Determining Guaranteed Income vs. Accumulation | 7 Figure Annuity Sales Podcast | Ep. 258

The first thing to determining whether or not it's an income case versus an accumulation case is good fact finding. Good fact finding is the foundation for case design. You can have good fact finding and still have poor case design, but you cannot have good case design with poor fact finding. I will say that till I'm blue in the face as somebody that does it every day.

Pretty profound. That is true.

Yeah. You can have good. Good fact finding and still have poor case design. You've probably had that done by your IMO before. But you cannot have good case design. Not our imo, but you cannot have good case design without good fact finding.

So true. Because I think of the number of times I went to appointments that have discovered money that they never were going to disclose until the questions were asked, just right to where they saw. My intent was not to dig up a whole bunch of money. It was to find out their problem so I can find a solution. And when they hear that, man, they will tell you everything.

I've had this. This realization lately, Chad, that I've never. I've never realized in terms of sales, but I've listened to some pretty big voices out there, not even in the annuity industry, just in big business in general, that are kind of sales thought leaders. And then I've examined some top producers, you being one of them, some of the agents that we work with being some of them. And one of the consistencies that I've seen amongst top performing sales individuals is they are convinced in their heart of hearts that they're helping people. Oh, 100% every single time, in fact.

Or. Or let me balance this out. They're convinced in their heart of hearts that they're helping themselves. Well, sure, because you do have. And you. You'll. All you have to do is talk to them for a moment. Look at my jet, look at my cars, look at my. This. Look at my. You know, there's okay to have a lifestyle. There totally is. But when it's all about, like, there's this, I can't say that there's people. I know that that's the primary focus, not what they get to do for people.

Does that have the same longevity? Have you noticed people doing it that way to be top performers for long periods of time?

Yep. Interesting. I have met some people that I.

Guess I'm thankful to have not come across that. But.

Yeah. Well, we would never have them as part of our fmo.

Sure.

I mean, if we. To us, part of the requirement is we need to know you really do care about people. And you're going to do it honestly and ethically. I don't care if you're writing 100 million a year in annuity business. It doesn't matter. If you're not doing it right and you're not being honest and ethical, it doesn't matter to me.

Yeah.

You know, but yeah, I would say now the really good ones, though, as far as the people you like. Yeah. You can tell. I'll tell you one of the things indicators I've seen in our industry over almost doing this for two decades is we have some of the most generous people I've ever met in my entire life in our industry. I mean, when a cause comes together or some of the charities they start, or even starting their own nonprofits, and it's pretty amazing what they'll do.

Yeah, that's good. It's necessary.

It is.

It's such a neat.

Well, there's the drive.

Right.

If you, if you truly want to help people, you're going to help people in other areas of your life.

That's true. Yeah. That's good. So determining income, whether or not it's an income case versus you, just a pure straight FIA for protection and growth potential. There are some kind of baseline thoughts, some, for lack of better terms, assumptions that bringing, you know, into the thought process here. First one is that there's generally a greater need for income than what you come across looking surface level.

Well, and so you have to look at it. It's not just. For example, I had a client that basically I met with them. They got an illustration from someone I know for 500,000 for a straight FIA. But what I created for them, they love. I mean, this is crazy, man. These guys are 76 years old and. And they backpack. Like, they go to different countries and they backpack.

That's pretty cool.

They go on the train.

Hope I'm in that kind of shape.

And so you got a ways to go. But anyway, but it was so impressive to me. And so what I did is I didn't create an income stream. I created a lifestyle streaming. Yeah. So in other words, they knew at any given year that that income writer produced a vacation stream that was. Would never have to be less than the previous year.

Right.

So they knew at, you know, let's say 2024, when they start to draw income, this is their worst vacation stream they'll have. And then every year after that, if it jumps up, then they get a step up, but they never have to go backwards in what they want to do. Right. And that triggered Something inside of them where they're going, this is what I want.

Right.

And the reality is income stream or an income rider isn't over always used for income. It could be used to pay property taxes, it could be used to pay a mortgage, it could be used to pay a car payment. It could be used to. It's a lifestyle stream. Right. You know, and I already looked it up. A lifetime lifetime writer or excuse me, a lifestyle writer. And unfortunately the domain name's already bought. Yeah, it's a. Yeah, but you know, the reality is that's what the income can do is it can produce a. A non retreatable lifestyle.

Yeah, yeah, we'll actually get into that a little bit here toward the end of the episode today. But that's absolutely true. And if you look deeper than surface level when you're doing fact finding, if you ask them simply what's your income, what's your expenses, you're probably going to at that level determine there's far fewer people needing income than there really are. You got to go a little bit deeper. So number one assumption, that there's a greater need for income than what meets the eye, surface level.

Absolutely.

