Why the “Perfect Annuity” Is a Myth

0:00
Welcome to Shooting It Straight with

0:01
Stan. I am your host Stan the Annuity

0:03
Man, America's annuity agent, licensed

0:05
in all 50 states. Today's topic is the

0:09
perfect annuity does not exist. It does

0:13
not. Even though you might have heard

0:15
something at the bad chicken dinner,

0:17
expensive steak dinner seminar, or some

0:19
online product presentation where it

0:22
sounded too good to be true, because it

0:24
is every single time with annuities.

0:26
There's no exceptions to that rule. Now

0:28
the argument to there is no perfect

0:31
annuity so stop looking for it. You

0:34
probably already own the closest version

0:36
to the perfect annuity and that annuity

0:38
is called social security which is the

0:40
best inflation annuity on the planet.

0:44
Period. So you can't say you hate all

0:45
annuities and take your social security

0:48
payments or plan on taking your social

0:50
security plan payments because that's

0:52
the best annuity on the planet. at a

0:54
close second to the best annuity on the

0:57
planet would be the pension. If you're

0:58
so fortunate and one of the 9% of the

1:01
workers out there that's going to get a

1:03
pension from their employer, just just

1:06
that stat alone makes it pretty good and

1:08
up there. But after that, when you get

1:10
to the commercial side of annuities, of

1:12
which I'm involved in as Stan the

1:15
Annuity Man, America's annuity agent,

1:17
there is no perfect annuity. Even though

1:19
they're all pitched as such, they all

1:22
have limitations and benefits. They they

1:26
all have good and bad. And when I say

1:27
they all, all types. There's single

1:30
premium immediate annuities, deferred

1:31
income annuities, qualified longevity

1:33
annuity contracts.

1:35
There's income writers attached to

1:37
variable annuities and index annuities.

1:39
There's variable annuity standalone and

1:40
index annuities. There's Rialas. There

1:42
charitable gift annuities. There's

1:44
traditional fixed annuities. There's

1:45
many different types. What you need to

1:48
understand is every single type has

1:51
limitations and benefits to them.

1:53
They're not too good to be true. So if

1:55
you're hearing that 30,000 foot view

1:58
sales pitch from the local person at the

2:02
expensive steak dinner seminar

2:04
and you're nudging your spouse going,

2:06
"That sounds great." There's a catch

2:09
somewhere. Okay? If you're hearing

2:11
upfront bonus, that doesn't mean free

2:13
money. If you're hearing market upside

2:15
with no downside, there is no such

2:17
product, okay? What you're being pitched

2:19
is a dream and you're going to own the

2:22
contractual realities of the policy. So,

2:25
don't look for the best product. And and

2:29
this is the one that the annuity

2:30
industry has an issue with when I start

2:32
talking like this, but in the in the in

2:35
the rooms in the big rooms with the

2:36
marble table when they close the door

2:38
and they take everyone's phone away and

2:40
there's nobody filming it, they all

2:42
agree with me. Okay? Not one annuity

2:45
product is better than the other. Not

2:47
one annuity company or type is better

2:49
than the other. Not one little marketing

2:52
of, you know, name of a product is

2:54
better than the other. Annuitities

2:57
are commodity products. They they are

2:59
contractual guarantee products. Now, a

3:02
lot of them aren't sold for that. A lot

3:04
of them are sold showing hypothetical

3:06
theoretical back tested unicorns chasing

3:08
the butterfly non-G guaranteed return

3:10
scenarios scenarios of which you should

3:12
never ever ever ever

3:15
buy an annuity for. You should buy it

3:17
for the contractual guarantees. Once you

3:19
do that, once you go into looking at the

3:22
contractual guarantees of the policy,

3:26
then you commoditize the product that

3:29
you've ch that you're looking at and you

3:31
can shop all carriers for the highest

3:32
contractual guarantee. There's only two

3:34
questions to ask when looking at

3:36
annuities. What do you want the money to

3:38
contractually do? And when do you want

3:41
those contractual guarantees to start?

3:43
From those two answers, we can determine

3:45
A, if you need an annuity, and B, if you

3:48
do, what type will provide the highest

3:51
contractual guarantee? If you answered

3:53
the first question, what do you want the

3:54
money to contractual contractually do?

3:57
And your answer was something like, I'd

3:58
like a reasonable rate of return or like

4:00
a market type return, that's not the

4:02
answer. That's not a contractual answer.

4:05
That's a pie in the sky answer. That's a

4:07
non-g guaranteed answer. That's a

4:09
hypothetical answer. That's a back

4:11
tested return answer of which you

4:13
shouldn't base any of your decisions

4:16
whatsoever.

4:18
So just remember annuities are commodity

4:20
products when you strip it down to that

4:24
contractual guarantee and not one's

4:26
better than the other. Now, when you go

4:28
to my site at theanuityman.com and run

4:30
quotes, we're using our proprietary

4:32
calculators. Obviously, we're we're

4:34
going to point you to higher rated

4:37
companies be, especially for lifetime

4:39
income. You always say jokingly, A+ or

4:42
better, you don't need a sweater, right?

