Steve Parrish: Why QLACs Will Rival Roth IRA Popularity

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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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let's get to

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[Music]

0:28
it welcome to fun with annuities I'm

0:30
your host Stan the annuity man America's

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annuity agent licensed in all 50 states

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we have a repeat guest but he's been

0:37
he's been gone for a while actually he's

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not he's been very busy but um got an

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email from him the other day had written

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article on CAC qualified longevity

0:46
annuity contracts which I'm if he's it

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we're running at close one to two who's

0:50
the biggest proponent of those I guess

0:52
Michael FAA would be third but um you

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know we really believe in the product

0:57
and it's a pro consumer product welcome

0:59
back to fun with annuities Steve

1:02
Parish great to be here Stan thank you

1:05
much Steve give everybody the brief

1:07
elevator speech on who you are I was

1:09
going to do that myself but it's better

1:10
that the person that is the elevator

1:12
speech does the elevator speech so give

1:14
the give the people a reminder of who

1:16
you are okay well I'm I'm associated

1:19
with the American College of financial

1:21
services and um now my title is

1:24
Professor of practice and scholar in

1:26
Residence and as you probably know Stan

1:29
uh the F here the title to lower the pay

1:31
but uh what I do is I'm involved in the

1:33
industry in a very broad way trying to

1:35
be a thought leader and provide ideas

1:38
and right suggestions in the retirement

1:40
field there you go and been in been in

1:43
the financial services field for how

1:45
long Steve let's date you right here oh

1:47
boy just a mere 48 years it's not like a

1:50
a long time like 50 years 48 years two

1:53
more to go and then what yeah then I'm

1:55
going to just keep going there you go

1:57
there you go so let's talk about CAC if

1:59
people don't know what a qac is that's

2:01
unfortunate and a lot I would say the

2:04
vast majority of financial advisers

2:05
don't even know what a qac is and the

2:08
vast majority of financial Journal

2:10
journalists don't know what a CAC is

2:11
which is also tragic so let's go over it

2:14
real quick 2014 our friends at the

2:16
treasury Department and the IRS

2:18
developed the CAC I was the first person

2:21
to write a book on that it's called the

2:22
CAC owners menu you can get it at my

2:24
site the annuity man.com and you can run

2:26
CAC quotes to your heart's content

2:28
quoting all carriers for the contractual

2:30
guarantees for your specific situation

2:32
but cacs were really developed and I

2:35
want you to add to this Steve this is my

2:37
Southern simplification of it CAC were

2:40
were put on the planet because the

2:42
government never intended Social

2:45
Security to be the primary source of

2:47
income for retirees even though it is

2:49
for I don't know what the percentages

2:51
are they wanted people to start planning

2:53
for Lifetime income because what I call

2:55
chapter 2 of your life I think the

2:57
biggest thing that you need to establish

2:58
is what I call the in inome floor which

3:00
is that monthly income amount hitting

3:02
your bank account every single month

3:04
regardless of market conditions Global

3:07
Geo political stuff political parties

3:10
Etc and qacs keyword qualified um can

3:15
only be used in Ira type accounts um

3:18
401ks are starting to include them IRAs

3:22
Etc so anybody that tells you um never

3:26
buy a ning side of an IRA that kind of

3:29
stupid idity you can just say well how

3:31
about the qualified longevity annuity

3:34
contract add to that definition in

3:36
history please

3:38
Steve well I think uh the the basic

3:41
concept that Congress knows and people

3:44
that are my age are very cognizant of is

3:47
we do not want to run out of money

3:50
before we run out of oxygen in other

3:53
words at the end of the day we want some

3:54
kind of Lifetime income and nowadays

3:57
with a 401k or an IRA you know a big pot

4:00
of money but you don't know how last how

4:02
long it's going to last so Congress came

4:04
in and said look we got to come up with

4:06
some kind of carrot to get people to buy

4:10
lifetime incomes or otherwise again

4:13
they're going to be eating cat food and

4:14
living in their car in their old age

4:16
yeah and it's a demographic tital wave

4:18
of 13 to 15,000 people turning 65 every

4:21
single day which means they need

4:22
lifetime income and they need guarantees

4:24
and they need to transfer risk for what

4:27
we call Longevity risk which is if very

4:30
fancy way of saying what you just said

4:32
outliving your money um so when you when

4:35
you buy a CAC which is issued by a life

4:37
insurance company that issues annuities

4:39
you're transferring the risk to pay as

4:41
long as you're breathing even if you're

4:42
on a ventilator I call them ventilator

4:44
annuities so people always say what's