Number two, the greatest fear retirees have is outliving their retirement funds, outliving their money. So here's the thing. If they come into the conversation with you, assuming that getting income will cause them to outlive the funds for faster, they may say they want accumulation. So if somebody says they just want protection and growth, you need to assess the assumptions underlying that statement and whether or not those assumptions are accurate.

So there's a lot of people, once again I go back down, meet with and they haven't touched their money because they're afraid if they draw anything out, they'll outlive it. So once again, that's another solution to the income rider. But if you're not doing really good fact finding, you're never going to find out that's a root cause concern.

That's right. And then the third one is that numbers have no emotion. Chad, you say this all the time.

All the time.

And to this point, they either need income, they either have a need for income or they don't. And it's that simple. And my encouragement is if there is a need for income, don't sell them anything else.

I mean, you've known me for quite a few years. Could you honestly say now show or not? Honestly, do you think numbers really like income ever money ever determines or gets me more excited or not?

I haven't seen that. I Haven't seen you ever get more excited about because, well, to, to the point you were showing me literally was before we started recording today, an appointment that you have this week with a.

Guy that is worth 400 million.

Yes. And you're sitting here talking about could be a $50 million deal, could be a million dollar deal. Don't really know.

Don't know. It's like, it's just, it honestly, it doesn't matter. I mean, I can look at my bank account and I could have something with six zeros, I could have something seven zeros or eight zeros. It just doesn't matter to me. It's like, what does it do for people? And that people includes my family, it includes my wife, it includes the people I love, it includes people I don't even know that we're able to reach and help. And so you know, when you look at that, because here's the other thing. If somebody gives $100 to an outreach and then another person gives a million dollars to the outreach, I assure you at times those people that give $100, it's far more of an impact on them.

The widow's might.

It is for sure. And so if you start to get emotion behind numbers, you'll allow your decision to be influenced potentially by the commission you make. And that's why it just doesn't.

That's good. That's good. So they either have a need or they don't. But you got to figure out how to uncover the need. So my encouragement finding, fact finding. But examine the current income and the current expenses. But also look at the projected retirement income and projected retirement expenses. There's a few things you need to examine.

What happens if one of them passes away and the lower of the two social securities goes away? What happens if you find out that one is 60 years old, the other is 70 years old and there's that big gap? Well, then you got to worry about do they have life insurance or you know what happens in that scenario where I've done this before, whereas a 75 year old, 62 year old, we still did joint lifetime payout because this huge.

Gap, yeah, that's massive.

But they had no possibility of getting life insurance for him and they still owed too much on the home. I mean, they could do a reverse mortgage. And most people know me, the reverse mortgage is generally the last resort. It's better than losing the home. But the point is.

When our pensions, we do have a lot of military people here. And I cannot believe the number of people I run into that do 100% gone. When the 1 0% survivorship, I'm going, your wife is in deep trouble, right? Because the lower of the two Social Security goes away and all of the pension goes away. That's why it's so important when you're talking about VA disability. When veterans disability is if they're 90%, that disability is gone, right? If they're 100%, then it completely goes on. And I remember I just did this last week, it was so bad. So the client goes, oh, I'm 100% VA disabled. All right, that's great. And I, I'm like, wait, wait, wait. I mean, it's not great that you're 100% disabled, but it's a great. Because if you were 90% disabled, you pass away. None of that goes to your wife. But because you're 100% disabled, 100% goes to. And he goes, no, I know what you mean.

Yeah. So, yeah, that's true.

Sorry.

You know, that's, that's very true.

That's where your foot gets stuck in your mouth and you're like, okay, he.

Knew what you mean.

Didn't mean how that sounded.

The point here is the retirement income and the retirement expenses can be very different than, than current income and current expenses. If they haven't retired yet, you need to ask, will any, will there be any large debts paid off? I mean, the difference, It's a suitability question, right?

I mean, do you expect your income to change?

But it can also have great impact on the actual product selected. Because depending on the timeframe of income activation or not, it's like, you need to know, I mean, mortgages can be massive.

Well, see, I do an income laddering, but I also do a debt reduction laddering. So. And if somebody tells me their home's paid off in five years, why, no, that payment's not going to be there. Now remember, you got to include taxes and insurance. Especially in the state of Texas, you have to include taxes. But there's things like cars, you know, as you get older, generally people don't care about a brand brand new car, right? So if they owe five years on a car and that goes away, generally they're not going to be buying a new car, right? And that's why you've been asked things like, hey, how old is your appliances? You know, you know, how old is your ac? How old is your roof? You know, I'll ask questions like that because a roof's Gonna could be 5, 10, 15, 20 grand, right? So you have to ask those type of questions.

Yeah. So will any large debts be paid off? When will they be paid off? Right. When will Social Security be activated? Right. So getting an idea for the future retirement income streams, if they're not already paying all those things are necessary.

