A New Take On Simplifying Annuities | 7 Figure Annuity Sales Podcast | Ep. 138

Hello, everyone. Welcome to this week's podcast. I am Chad Owen. This is my sidekick, Caleb north, also my son in law, also the future father of my future grandbabies.

Good to know that your head's in the right place for this podcast.

My head is always looking for grandbabies. Okay, let's just make this real awkward and uncomfortable right now. You know, you've been married for over four years. I mean, come on.

It's true. True.

Let's air enjoying.

Enjoying every minute of it.

Yeah, but it's time.

Yeah.

All right, on to the podcast.

So go ahead. What are we talking about today?

Oh, yeah, well, let me get to it. We're gonna take.

I want grandbabies. I don't make all these annuity sales just to better myself, to better my family and future generations. There you go. Right now I only have one generation. I need a second generation to work on. Okay.

And you're almost half a century, right?

No. What? I'm turning 48. So. No, I'm still a little ways away.

I don't care.

Age is only a number.

Yeah, it's true.

I mean, think about it. Better at 70 in our industry. I mean, man, I see people that are 90 that look 55 and they see people at 55 that look like they're 90. Unbelievable. And you know what? The. The funny thing is that the common thing I see in that series in that scenario is the joy.

Right?

If they're joyful, they usually look younger. If they're grumpy, they usually look older. It's weird how that attitude, it's amazing. I mean, there's a lady that I met with that was 78 years old. I could have sworn she's probably around 60, and it was not because of plastic surgery. It was because she just was a joyful lady, fun to be around. And so. Yeah. So what are we talking about?

Well, we are going to do a third take on simplifying the annuities. Simplifying annuities.

We've already had first and a second.

Had a first and a second. It's funny because those two. It doesn't matter the recency of them. I think one was like maybe six months ago or. No, it was actually, I think the last one we did was last July.

Wow.

Was that. But that was the second highest most listened to podcast over the course of the podcast.

Wow, you're really complicating this. Let's just get to it.

Complicating it a little bit. The point is. And two of the two times that We've talked about this, Chad. Yes, they are the second and third, third highest listened to, viewed, whatever you want to call it podcast we've ever done. So clearly I think it was the first, the first episode we ever did. It just is natural. A lot of people when they listen to a new one, they just go to the first episode. But the second and third most listened to podcast episodes all about simplifying annuities. So we're going to dive into it again today, see if we can figure out some new ways to bring some fresh light to this when we'll just crack it right out of the gate. What's an annuity?

I don't know, you tell me.

A financial product sold by an insurance company that guarantees.

It's a contract. It really is a contract with an insurance company that guarantees X reason or whatever it is. So if it's for index growth, it guarantees. You can't go backwards. You only get the gains, you capture it. You can't go backwards. If it's with an income, then it guarantees income for the rest of your life. You, you know, and there's obviously lots of things, but somebody asked me, what's an annuity? It's simply put, it's an insurance. It's a company with it. See how simple I just made this complicated thing? Okay, so.

It'S a contract with an insurance company that just simply guarantees something.

Absolutely, absolutely. That's perfect. The way that I like to think about them and the way that they operate is it's a vehicle.

It is, right?

It's a vehicle.

That's. That's how. Wait, that's how you like to think?

That's how I like to think about it. Asking me why I like. Yeah, because they ask me why I like to think of them.

Why is there. I'm like going. We had this conversation multiple times. Okay, so why did, how did you come up with this? Oh, I didn't.

I'm not going to claim to come up with it. I'm not going to claim to come up with it. But that's the way that I do like to think about them. That's a great way to think about them because say, for example, you've got an ira. Okay, you. An annuity can be an ira.

It's the vehicle it can go into. So what is the ira? The person.

That's the. Yeah, that's exactly.

Ira. Mutual fund. Well, not mutual fund. Ira, non qualified, whatever it is, any type of money can get into. A 401k can get in to a New annuity, obviously, you know, if it's a 401k, it goes in as an Iraq.

Right.

But any qualified or non qualified product can get into an annuity. And it doesn't have to change who it is. It can step from one to the next. From the standpoint of qualified to qualified, non qualified to non qualified, Roth to Roth.

Yeah, you're exactly right. That's perfect. It's a vehicle. Takes the contents.

Okay.

Underneath annuity, you've got two different types.