4:46
the ROI stand on a CAC I don't know that

4:48
until you die but I think one of the

4:51
things that popped out in your article

4:53
which dovetailed into a prediction I

4:55
made in 2015 I'm way ahead of my time

4:57
Steve I'm a visionary I said back then

5:00
when cacs were introduced I said this

5:03
will eventually be the number one

5:05
selling annuity type in the

5:08
country now I've missed that a little

5:10
bit but I still think I'm right and

5:11
you've dovetailed that when you said

5:13
it'll eventually be a standard technique

5:16
similar to you know kind of the the

5:19
popularity of Roth IRAs can you explain

5:22
where you're coming from on that yeah

5:24
because I've been around long enough

5:26
that I saw rths when they first came out

5:28
yeah and and you remember this I mean

5:31
people laughed at it it came out 27

5:32
years ago and I remember a LinkedIn post

5:35
where I was talking about roths and

5:37
somebody wrote what do you mean pay tax

5:40
now when you don't have to that's crazy

5:42
talk well nowadays I mean rths are very

5:45
popular you're paying tax on the seed

5:47
and not paying tax on the Harvest you

5:49
know that makes sense well I really

5:51
believe that even though you have a

5:53
weird name like CX the same thing is

5:55
going to catch on people want a lifetime

5:58
income they can buy that income on the

6:00
cheap at a discount with a qac So

6:03
eventually as you know the all the

6:06
naysayers and everything finally figured

6:08
out I think that'll become very

6:10
commonplace just like roths do like

6:13
roths are being the marketer that I am

6:16
in the brand or every time I see a an

6:18
afflac commercial with the duck you know

6:20
I'm in I'm introducing CAC inside of

6:23
that because because similarly it's it's

6:26
it's a branding thing people don't know

6:28
anything about it I think

6:30
um to me and and probably the number one

6:32
seller CX on the planet have been since

6:34
day one because I believe in it we and

6:36
we actually inform our clients about it

6:38
through a myriad of thousands of videos

6:40
and books um I think cacs are more of an

6:44
emotional purchase yes annuities are

6:47
math and we only sell contractual

6:48
guarantees but the reason I say that is

6:51
you can attach your spouse for Lifetime

6:53
income using your IRA assets and in a

6:55
world where last stat I saw private

6:58
companies there's 9% or less that offer

7:01
pensions you know 401ks 43 BS 457s are

7:06
accumulation products but at at some

7:09
point in time you're going to have to

7:11
convert um part of your IRA or those

7:15
type of assets qualified assets into

7:17
lifetime income which is where these

7:21
things come in now the Peace of Mind

7:25
part in your article I appreciate and I

7:27
guess that that kind of correlates with

7:29
what I just talked about the emotional

7:32
um decision of Lifetime income talk to

7:35
me a little bit about about what you

7:36
call the older me

7:39
version yeah and and you know a few

7:41
years ago it can spell septo genarian

7:43
and now I am one in the 70s and I see

7:46
this with my friends and neighbors and

7:48
relatives is at at some point in your

7:51
life you start appreciating the piece of

7:53
mind that comes with having some kind of

7:55
guaranteed income because you're not

7:57
making a paycheck and if your

7:58
Investments go wrong you know you can't

8:01
go back to work so let me give you the

8:04
example that I use in my article is you

8:06
know you've recently retired and you go

8:08
to the doctor and you get the news Jim

8:11
there's now a safe surgical procedure uh

8:14
for that terminal medical condition you

8:17
have so all you know all things consider

8:19
you can you got a long life to live well

8:21
you know it sounds great but maybe

8:23
that's unwelcome news in the weird sense

8:26
that that prognosis about your medical

8:28
condition means you're going to have a

8:30
longer lifespan and you didn't plan for

8:32
it and so suddenly you're going well how

8:34
am I going to pay for that so that's

8:35
what I'm getting at is there's that

8:37
piece of Mind idea that I really need to

8:41
feel like I'm going to have an income no

8:44
matter what so the idea with a qac uh

8:47
where I was going that is what if I told

8:49
you you could cover that increased life

8:51
expectancy that you're going to have by

8:53
paying uh have it pay an income stream

8:56
to you so if I could just give a quick

8:58
example and you've got all the numbers

9:00
and the calculators for it but let's say

9:03
that Jim was aged 60 and he took a

9:05
couple hundred, from his 401k or his IRA

9:09
and bought one of these things so a

9:10
couple hundred thousand and now he wants

9:13
it to start paying them at six I'm sorry

9:16
at 80 so that's 20 years um but he wants

9:19
to get his money back because you know

9:21
it's a cash refund feature just in case

9:24
well that would still lock in $6,200 a

9:27
month or somewhere around that beginning

9:28
at age 80 or

9:30
$74,000 a year that's pretty cheap

9:34
insurance especially knowing that he you

9:36
know maybe there's going to be even

9:37
another Medical Technology that's going

9:40
to make him live even

9:42
longer and once again you can attach a

9:44
spouse I I really believe that's the the

9:47
the magic right here you know my wife

9:49
has put up with me for all these years

