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Old 11-29-2012, 12:54 PM
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If you want to know more about annuities AND Financial Advisors, read the book I have mentioned in another thread regarding Financial Advisors and what they try to get you to buy. It is a short (73 pages?) but excellent read, free in Kindle, and describes them from a retired Financial Advisor who got tired of how firms operated with their clients.
I confronted one of my past advisors on some of the questions he remarked in the book. Needless to say he got defensive and tried to say he was told how good they are in their training. He is no longer my advisor.

"Beware of Your Financial Advisor" by: L. T. Drake

Please let me know how you feel after you read the book on annuities AND other investments with companies please. It opened my eyes for such a short read.
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Old 11-29-2012, 03:42 PM
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Originally Posted by Roaddog53 View Post
If you want to know more about annuities AND Financial Advisors, read the book I have mentioned in another thread regarding Financial Advisors and what they try to get you to buy. It is a short (73 pages?) but excellent read, free in Kindle, and describes them from a retired Financial Advisor who got tired of how firms operated with their clients.
I confronted one of my past advisors on some of the questions he remarked in the book. Needless to say he got defensive and tried to say he was told how good they are in their training. He is no longer my advisor.

"Beware of Your Financial Advisor" by: L. T. Drake

Please let me know how you feel after you read the book on annuities AND other investments with companies please. It opened my eyes for such a short read.
I am a Chartered Financial Consultant and spent 25 years in the financial services industry, mostly as a field manager, hiring and training advisors. The book may be accurate, as I was often disgusted with the tactics some reps used in selling financial products in general and annuities in particular. I insisted that our reps be trained to present our products in a fair, balanced way, and fired reps who were found to be wanting ethically. In the late nineties new regs were passed by the SEC and insurance commissions that require the Principal (which was me) in the office to review every transaction involving a security product to assure suitability. It was a massive amount of work, but it certainly provided oversight that prior to that had been lacking. The company I was with, New York Life and NYLIFE Securities, developed questionaires for the client that would indicate what, if any, products might be suitable for them based on age, risk tolerance, and time horizon. We would have to review those questionaires and they would be required to be kept in the clients file. We did unannounced file reviews on every rep once a year to assure compliance with the rules. I am proud of the many clients I helped along with my reps, and never, to my knowledge, did we ever sell someone a financial instrument which was not suited for them. That is not to say that all were happy or successful, but that is the nature of the risk involved in investing. Annuities have their place in the realm of financial products and often provide a relatively good return along with some guarantees and safety that are not available in other financial instruments. Always ask tough questions of anyone who advises you, and seek information online or elsewhere before you trust anyone with your hard earned money. I am certain Bernie Madoff seemed very trustworthy!
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Old 11-29-2012, 05:04 PM
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I agree with you. The book describes all of that. I was amazed on how many reps had the package for a client already in place before they talked. They basically went through the motions. And the profits for the firm? wow? The book was written by a guy like you who actually CARED about his clients and couldn't tolerate what financial companies were telling them to sell so he quit the industry. If nothing else, it's a good quick study for people that want an understanding on how annuities and other investments work,and prepare them for what to ask.
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Old 11-29-2012, 05:49 PM
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I agree with you. The book describes all of that. I was amazed on how many reps had the package for a client already in place before they talked. They basically went through the motions. And the profits for the firm? wow? The book was written by a guy like you who actually CARED about his clients and couldn't tolerate what financial companies were telling them to sell so he quit the industry. If nothing else, it's a good quick study for people that want an understanding on how annuities and other investments work,and prepare them for what to ask.
Not all companies operate like that, so he must not have been affiliated with one of the good ones. Many people suggest that one should only deal with an independent broker who can deal with many companies, and therefore offer them the best possible product. Many independent brokers are ethical and responsible, however many I have seen are really looking for the product that pays them the highest commission. In my professional opinion, when it comes to commissioned salespeople in the financial services industry, your best bet is to stick with a "captive agent" with one of the major companies, such as New York Life, Mass Mutual, Principal Financial, Northwestern Mutual for example. They are held to very high standards by thier Principals and they are well trained and closely supervised. Independent brokers are much more on their own. Non commissioned salespeople with discount brokerages are not really trained to give much advice or counsel, and stock brokers are often not well versed in annuities. Fee based planners are usually able to give good advice and counsel, but you will end up paying the fee, usually on an ongoing basis for account management, AND paying a commission for the product(s). And while there are low and no load financial instruments out there, someone is paying for the big buildings, the advertising, and the call centers.
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Old 11-29-2012, 06:22 PM
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If you want to know more about annuities AND Financial Advisors, read the book **snip** free in Kindle
"Beware of Your Financial Advisor" by: L. T. Drake
Hardly free. $9.99 Kindle price, free to "borrow" if you have Amazon Prime which will cost $79 per year.
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Old 11-29-2012, 09:48 PM
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Hardly free. $9.99 Kindle price, free to "borrow" if you have Amazon Prime which will cost $79 per year.
I got the book about 10 months ago and it was free. They may have changed their pricing. Even at $9.99 it is a good investment. Great information.
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Old 11-29-2012, 10:54 PM
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I got the book about 10 months ago and it was free. They may have changed their pricing. Even at $9.99 it is a good investment. Great information.
Yeah, Kindle freebies don't stay free for long. Guess I missed my chance, but I'll keep watching.
Thanks for the info.
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Old 01-06-2013, 11:38 AM
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Default Good public information

FINRA - Investor Alert pdf - Equity-Indexed Annuities—A Complex Choice.pdf

FINRA - Investor Alert pdf - Variable Annuities-beyond the hard sell.pdf

I thought this would be a good place to post this information. Use lots of caution around some of these products.

