a try. Or will advisors people such

47:35
as yourself influencers you know with a

47:37
very wide audience and readers just say

47:39
hey you know it's time to bring these

47:40
things in. We might increase the size of

47:43
the annuity message from people who say,

47:45
"Look, I'm not in great health. I would

47:47
like to get one of them."

47:48
Well, and what we have to do when we we

47:50
go through that process is someone says,

47:52
"I want to underwrite a SPIA to see if I

47:54
can get a better payout because I'm

47:55
going to prove that my life expectancy

47:57
is less." We warn them upfront that

48:00
there is a good possibility you're going

48:02
to be denied.

48:04
And that's a problem as well. I I think

48:07
if there would be a simplified issue

48:09
type underwritten SPIA consumerfriendly,

48:12
I think people would flock to it just

48:14
because a lot of people have underlying

48:16
conditions and would like to get, you

48:18
know, in essence an accelerated payment.

48:20
But I I think it's fascinating where

48:22
you're headed with this. I encourage you

48:24
to to dig into the long-term care side

48:26
because,

48:28
as you know, the long-term traditional

48:31
long-term care, there's not many

48:32
carriers left in the United States for a

48:34
myriad of reasons.

48:35
And there's three different types of

48:37
long-term care, which, you know, I have

48:39
a long-term care expert on, and we go

48:40
through those things. His name is Jack

48:42
Lindenberg. He's fantastic if you want

48:44
me to point you to him. Um, but I think

48:48
that's that's interesting for where

48:51
you're headed. What's the difference

48:53
between Canadian and US type annuities?

48:56
You know, I get I get a lot of calls

48:57
from from people that watch my videos

49:00
and and podcasts. I'm sure that you're

49:02
you being on will give those Canadian

49:04
calls in.

49:05
Um Yeah. So,

49:06
what do you see up there?

49:07
Yeah. So, it's it's very interesting

49:08
that you you asked that. So, I am a

49:10
Canadian and US citizen, right? Which

49:13
means that I file taxes in both

49:15
countries. Lucky me. Um, I mean, I don't

49:19
even want to start talking about what a

49:21
patriot, huh?

49:22
Yeah. What get Well, there's some tax

49:24
credits that you get for one, not 100%

49:26
tax credits. I I I could do a whole

49:28
podcast on on tax regimes. In fact, my

49:30
PhD thesis was on the reconciliation of

49:32
the Canadian and US tax system. But to

49:34
answer your question, there are many

49:36
annuity products that are available in

49:38
the US that are simply unavailable in

49:40
Canada.

49:41
Correct.

49:41
So, when I p I own three annuities. I

49:44
mean, we can get into which ones, but I

49:45
I bought them all as an American citizen

49:47
with a residence in Florida because you

49:49
simply can't get them here. They don't

49:51
exist. They're not offered. And why the

49:54
innovation hasn't hit here, may be part

49:56
of the fact that there's more defined

49:58
benefit pensions here per capita than

50:00
there is in the US. But for all of you

50:01
that are listening to this, all three of

50:03
you that happen to be Canadian and US

50:05
citizens, who happen to have a Canadian

50:07
residency and a US residency, all one

50:09
all one of you, if you're buying one of

50:11
these things, get it from Stan in the

50:13
US, even if there's a stand in Canada.

50:15
That's right. That's that Well,

50:17
obviously we we we appreciate that. U

50:20
and we do like working with people all

50:22
across the United States. And if there

50:23
was a chance for us to do Canadian, we

50:25
would because we do get a lot of those

50:26
calls. Um, if you were annuity zar

50:31
and you were sitting over top of

50:33
everything, what would you change?

50:37
I know it's loaded and broad, but pick

50:39
something.

50:39
Yeah. Yeah. So, unfortunately, there

50:42
isn't such a position. You know,

50:43
insurance is regulated by the state. So,

50:45
there are 52 or 51.

50:47
Let me dream. I'm dreaming.