You have fixed and index. Well, actually, yeah, you base. Yeah, go ahead.

Immediate deferred.

Yeah, exactly. Media and deferred. And that's, you know, it's funny because I get, I still to this day get caught up in that. Sure. I'm like, there's two different types. And I'm like, no, it's an index and a variable. No, it's an index. No, it's an immediate and a deferred. And it's so easy, depending on how tired I am, it only can catch you up. What types of annuities do you sell? Well, there's nine different types. I mean. No, there's two different types. I'm going to take this simple thing and make it as complicated as possible. Well, there's a fix and a deferred period immediately.

Oh, I'm sorry. I did not sleep well last night. But it's okay.

We're going to get you another shot of espresso.

I do need. I do need that.

Yes, but. Yes, you've got immediate. You've got deferred. Walk us through. Chad, real quick. What's a deferred versus an immediate?

Well, deferred means you deferred it. Immediate means immediate.

Yes. So what's big, what's being deferred and what's immediate?

Exactly. It's that simple. Yeah, it really is. Because you, you know, now I will tell you, people do get immediate annuities confused thinking an immediate annuity is a spia single premium. Immediate annuity. There are annuities nowadays with income riders. You can start to draw immediately. So in one month you can start to draw income. So immediate to me just means you're going to immediately need the money. Deferred means you're waiting to draw on it. That's all it is. But immediate nowadays can actually have an income rider on it and you can start to draw right away. Sure.

Well, and there are plenty of what we're going to get to in a second. Fixed indexed annuities that will even allow income coming out within the first Calendar year as well. So that brings us to.

That is, that is a point to really bring up though, because if I would have talked to you, you know, 15 years ago an immediate annuity and deferred annuity were totally different. Same concept, but now we have a lot more options with an immediate annuity. Sure. It does not have to be a spia. Right.

Well, and when we, when we come into these types of things and we want to simplify what is an annuity for somebody and we talk about, okay, it is just simply put, it is a contract with an insurance company. It is operates like a vehicle. You have two overarching types, immediate and deferred. I like to bring in examples, but I really like to focus on the four main types.

Yes. Okay. You've got what is fixed, the variable, the indexed and the media or spia. Yeah, those, those are your four major types.

That's exactly right. We already hit on spia a little bit. How do explain those immediate annuities to clients?

Well, okay, so this is a little controversial, but this is just how I explain it to people because I'm using the traditional term of the immediate annuity. So I say nuances to it. I only generally use two different types of annuities out of the four. The variable annuity has high risk, high fees. And now sometimes you can get variable annuities obviously that have lower risk because it depends what mutual funds you use in it. And I think I've actually ran into a couple recently that have some pretty low risk funds in there. But that being said, a variable annuity generally has higher fees, higher risk. An immediate annuity might as well write a check the insurance company because the money's gone. Now, once again, I'm explaining this in a simplistic term. Obviously we can do 10 year period certains. We could do an immediate annuity with a return or premium. There's all sorts of things we can do. We can do joint lifetime payout, single lifetime payout. There's a lot of different things we can do. But that being said, generally it's like you're writing check the insurance company, the money's gone, Right. Generally there's going to be no opportunity for index growth of any sort because that's not what it is. A fixed annuity is generally for older people or people who want annuities for a very short time frame, three or five years. And then an indexed annuity allows you to participate in market growth without market risk. So it doesn't say you participate in the actual market because it depends which index you're talking about. Sure. So an indexed annuity will have multiple options for different types of indexes, depending on which company presents the product. Right. So some will use the S and P, some will have a different type of index, the hybrid type of index, where it's. It's the croquis or. I mean, holy cow, I could go on and on about all the Swiss. There's so many different indexes out there. Which is the best? Whichever one has the best historical return in realistic numbers.

Right.

So there are some companies that will use very unrealistic returns and they have very high spreads, from the high to the low. And I won't use those.

Well, you have to take into account the actual rates that the company's giving on those indices, because you can have an index that's performed phenomenally over the last 10 years, 20 years, whatever, but the rates that you can actually get with the company drops what is actually credited to the client to where it's not even competitive anymore. So you have to consider what the insurance company, he's willing to pay on it. But that's. That's very important. And then when we think about immediate, obviously kind of the main one there, Spias, you've got deferred. We talk a lot about the fixed and the fixed index. That's what we were just highlighting the key, at least from where I sit, what makes the most sense. Like, if you're really trying to get a grasp of how do I explain annuities to my clients, you need to understand those four main types, but you need to be able to relate them to your client in your client's terms.