9:52
um you know we're we do everything joint

9:54
lifetime income yes you're going to get

9:55
a smaller payout because it's two lies

9:57
but I just think it's it's really unique

10:00
that you can do that let me interject a

10:02
couple things because people are going

10:03
to um reflex and say I'd never buy an

10:06
annuity because the nity company keeps

10:08
money when I die well with CX as Steve

10:10
just pointed out you can you can

10:12
structure what's called life or joint

10:14
life with cash refund what does that

10:16
mean that means when your Lear jet hits

10:17
the mountain uh whatever money is left

10:20
in the account goes 100% to the list of

10:22
beneficiaries and the evil annuity

10:24
company doesn't keep a penny even though

10:25
they are contractually on the hook to

10:28
pay for as long as you you

10:30
are breathing okay so dispel that thing

10:34
that you've read well you know nity

10:36
company keeps the money don't be dumb at

10:39
the cocktail party because it doesn't

10:40
work like that the other thing too is

10:44
and I've read some you know some I'm not

10:45
going to mention their names because I

10:47
know them and they're they're great

10:48
people but they they manage money for a

10:50
fee nationally and they'll say things

10:53
like well uh if you compare Investments

10:56
to a CAC the Investments you know

10:58
historic beat CAC returns that could be

11:02
the dumbest thing I've ever heard dumb

11:04
as a box of hair as they say in the

11:06
South because you're comparing an

11:08
investment to a contract a CAC qualified

11:12
longevity annuity

11:15
contract is a transfer of risk

11:18
contract cacs don't have any moving

11:21
Parts any annual fees no Market

11:25
attachments so yes there's some

11:27
opportunity loss but in used in

11:29
proportion with your portfolio and part

11:32
of your overall plan and the plan of the

11:35
income floor you know qacs are in my

11:38
opinion a bargain when you're looking

11:41
for future lifetime income um expound on

11:46
that what did I miss and I was on I was

11:48
on the soap box I'm stepping back off

11:51
well I get on the same uh Soap Box the

11:53
one thing that I think that people don't

11:54
get when they start playing this game of

11:56
trying to compare apples to oranges with

11:58
investment return is at least I don't

12:02
know when you're going to die maybe you

12:03
do um so in other words you say okay I'm

12:06
going to plan for I need to have income

12:08
I don't want to run out of money before

12:10
I run out of oxygen so what age am I

12:12
going to use well you really can't take

12:14
your life expectancy let's say it's 84

12:17
because that just means half the people

12:19
died before 84 correct so so you know

12:22
you gotta maybe planted for 95 because

12:25
again you don't want to eat cat food and

12:27
live in your car so what you have to do

12:30
as an investor what's the insurance

12:32
company have to do they don't have to do

12:34
that because they're going to have a qac

12:36
with you and me and all these others

12:39
hundreds of thousands of people and so

12:41
they base it on average life expectancy

12:44
and so yeah if you die prematurely and

12:47
by the way who dies maturely I've always

12:49
wondered about but that is that is well

12:51
I hope I hope I will say that means I'm

12:52
thinking correctly

12:55
yeah yeah I mean granted if you die

12:58
earlier you uh get less though as you

13:01
pointed out you can have a a refund

13:04
feature if you live longer um you've had

13:06
uh Dr Wade fou he calls it the mortality

13:09
premium you get the advantage of the

13:11
people that died before you I want to

13:13
bet for you not against you and and so

13:15
that's the point you can't just take

13:17
Apple's to Apple's look on on return and

13:20
if I can give you one quick example that

13:22
sure the audience might just see where

13:26
I'm going with this you sell um spia

13:29
right single premium immediate annuities

13:31
absolutely well Jim if he said well I

13:34
don't know I don't I I don't think I'm

13:37
going to do this I'm going to wait until

13:38
I'm 80 and then I'll buy uh an annuity

13:41
stream that's fine I know understand

13:43
that you'll you'll help them on that

13:45
sure but um now to generate that same

13:49
amount of income I was talking about

13:51
$6,200 a month well now it's not 200,000

13:55
that's going to do it it's about 780,000

13:59
do because he waited 20 years so if you

14:02
want to to play the the numbers game

14:05
over 20 years he'd have to make at least

14:07
7% on his money to get to the same place

14:11
I don't know about you but for piece of

14:13
mine I put some money away and in fact

14:16
by the way have put money away in a CAC

14:18
with you by the way that's a free

14:20
advertisement um why not I didn't take

14:23
it all but I took some to lock in that

14:26
income and that's at that income floor

14:28
you know Tommy hegn is a good friend of

14:30
ours he calls it mortality credits and

14:32
just think about going to your favorite

14:34
football stadium and everybody in that

14:36
football stadium is your is your age and

14:38
your gender and what you're in essence

14:40
doing is you're sharing and pulling the

14:42
risk with all of those people some are

14:44
going to live longer than their life

14:46
expectancy some are going to live