4:44
You know, for lifetime income, we're

4:46
going to point you in that A+ or better

4:48
scenario because you're marrying M A R R

4:51
Y I N G. It's hard for Southerners to

4:53
say for some reason. You're marrying the

4:55
product, not dating the product. You're

4:57
marrying that company. They're on the

4:58
hook to pay for as long as you live

5:00
contractually solving for longevity

5:02
risk. And most of these products like

5:05
immediate annuities, QAX, qualified

5:07
longevity annuity contracts, deferred

5:08
income annuities, lifetime income

5:10
writers, these are all lifetime

5:12
products. There's no ROI until you die

5:14
because they're going to pay as long as

5:15
you're breathing. And remember, with

5:17
lifetime income products, the payment

5:19
that you're getting is a combination of

5:21
return of principal plus interest. So

5:23
you're drawing down on the total amount.

5:25
Drawing down in southern means subtract.

5:28
So there is a possibility if you outlive

5:30
your life expectancy, they will be there

5:32
will be zero in the account and the

5:35
annuity company is still on the hook to

5:37
pay because they're obligated

5:39
contractually to do that as long as

5:41
you're breathe. We have thousands and

5:43
thousands of clients that's drawn down

5:45
their account to zero, but yet they're

5:47
still getting paid. There's no ROI

5:50
until you die. Okay? So annuities in my

5:55
in my opinion as the annuity man,

5:57
America's annuity agent, they're not

5:59
investments, they're contracts. If you

6:00
want market returns, go buy market

6:02
products. Now, I know the annuity

6:04
industry is trying to eat into that that

6:06
market product type place with some

6:09
products like index annuities and

6:10
variable annuities and Ryers and things

6:12
like that. But in my opinion, Stan the

6:14
annuity man, at the time of this taping,

6:16
I think you should buy non-anuity

6:21
products for market type growth. Period.

6:23
End of story. I've been on that side of

6:25
the table. I know what I'm talking

6:27
about. I' I was with Dean Witter and

6:29
Payne Weber, Morgan Stanley, um, and

6:31
UBS. The first two, Dean W and Payne

6:34
Weber tells you how old I am and how

6:36
long I've been in the business. But I am

6:38
familiar with market growth type

6:40
products. market growth type products to

6:42
me means unlimited upside. Okay. And

6:47
with annuity types, you know, the ones

6:50
that provide potential hypothetical

6:53
growth, they all have limitations to

6:56
that upside. And in my opinion, in the

6:58
perfect world that I live in with Stan

6:59
the annuity man, there should be no

7:02
limitations,

7:03
etc. So, just remember two questions.

7:06
What do you want the money to

7:07
contractually do when you want the those

7:09
contractual guarantees to start?

7:11
Annuities do not solve for market

7:12
growth. There's no G and pill. P stands

7:14
for principal protection. I stands for

7:16
income for life. L stands for legacy.

7:18
Other L stands for long-term care

7:19
confinement care. If you do not need to

7:21
contractually solve for one or more of

7:23
those items in that pill acronym, then

7:26
you do not need an annuity. So there's

7:30
no there's no annuity that's better than

7:33
the other. There's no company that's

7:34
better than the other. even though

7:35
they're all going to pound the table and

7:37
tell you why. The only argument that one

7:39
might have over the other is just a

7:40
ratings. They might be a plus versus A+

7:43
versus A. But when it comes down to the

7:46
contractual guarantees, those are the

7:48
contractual guarantees. So, you should

7:50
have them compete. Going to my site, if

7:52
you run the quotes, we're only going to

7:54
show contractual guarantees, not

7:55
hypotheticals and theoreticals. So you

7:57
can look at that and then you filter the

7:59
bodies as they say by the claims paying

8:02
ability and the rating that you feel

8:04
comfortable with. The annuity industry,

8:06
this is easy stuff. Okay. The only thing

8:09
complex about the annuity industry are

8:11
too many people that are selling

8:13
annuities. They make it complex for I

8:16
don't know why, whatever reason, or they

8:18
just sell one product type or from one

8:20
carrier because if they sell enough,

8:22
they go to Bora Bora with their

8:24
girlfriend, boyfriend, or whatever,

8:26
whatever applies.

8:28
That's that's garbage. I mean, when

8:30
you're quoting annuities and you go to

8:32
my site, you're gonna see all all

8:34
companies listed, whether you're looking

8:35
at a fixed rate annuity, multi-year

8:37
guarantee annuities, what those are

8:38
called, the annuity industry version of

8:40
a of a CD, or if you're quoting single

8:43
premium immediate annuities, deferred

8:44
income annuities, qualified longevity

8:46
annuity contracts, and income writers.

8:48
We're quoting, I mean, you're going to

8:50
see multiple companies, not just one. If

8:54
you see just one, that is a red flag

8:56
that that agent or adviser is either

8:58
lazy and didn't learn the other ones

9:00
don't have the type of calculator and

9:02
quotation machine that we've invested in

9:04
for you, the consumer that can run 24/7

9:06
365 or they're just trying to sell a

9:08
product. And the problem with the

9:11
annuity industry in my opinion, we're

9:13
it's not about product, it's about

9:14
contractual guarantees. And when it's

9:16
about contractual guarantees, then

9:18
you're shopping all all all carriers for

9:21
the highest number for your specific

9:24
situation. That simple. Glad you joined

9:27
me. That's Shooting It Straight with

9:28
Stan. My name is Stan the Annuity Man,

9:30
America's annuity agent for a reason.

9:33
I'll see you next time.