Correct.

Right. Now, the example that came to mind was the cowboy rancher guy that you met with one time, and he had.

Cows walk us through this in a long time.

Yeah.

So basically, I had this rancher, and he's been a rancher his entire life, and he just did not know about money. He knew about cattle really well. And so if I remember this correctly, he's. Let's see, let's go back this. So he had his money in a brokerage account from 2007, 2009. He lost 50%, but he still wanted to stay with his broker because he's had his broker for a time and he didn't want to walk away from. I said, okay, so pretend like you have a ranch hand out there and you hire this ranch hand. You've had this ranch hand for 10, 15 years, but all sudden you go outside and 50% of your cattle is dead on the ground, non usable. And the ranch, the ranch hand goes, hey, don't worry about it. You know what, you lost 50% of your cattle, but don't worry, they'll breed, they'll get back to where they were, just keep me hired on. And I said, what would you do to that ranch? And he goes, it'd be lucky if he was still alive, let alone working for me. I said, do you realize you have a ranch hand broker that killed 50% of your herd of Benjamin's? And he said, don't worry, it will come back. Why do you look at it differently? And he goes, oh, wow, I've never thought of it that way. I said, oh, but don't worry, the market will come back. He still killed or allowed to be killed 50% of your herd of Benjamin, Right. Yet he's still working.

Right.

Needless say, I got the deal. He fired his ranch hand broker and he. Because I related it to something he could easily understand.

Absolutely.

I also had an electrician just recently, and I don't like electricity. I like the benefits of electricity, but I don't like working with it. I've been shocked more times than I can count. That's why I start twitch every once in a while. It's like I get close to electricity and I get shocked. I was actually just a client's house, the gates, the cow gates, and I know don't touch the wire. So I grabbed the plastic thing, I opened up, I set it down, and then I go to grab it again and I guess my hand just got a tiny bit too close and I got zapped.

That means he had the box on the wrong side.

Does it? Well, we'll get into that after.

Yes.

But man, I got shocked good. And I'm like, now I'm getting ready to leave his house and I'm going, don't worry, I got this gate. And I'm like, you know, hoping I don't get killed. Right now you can't get killed by gate. But anyway, so he's an electrician by nature. And I said, you know, have you ever touched a wire that you thought was dead but it ended up being alive and you end up getting shocked? He's like, yeah, what about when you think you have a wire that's fully insulated, but it's not, and then you get shocked? He's like, oh yeah, that's definitely happened too. I said, here's the thing. No matter how well you wire that house, you could always touch a wire that was Bare or it had a little crack in it and you didn't realize it and you're gonna get shocked, right? It's like, yeah. I said, well, what I'm doing right now is I'm wiring your retirement, I'm wiring your income to where no matter what goes on around you, you can never get shocked from it. You can never get killed by it, you can never lose it. You can never go backwards. It's a super insulated piece of wire. And he's like, man, that's exactly what it was. So with a super insulated wire, that means it's going to power your retirement for the rest of your life and you never need to worry about the power shutting off.

There you go. You put it in their turn.

Absolutely.

That's the key. And if you can take what you know about annuities. And again, this is the third time we've tried to kind of bring this back around, but really that important piece of being able to relate them to your clients is what will help you best, quote, unquote, simplify the annuities. Oh, I love the air quotes. Those are my favorite.

It is. Because you know what? That electrician could talk in a language that I don't understand. That rancher could talk in a language that I don't understand. I mean, shoot, I hear you talk to your brother in hick language and I don't understand what the heck you're saying. And I just gone, they're done.

I didn't understand to them. They understood what they were saying to each other. I didn't have a clue. So when they slow it down and they speak, and English, not Texanese.

It'S all about the relatable language that the client will understand. And that's what we want to do. That's how we keep it simple.

Absolutely. So take this concept, if you're navigating that, where you're trying to figure out how do I simplify annuities to my clients? Keep that in mind. You want to relate it in their terms, not financial ease. But then go back and listen to those couple of other podcasts that we've got about it as well. There's some other great things in there that'll help you out.

Absolutely. So I hope this helps you guys. You have a great day and happy selling.