Good luck - I am new to TOTV and it seems like there are dozens of "free lunch" seminars every week in The Villages. It seems like sales reps are making a lot of money???? May fit for some but I have heard that expenses are very high because commissions to the rep are 5% to 15%. Check your surrender charge schedule - if it is high % and above 7 years, you paid a lot... that "free lunch" just got very expensive
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Old 01-07-2013, 04:26 PM
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Cool article on variable annuities ... Celsius and Fahrenheit analogy is so well taken. PURPOSE is a key word in any investment decision. Sometimes, it is critical to conserve and sometimes it is exciting to gamble. I've never felt comfortable on imparting "gambling" advice - never sure whether a client fully understands his or her or their position nor my explanation. Like to sleep at night so I've stayed on the insurance side of the fence rather than the investment side. For those seeking security with potential for measured gain, I'd recommend studying up on the coin known as Indexed Fixed (it exists in both the Universal Life and Annuity markets sourced from major A rated insurance companies with billions in assets. In a nutshell, you get a piece of the action in a rise of the S&P 500 (for example) during each year but you do not share in any downside. All your annual gains are vested, if you will. The coolest attribute of the Indexed UL policies is that you can take out your earnings in the form of loans (translation not taxable). Translation, they have both living benefits and death benefits. Naturally, there are waiting periods and penalties if they are not met plus the danger that, if not well-structured, can become a MEC - Modified Endowment Contract yielding costly fed penalties. What's the old saying? There is no free lunch. There is also no substitute for being well-informed. All of these articles and books are great resources to all of us. Just my .02.
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Old 01-14-2013, 12:09 AM
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Don,
I don't see the article or link. I guess the important thing to remember is that the more complex the investment product, typically the worse it is for the investor. Watch your fees and invest in something you understand.

Before you buy and annuity, make sure you ask some tough questions (see FINRA investor alert in previous thread- Good public information). Typically, the longer the surrender period, the higher the upfront commission to the Sales Agent.

Annuity fee disclosure checklist
Before you buy any annuity, ask your advisor to fill in the blanks.
What you pay each year
Annual fee (as % of account value) for: Your Number(fill in blank) Typical fee
The insurance (a.k.a. mortality and expenses) _____% 1.35% typical
The investments within the annuity _____% 0.95% typical
Riders and options _____% 0.65% typical
Total annual fee: _____% 2.95% typical

What you pay to get out
Max. surrender charge (as % of withdrawal) ____% 7% typical
Number of years before surrender charge expires ____ % 8yrs typical

Source:Morningstar, National Association of Variable Annuities, Money research
Note: Max. surrender charge may not apply to all withdrawals.

According to Larry Swedroe at CBS MoneyWatch
The typical EIA provides far less than 100% of the index’s return…First…most EIAs have participation rates….between 70 and 90 percent, [second is] through the use of an annual cap–the maximum rate at which the annuity can be credited. For example, the S&P 500 rose almost 29 percent in 2003 [but] an EIA might have limited the gain to…perhaps 12 percent, less…expenses. [Third, dividends don't count toward payout, only the price change of the index. Fourth is] the use of a margin fee…For example, in the case of an annuity with a [margin fee] of 3 percent, if the S&P 500 gained 9 percent, the return credited to the annuity would be 6 percent. Fifth…[they use] simple interest instead of compound interest.
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Old 01-19-2013, 09:35 AM
JanandRonniemerlino JanandRonniemerlino is offline
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If you go to a free lunch seminar, the presenters can only sell you two things - annuities and life insurance. They pay for your free lunch (or dinner) by selling the annuities that make them the highest commission and pay you the least amount of interest and the fewest guarantees. The only true guarantee you will get is that your money will be locked up and unavailable to you (without a steep penalty) for a very long time. True financial advisors that can offer any product are usually prohibited from selling the junk annuities that these insurance scumbags push. It's all about oversight and accountability - FINRA registered representatives have very strict oversight so that they operate in the best interest of the public, while insurance agents can get a license to sell this high commissioned garbage in about two weeks and operate with no oversight at all. It's almost like a license to lie, cheat and steal. It's crazy to the point of being criminal, yet it's true and running rampant in places like The Villages where there is a high concentration of retirees. Take a look at the article Index Annuities Are A Safety Trap on CNN Money.
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