14:47
shorter some are going to die right on

14:49
the money right on where the actuar will

14:51
say they're going to die and you're

14:52
pulling that risk to get a better price

14:54
the other thing I want to point out is

14:56
qualified longevity annuity contracts

14:58
are the same structure as a single

15:00
premium immediate annuity it's a

15:01
transfer of risk um the income coming

15:04
back to use combination return of

15:06
principal plus interest because it's Ira

15:09
qualified type assets you're going to

15:10
have to pay taxes on that money coming

15:12
out of an IRA like any structure but

15:15
there's three types of products that are

15:17
pretty much the same Spas single premium

15:20
immediate annuities deferred income

15:22
annuities which is a spia that you defer

15:24
past one year and then there's qualified

15:26
longevity annuity contracts which is a

15:28
DIA

15:29
that's used in a qualified account I

15:31
know I just acronymed everyone to death

15:33
but the point is these are very

15:35
simplistic Pro consumer products and the

15:37
big boys the big carriers the the ones

15:40
that everyone loves the a plus carriers

15:43
they're the ones that play here okay

15:45
they're the ones that you're going to

15:47
feel very very comfortable with people

15:48
always say well St what happens if a

15:49
double A+ company goes out of business

15:52
my answers were screwed you know the

15:53
country is in trouble okay we got bigger

15:57
we got bigger issues to say the least

15:59
one of the things you point out your

16:00
article as well was that um you know you

16:04
just can't assume that all an annuity

16:06
carries are fine which is what I kind of

16:08
talked about the strength and I always

16:10
tell people if you're buying lifetime

16:13
income A+ or better and of course I

16:15
Grime everything A+ or better and you

16:17
don't need a sweater A+ or better with a

16:21
CAC that's or any lifetime income

16:24
product in my opinion and with my team

16:27
and my main office is based in Las Vegas

16:29
Nevada which you got to laugh at because

16:31
that's a risk place and we sell no risk

16:34
um how are some of these carriers using

16:38
what you call unusual

16:40
assets yeah I just that's a good one to

16:43
be aware of and that's why people like

16:45
you are around to to screen this but

16:48
we're seeing some things where hedge

16:50
funds are coming in or private Equity

16:52
are coming in and buying some of these

16:54
smaller insurance companies and they're

16:57
using I call it un usual assets it's

16:59
kind of like these synthetic Securities

17:01
so we remember we remember this

17:03
happening back in the the Great

17:05
Recession where they were buying a bunch

17:08
of mortgages putting it into pool and

17:10
calling it kind of a bond what in the

17:12
bond it's a synthetic security well

17:14
we're starting to pick up on some of

17:16
these companies doing it and without

17:18
getting all techy and all that sometimes

17:20
they're taking some of these Investments

17:22
offshore with reinsurance Arrangements

17:24
no there's not going to be a quiz in

17:26
this when we're done but all I mean is

17:28
some with these more questionable

17:30
companies have been messing around with

17:32
the assets and we've always um

17:34
Associated insurance companies with

17:36
security bonds that kind of thing so

17:38
that all I'm saying is you need to have

17:41
somebody screening because it's not like

17:43
all the companies are doing it I'm just

17:44
saying some are and so it's not a real

17:46
good thing to DIY yourself unless you

17:49
know everything about synthetic

17:51
Securities and offshore reinsurance yeah

17:53
our site is do it yourself until you get

17:55
to the finish line and then we answer

17:57
the questions explain the good the bad

18:00
the upside and the downside um to cover

18:02
your point here on these questionable

18:04
companies they are not in the CAC game

18:07
and the reason they're not and they're

18:08
typically not in the immediate annuity

18:10
game or defer annuity game either

18:12
because of the capital requirement to

18:15
play which means that you got to be big

18:17
big big these companies typically are in

18:20
nothing against index annuities but

18:22
they're in the index annuity space

18:24
they're not in the CAC space now will

18:26
that change it might but once again A+

18:29
or better when you run quotes at my site

18:31
at the annuity man.com for QX um you're

18:35
going to see those names you're

18:36
comfortable with we're not going to give

18:37
them any advertisements because they

18:38
don't need it but all the ones that make

18:40
you feel warm and fuzzy and run all the

18:42
ads and have the big buildings and the

18:44
big planes they they have the financial

18:48
wherewithal to back the claims that

18:50
they're putting out so right now the

18:53
filter is already in place will that

18:55
change in the future if it does you know

18:58
we talk talk about that as my staff and

19:00
my management team um all the time and

19:02
we're always filtering and looking under

19:04
the hood because I do have a little bit

19:05
of a street background with Morgan

19:07
Stanley DEA wter Payne Weber and UBS so

19:09
I can read you know when it's doesn't

19:12
look right um but one thing I wanted to

19:15
also point out people always say well

19:16