See, I can tell you that's why I say, and I've said this a million times, you're in the top three case designers I've ever met in my entire life. The reason why is because most your marketers will not ask about a debt reduction or an income increase. Most will not do that. They just said, what's the product? When do you want to defer it to? And it's just, it's just, it's like that, it's just. What's the word I'm looking for? Robotic in their process.

Right.

And said, you go, hey, do you think there's going to be any income increase? Do you think there's going to be a need for an income, an income laddering plan? Do you think there's going to be need for a debt reduction plan? That's true. Case design.

Well, I'll tell you, if I actually did a training video on income laddering, laddering both directions, right? So laddering to where income increases and then laddering to where you actually front load the income because expenses are expected to decrease drastically. And so income needs, you know, generally decrease as people get older. So if you want that video, that training video, you can just reach out to me and I send you a link to it. But it's Caleb northetirementrealized.com and I can.

Tell you, you know, there's so many people that keep saying taxes are going up, taxes are going up, taxes are going up. We don't know that. And if you go back to Reagan years, taxes have actually consistently went down. They don't realize that. Just pull up any, just chat GBT or Google anything out there about what is the effective tax rate for the common person making a hundred thousand a year and watch the tax chart, it actually is less. And I actually am kind of expecting tax rates to go down, but more effective. Now, don't throw anything at me right now, but if we went to a flat 15% federal sales tax rate, got rid of the IRS completely, which I'm probably gonna die walking out here because I just said that. But you know, you do that, you would have two times the amount of tax revenue coming in because anybody who's paid under the table wouldn't be able to do that anymore. Yeah, anybody who doesn't they're not, let's say, ethical on their tax returns. You won't be able to do that. If you're rich, you're going to pay more taxes because you'd be paying a 15% tax.

More things.

Yeah, but if you're poor, you're not going to be paying as much taxes because you're going to be buying less. If we would do that alone, then we would have way more revenue coming into the government. Now, I'm not, I'm not balance. I'm not for the government sucking our life out of us with the taxes. But, you know, I think there's got to be ways we can be more effective and it will never be for the good of us. It's what brings in the most revenue for the government.

I'm curious now. Now you got my wheels turning. I'm curious and I've had this curiosity since I've heard about that idea as a, as a proposition of what does that do to the economy as far as stimulation goes, does that cause people to stimulate it?

It would increase it. Because if you think about it, I'm at a 39% tax bracket, so how likely would I be if I didn't have to pay that? How much more revenue would I have available to buy more things?

You would have more.

Yeah. So you have a person that pays no taxes because whatever reason, now there needs to be stipulations.

Most people are paying more than 15% already.

Exactly.

In their income.

Exactly. Well, I don't know. So I remember Romney one time got shot down. I'm not endorsing by any means. God, by any means, but the reality IS he said 52% of working people don't pay taxes. That is a true statistic.

52% of working people don't pay taxes.

That's insane.

So just once again, research it yourself.

I'm paying enough and you're paying enough for. Golly, we're carrying the load here.

That's funny.

Yeah.

It's not actually funny. Another question you need to ask is, does the projected retirement income without annuity income cover the expenses for both spouses individually if one were to die or the other one were to die? Taking into account approximately 10 years of projected inflation, I want to see a surplus of current income to current expenses. In other words, if they have $5,000 a month in expenses, I don't want to see 5,200amonth in current income and call that good because that $200 marginal difference is going to be nothing over the next year or two. So seeing a certain, especially if you're considering an alternative being an accumulation product that's going to have a 7 or 10 or 14 year in some states, if you're using those surrender period. Right. So whatever. If you're looking at an accumulation product, what's the surrender period for that product? And does the current income that they're going to get in retirement guaranteed cover both of them in their current expenses for that period of time? So that, God forbid, that stream needed to become an income stream down the road, they actually have it liquid and it's able to be that. Agreed. At that point.

Well, I think that's enough jabber from you. Right.

I want to add one more thing, as always. Is that one more thing?

Oh, it's way more than one more thing.

If the guaranteed retirement income doesn't cover both spouses individually, their individual, like if one were to die or the other were to die, doesn't cover their expenses with a surplus that's reasonable to protect against 10, 7 to 10 years of inflation, then they'd need more guaranteed income. Alternatively, if the guaranteed retirement income that they do have does cover both of them and their expenses for that period of time, they may not need a guaranteed income stream. But like your traveling clients that backpack, they may still want it, especially if you show them that it's guaranteed for the rest of their life, regardless of how long they live. They could use that to go on trips and travel. They could use that to spoil the grandkids. They, you know, whatever they want to do, buy that classic lifestyle.

Right.

It's so good. It's so good. Even if it's not a need, it may still be a desire. And that should be something that's getting positioned for them. If it is for sure.

Well, that should be it.

Yeah.

You're done?

I'm done.

We're done. Happy selling.