50:49
Okay. All right. Um, I I think that uh

50:54
if I could throw, you know, a couple

50:55
hundred million dollars at the problem,

50:57
which is what ZARS are allowed to do

50:59
these days, they can go to Congress,

51:01
they put in a footnote, and before you

51:02
know it, $100 million has come into

51:04
their budget. Uh, you know, a public

51:07
advertising campaign to clarify what

51:09
these things are and how important they

51:11
are to reduce the financial illiteracy

51:15
around these products. Don't have it run

51:18
by companies or affiliated organizations

51:21
that where you got a bias. They're not

51:24
and I'm I'm the last one to say let's

51:25
hand it over to government. But you've

51:27
just given me a government job. I got to

51:28
figure out what to do. Right? I'm not

51:30
saying let's hand it over. If you handed

51:32
me a government job, I would suck out

51:34
that budget and say, "Let's get this

51:36
thing clarified. Here are the different

51:38
types. Here's what they do. These are

51:40
the different vitamins A, B, C, D, and

51:43
here's what the vitamins do." And we put

51:44
it on the package. And there's clarity

51:47
around the nutritional content of these

51:49
things. I go to the store, I pick up my

51:51
vitamins. I know am I getting zinc in

51:52
there? There's no zinc. My doctor said I

51:54
needed zinc. Let's pick up the

51:56
multivitamins with that sort of clarity

51:58
of message and clarity of ingredients

52:01
and clarity of what are these things is

52:04
what I would do. Let's get a messaging

52:07
campaign out there. uh instead of

52:09
putting more roadblocks or barriers or

52:11
legislative uh roadblocks in front of

52:13
the or or mandating anything for that

52:16
matter.

52:16
And I would do the exact same thing. It

52:18
would all be about messaging. It would

52:20
all be simplified. It would all be

52:22
repetitive and easy to understand. It

52:24
would stick in the back of your head and

52:25
you'd understand when the word annuity

52:27
was used, whether it was got guarantees

52:30
or transfer of risk or whatever we came

52:32
up with. I think that's the biggest

52:34
problem with an industry that has a

52:36
monopoly. an absolute monopoly on

52:40
lifetime income. How that how this isn't

52:42
a multi-t trillion dollar market

52:44
annually. I don't understand and

52:47
sometimes it feels like I'm screaming

52:49
into a hurricane with people that don't

52:51
under that the industry that doesn't

52:53
seem to care because they're making so

52:55
much money. Last question motion and I

52:57
appreciate once again Mosha Mleski.

52:59
We're gonna have his stuff on the site,

53:00
but boy has it been a pleasure and I

53:03
could talk to you forever and hopefully

53:04
one of these days we our paths will

53:06
cross. Especially in Florida. I live in

53:09
Florida and Las Vegas, so maybe we'll

53:11
our Florida paths will cross. But this

53:12
is the last question and I do it with

53:15
all my celebrity guests. I don't give a

53:17
heads up on it, but it's called the mic

53:19
drop moment. And what I want you to do

53:21
is I'm going to hand you the mic and

53:22
you're going to say something that you

53:24
think the consumers out there that are

53:26
listening to this need to hear and walk

53:28
away with because you're Mosha Mleski.

53:31
So mic drop moment Mosha Mleski.

53:36
Yeah. I I think that consumers should

53:39
pay more attention to what fees,

53:42
commissions, and u you know revenue

53:45
sharing agreements uh exist with all the

53:47
financial products that they buy. I

53:49
think many of them are embarrassed to

53:51
ask this. They have a good relationship

53:52
with their financial advisor, their

53:54
local insurance agent, their local car

53:55
insurance salesperson. And I think that

53:57
people have to become more accustomed to

53:58
look what what's the markup on this

54:00
thing. You know, I'm buying a car. This

54:02
is what I'm paying. You know, you can

54:04
easily spreadsheet and compare. I think

54:06
that would also solve part of the

54:07
problem. The skeptic in the consumer

54:09
says, "Yeah, you're making a big, you

54:10
know, you're ripping me off." Well, if

54:12
you disclose that it wasn't that much,

54:15
you know, maybe I'd feel more

54:16
comfortable with it. It's not just I

54:18
don't understand it. Even if I do

54:20
understand it, I'm concerned that it's

54:21
very opaque and I don't understand how

54:23
much I'm making. So, ask awkward

54:25
questions. That's the mic drop moment.

54:27
Learn to ask awkward questions to people

54:30
you like. Yeah, I know. I have a great

54:31
relationship with my advisor, but here's

54:34
an awkward question. Exactly. How much

54:36
money are you making from this?

54:38
I love that. I'm I'm I'm gonna That

54:41
might be a t-shirt, Mosha, that we have

54:43
is ask awkward questions to get the

54:46
right answers. I really appreciate that

54:48
and I really appreciate you joining me

54:49
and thank you so much for everyone out

54:51
there that's that's joined us on all the

54:53
podcast platforms and YouTube channel

54:56
called Fun with Annuities and I will see

54:57
you next week.