Stan this sounds great This sounds too

19:19
good to be true understand with any

19:21
annuity type it's never too good to be

19:23
true let's talk about the downside of

19:25
qacs okay the downside of a qac is

19:29
liquidity or lack thereof you're lock

19:32
just think of if if you're a southerner

19:33
or from Texas and you're going hunting

19:35
you're locking and loading Baby Lock and

19:37
Load you're locking and loading your um

19:40
lifetime income you can structure it

19:43
once again so that the evil annuity

19:44
company never keeps money even though

19:46
they're on the hook to pay as long as

19:47
you're breathing but the downside would

19:49
be liquidity you can't call us up five

19:51
years from now and say you know what I

19:54
don't want to do that anymore I want to

19:55
go buy a boat send me that CAC money you

19:57
can't okay you're going to get all of

19:59
your payments back um you know as long

20:02
as you live and if you die in in a fiery

20:04
lar Jet crash structuring it with cash

20:07
refund the the remaining money will go

20:09
to your beneficiaries but if you said

20:11
what's the downside to me that's the

20:13
downside the upside no annual fees no

20:15
moving Parts no Market attachments

20:18
transfer risk and their pay as long as

20:20
you are breathing so you know remember

20:24
annuities are the only product category

20:27
That Pays a lifetime income so that you

20:31
know you can't really calculate Roi

20:34
until like Steve said if you know you

20:36
know when you're going to die by the way

20:38
we again we're talking with Steve Parish

20:40
a young young 48-year veteran um who

20:45
works with the American college if you

20:46
haven't been there it's American

20:48
college.edu excuse me the American

20:50
college.edu check it out it's really

20:53
cool um it's it's the American College

20:55
of financial services they do a great

20:58
job in this in this space educating

21:02
everybody primarily agents and advisers

21:06
because um they they need it

21:11
both hey Sten can I throw in one other

21:14
because thinking about your the downside

21:17
is liquidity you know and somebody says

21:19
Hey I want to buy a boat but let me flip

21:21
that on you is the government's forcing

21:24
you in a way to have liquidity it's

21:26
those required minimum distrib tions so

21:30
in a year whether I want to or not the

21:33
government says I have to take some of

21:34
my money out well we really haven't

21:37
mentioned this and when QX first came

21:39
out that was the big deal yeah is you

21:41
don't have to uh in other words if you

21:44
have a qac you don't have to at 73 start

21:48
taking that money out so my counter to

21:50
the liquidity thing is yeah but if the

21:52
government's going to make you take the

21:53
money they can't make you take it if you

21:55
have it in a qac yeah and one of the

21:58
things that you know I'm not I'm not I

22:00
don't get a lot of Christmas cards from

22:01
the industry I know that's hard for you

22:02
to believe Steve but um you know one of

22:04
the things I always tell people is you

22:06
need to look at that required minimum

22:08
distribution is what I call a forced

22:11
annuity it's the it's the IRS tapping

22:13
you on the show and go oh by the way

22:14
regardless of whether you need the money

22:16
or not you have to take a payment every

22:18
year to me that's an annuity you call it

22:20
what you want to now all the Masters of

22:22
the Universe go crazy when I say that

22:24
but you know send the email Stan theanu

22:27
man.com

22:28
and I'll respond but the point is it's

22:31
all about lifetime income it's all about

22:33
your income floor in chapter two of your

22:35
life I don't call it retirement I call

22:37
it chapter two you need that income

22:39
coming in that's guaranteed that's not

22:41
volatile and our friend Wade foul that's

22:44
pfu if you want to pull him up buy his

22:46
books or you can go to go to fund with

22:49
annuities and watch the podcast we did

22:51
he has factually destroyed the 4% rule

22:54
which is don't buy an annuity just take

22:56
4% from your portfolio

22:59
that's garbage as they say in French and

23:02
and I think people are warming up to the

23:04
fact that an anity for Lifetime income

23:08
might make sense to either provide a

23:12
significant P part of your lifetime

23:14
income needs or fill a gap um from

23:18
Social Security a pension if you're so

23:19
fortunate dividend stocks rental income

23:22
whatever is coming in so that you don't

23:24
have to think about it and you have that

23:26
lifetime income that you need need

23:30
absolutely let's talk about interest

23:32
rates um one of the things that we get

23:35
asked all the time and let me just

23:37
clarify right here if I knew where

23:39
interest rates were going I wouldn't be

23:40
talking to anyone I'd be on my lar jet

23:43
trading interest rate Futures but I

23:45
don't and none of us do um my I'm GNA

23:48
ask you this question but let me answer

23:50
mine the popularity of annuities will

23:53
they increase or decrease with interest

23:55
rates volatile moving up and down just

23:58
based on the annuity man numbers which I

24:00
will not give because we're a private

24:01
company of which I own everything they

24:04
have not been affected either way

24:05
because people need contractual

24:07
guarantees people need principal

24:09
protection income for Life Legacy and

24:11
Long-Term Care Solutions that's a pill

24:13
acronym I came up with so I do not think

24:16
that interest rates will play a

24:18
significant role in either the uh the

24:21
growth I think the the growth is going

24:23
to come from the 13 to 15,000 people

24:26
hitting 65 every single day and remember

24:28
remember everyone the primary PR primary

24:31
pricing mechanism of a CAC A spia A dia

24:34
an income Rider whatever lifetime income

24:36
product you're looking at is your life

24:39
expectancy okay not interest rates

24:42
interest rates play a secondary role but

24:44
what is your comment to that well they

24:48
always teach you never to answer a

24:49
question with yes or no but I'm still

24:51
going to give a no no I don't think

24:53
interest rates I mean assuming interest

24:55
rates going down who knows uh that's

24:58
that really going to have any effect on

24:59
the popularity and what I'm thinking

25:01
Stan is first of all they're more

25:03
mainstream I mean annuities in general

25:05
so yeah there's the the people that say

25:07
you know I hate them or whatever but

25:10
we're not hearing as much and I think

25:12
the other thing to keep in mind is let

25:14
me interject hold that to the annuity

25:15
industry I say you're welcome go ahead

25:19
yeah that's a good point from your

25:21
standpoint well I think another thing is

25:23
the government has I'm going to use the

25:26
word blessed annuities in the secure act

25:29
when the secure Act of secure 2.0 came

25:31
out which was bipartisan law that you

25:34
know once Congress actually agree on

25:35
something they knew we had to take care

25:38
of people's incomes uh when they're

25:40
elderly well essentially they blessed

25:42
annuities with all these Provisions that

25:43
were positive so that's going to uh be

25:46
there and then there's just all the

25:48
product Innovation and you know these

25:50
these companies aren't dumb they're

25:51
coming up with great things that address

25:53
consumer needs so to the question will

25:55
they go down in popularity is it all an

25:57
interest rate play I I clearly think the

26:00
answer is no it's the need not the where

26:03
interest rates are at anyone point in

26:05
time I think it's important to to point

26:07
out that there's not one perfect qac

26:10
carrier there's not people what's the

26:12
best qac carrier there is none when

26:14
you're when you're shopping annuities

26:16
for contractual guarantees only which is

26:18
a

26:19
qac then you've commoditized the product

26:22
now obviously A+ are better you don't

26:24
need a sweater okay but but when you

26:27
quit all carries and if if you go to my

26:28
site of the annuity man and use our

26:30
calculators you're going to quote all

26:32
carriers um these these quotes change

26:35
like a gallon of milk okay they're

26:38
commodity products and the reason they

26:40
change is because of capacity issues

26:43
okay carriers life insurance companies

26:46
that issue annuities they have a

26:48
specific number that they want to hit

26:50
for specific age ranges think about when

26:53
you put when you're Master of the

26:54
Universe um stock guy or gal says okay

26:57
we're going to do International small

26:59
cap value midcap large cap whatever they

27:03
have they have a specific percentage

27:05
they're filling

27:06
tranches the same thing happens at life

27:09
insurance companies when they issue

27:10
annuities like a CAC they have tranches

27:12
of age ranges once they fill that up

27:15
they're going to lower the guarantee not

27:16
to attract you if they don't have enough

27:19
people in your age group they're going

27:20
to raise the guarantee to attract you so

27:22
you can't quote something today and then

27:25
a month from now go you know what I want

27:27
that XYZ CAC Stan I do that southern

27:30
accent because I'm from North Carolina I

27:32
can get away with that and and no

27:34
because they're commodity products yes

27:36
you can lock them in and lock that quote

27:39
in if you want to move forward but it's

27:40
something you have to understand when

27:42
you quote it it's like a gallon of milk

27:44
just put it in the back of your head it

27:46
could be there it could not be there but

27:48
the point is the good news is these are

27:51
commodity products and there's not one

27:53
carry that's better than the rest the

27:55
one of the things I want to really talk

27:57
to you about is the workplace starting

28:01
to offer the CAC within their choices of

28:08
quote unquote Investments what's your

28:10
thought on that well let's set the

28:14
Baseline that basically the secure Act

28:16
made it easier for employers to do that

28:18
or or we wouldn't see it right but now

28:21
now they can do that and and Stan I'm

28:23
this is me speculating I I don't know

28:27
whether it'll be a big place that you

28:30
buy them or not I mean it'd be a great

28:32
deal if you're in your 401k and you take

28:34
some of your money and buy a CAC the

28:37
reason I'm asking that is it's amazed me

28:39
over the years and again you know 48

28:41
years that really take life insurance

28:44
the flip side of annuities um people

28:47
don't tend to buy a lot of life

28:48
insurance through their employers even

28:50
though they can get you know the

28:52
advantage of big buying from a big

28:55
company right um so I don't know I'm

28:57
really curious whether that'll happen or

28:59
whether people will say look I want to

29:01
control this I'll do it with my own Ira

29:05
money um what do you think because I'm

29:07
just not sure whether that'll take off

29:09
inside the employer or not well

29:10
obviously I have a contrarian view on

29:12
this because I am a contrarian but this

29:14
I look at it from the standpoint of the

29:17
annuity Man's big company we have a

29:19
board of directors okay and that board

29:21
of directors has a fiduciary com they

29:25
have fiduciary responsibility to do the

29:27
right thing okay so when when these

29:30
companies are offering 401ks or 43 you

29:32
know whatever that is 457 43 BS which is

29:35
government but let's just say

29:36
401ks they have a fiduciary

29:38
responsibility to do what's right for

29:40
the employees now be dovetailing from

29:43
there my question

29:46
is education to the employees under them

29:49
understanding the liquidity issues the

29:51
choices the commoditization and then my

29:54
biggest worry is let's just say that the

29:57
board of director c s of XYZ big Mega

29:59
Corporation says we're going to offer

30:02
CAC and then the big boy life insurance

30:06
companies let's just say there's one or

30:07
two or three come in and pay a shelf

30:10
space fee to get on that platform to

30:13
sell the CX well to me that that messes

30:16
up the whole thing because like I said

30:19
before these quotes are like a gallon of

30:20
milk and you need to quote all carriers

30:23
to get the highest contractual guarantee

30:25
for your specific situation so my

30:28
concern is the the as they say in the

30:31
South the good old boy Network letting

30:33
in the few gargantuan can pay the

30:36
freight companies to offer CAC and then

30:40
the pricing isn't competitive when you

30:43
when you said okay here's my qac quote

30:45
from XYZ Corporation and I'm going to go

30:47
to that crazy dude at St at the annuity

30:49
man.com I'm gonna quote it there I'm

30:52
probably going to tell you that we're

30:54
going to beat that quote why because

30:55
we're quoting all carriers and you only

30:57
have a limited choice so my concern at

30:59
the

31:00
workplace is that it's a limited choice

31:03
and the education is not there my whole

31:06
thing with my company is edutainment we

31:09
make it fun and we educate you at the

31:10
same time without pitching you we're not

31:12
hammers looking for nails and and I

31:15
think there's a huge education leap with

31:18
cacs even though they're simplistic

31:20
products that people need to understand

31:22
before jumping in that's my opinion

31:25
that's the reason I don't think they're

31:26
going to catch on like

31:28
like like like has been predicted by

31:31
some yeah and and again we've seen that

31:33
on the insurance side people don't

31:36
really want to buy it through their

31:37
employer because they you know you get a

31:39
choice of one what how how how good is

31:42
that it's not good and it's and as a

31:45
board if I'm a board member any board

31:47
members listening to this and and

31:49
someone's doing pushing to CAC and they

31:51
have one or two choices you need to you

31:53
need to avoid that decision because you

31:56
can have a you can have someone that's a

31:58
participant say I should have had more I

32:01
should have had more choices right okay

32:04
um I'm not a I understand the law of all

32:07
of that but to me it's just basic you

32:09
have to provide choices to to the

32:11
employees let's talk about let's let's

32:13
pivot to Social

32:15
Security

32:16
um are you worried about that

32:19
Steve I'm not personally worried about

32:22
it this is uh the game where they keep

32:25
kicking the can down the road but

32:27
Congress almost has to act on Social

32:30
Security that said people are worried

32:33
about

32:35
it yeah it I

32:39
think I think the best thing the

32:41
government could do and they're kind

32:43
they're trying to do it now but you know

32:45
as Government they don't do it well um

32:49
they need to educate people that Social

32:52
Security should not be your primary

32:55
retirement income Source now I

32:58
understand the demographics I understand

32:59
the numbers I understand the voters I

33:01
understand median and mean income levels

33:04
and all that stuff I get it but I think

33:09
the sooner that they educ start

33:11
educating the public that this was never

33:13
put in

33:14
place for for a primary source of income

33:18
obviously then it'll be bullied by

33:21
either party to that's you know that's

33:23
them hating on voters and the working

33:26
people I've never understood Steve the

33:28
working American I thought we all worked

33:30
I didn't I didn't understand there's

33:31
some that do and some that don't um but

33:34
I think Social Security it's never going

33:37
to go away it's never going to go

33:39
insolvent I don't care what the

33:40
conspiracy theorists think that's my

33:42
opinion um but should you put things in

33:46
place for say your children or your

33:49
loved ones to not depend on it if you

33:53
are if you have that ability definitely

33:56
that's what CAC are for

33:58
um but you know as you said pretty well

34:03
you need to supplement it with your own

34:05
quote unquote income that you can't

34:08
outlive and that would be an annuity

34:10
that's not that's not some Homer you

34:12
know pound the table bu for me that's

34:15
just reality annuities are the only

34:17
product type and category that provide a

34:19
lifetime income stream you know there's

34:21
there's different types of annuities but

34:22
there's four types that do that what are

34:24
your thoughts well and yeah I mean to be

34:26
clear I'm not worried worried that the

34:28
social security that you've put money

34:30
into now is just going to dissipate it's

34:32
not going to do that but does anybody

34:34
think Social Security is going to go up

34:36
are you kidding the issue right now is

34:38
to maintain it when when a politician

34:40
says well I'm not going to touch Social

34:42
Security what they're really saying is

34:44
your Social Security will go down

34:46
because if they don't touch it then what

34:49
happens is in 10 years they're going to

34:50
have to start lowering the benefits so

34:52
what I'm thinking is they'll take care

34:54
of that but all that means is maybe

34:57
they're going to have to do something

34:58
they're going to make a later retirement

35:00
age or maybe the Consumer Price Index

35:02
they use to measure your cost of living

35:04
is going to go down so supplementing

35:07
your Social Security makes sense because

35:10
it's a wonderful thing to have but I

35:11
don't see it going up I just mean I

35:13
think it'll be there but that's just

35:15
base I mean you need more than that it's

35:19
an annuity so your responsibility is to

35:22
get a supplemental annuity with your own

35:24
money sure so that you're going to be

35:26
happy in retirement no ABS absolutely

35:28
and the reason that qacs are important

35:30
in my opinion and yours as well is that

35:33
the vast majority of Assets in this

35:35
country are are Ira type qualified

35:37
assets I mean the the government's been

35:40
trying to figure out how to get to those

35:41
for a long long time but um cacs

35:46
represent you know using your IRA assets

35:49
for Lifetime income which I think is is

35:52
a very good thing once again you can set

35:53
it up on you you can set it up on you

35:55
and your spouse each one of you can have

35:57
one the rules change all the time we're

35:58
not going to go over the rules today

36:00
because we don't want to date this

36:01
because it'll change and it'll be on my

36:03
site at the annuity man.com if you want

36:05
to check it out but there are rules for

36:06
how much you can put in they do limit

36:09
that but it's it's a pretty high limit

36:10
when it first started out in 2014 it was

36:12
low with a bunch of rules they got rid

36:14
of all that nonsense governmental speak

36:17
and made it very easy to understand so

36:20
you know in my opinion going back to the

36:22
original um comment you made that you

36:25
know CX will eventually be standard

36:28
technique used for retirement income

36:31
similar to the popularity growth of Roth

36:33
IR Ray I think that's very prophetic

36:36
I've not yet heard anybody say that so

36:38
you get full credit from here on in but

36:40
I do think um I think that's a good

36:42
comment I think that the Roth IRA had

36:45
needed

36:46
education to get people to understand

36:49
the good the bad the benefits and

36:50
limitations same thing with

36:54
QX yeah it's just going to take a little

36:56
bit of time but uh you know talking to

36:59
some of the professors I have a qac you

37:02
know you were talking to to to Wade and

37:04
to Michael and some of these other

37:05
people we see it coming no it is it is

37:09
coming so you know let's close this

37:11
thing up as I do with a lot of my um

37:13
guest when I feel froggy is I I ask them

37:17
to do a mic drop moment which means that

37:19
all the pressur is on you I'm going to

37:20
count you down from five and you're

37:22
going to say something so unbelievable

37:24
Steve that it's going to even Astound

37:26
you and it's just going to make the

37:28
listener drop drop and say oh my gosh so

37:31
you ready I know you're prepared you

37:33
ready well five four three two one go

37:39
I'm going to repeat something I said at

37:40
the beginning but maybe it'll make sense

37:42
to you is that the older you is not

37:45
going to be the same as the younger you

37:47
take my word for it someday you're going

37:50
to get older you know want to have peace

37:52
of mind you're not going to want to have

37:53
to call your broker every month when the

37:56
uh economy is going crazy you want to

37:58
play with your grandkids go golfing

38:01
whatever and to know that you've locked

38:03
in some income you're just gonna have to

38:06
take my word on it see I don't have much

38:08
hair left is the fact that uh you're G

38:11
to be real happy when you don't have to

38:13
mess with this stuff older and you know

38:15
that you just got an income as as um

38:18
Forest Gump says it's one less thing

38:22
there you go and that's from a very

38:23
smart dude with 48 years of experience

38:27
his name is Steve Parish he is a good

38:29
friend and he is a very smart person I'm

38:31
so glad you join us I'm glad everyone

38:33
else joined us on fun with annuities the

38:36
number one annuity podcast on the planet

38:38
hosted by Yours Truly stand the annuity

38:41
man America's annuity agent we will see

38:43
you next time

38:50
[Music]