How Annuities Impact the Current Market Landscape | 7 Figure Annuity Sales Podcast | Ep. 218

On this week's episode, we're going to.

Talk about how annuities fit into the current market landscape.

Part two of one, but we're probably going to have four.

Part two of three.

Yes.

Yeah.

Stay tuned.

Hey, everyone. Welcome to this week's episode. I am Chad Owen, and you wait for the advertisement to know what I own and who to call. Right. Don't we have that in there somewhere?

Every week, at least this time you've been, you've been shamelessly plugging Retirement Realized Financial and.

Oh, Retirement Realized Financial and Retired. So if you see I don't need to plug it. You just plugged it. So if you're interested, you have Caleb's number. I'm sure I don't even remember. Do we do, like, a little commercial in there that shows what our number is or is it okay, so they'll know. Okay. They'll know even if they're not watching and they're listening. Okay, well, there you go. That's maybe why they told me not to plug it. Why would I want to retire? Why would I ever want to plug Retirement Realized Financial and Retirement Realized Agents Academy?

Well, it's the best annuity. Sales training and the academy, and it's the best annuity, imo.

Yeah.

At Retirement Realized Financial, except for some.

People we partner with. They're great, too.

Well, they're great.

Yeah. We careful because we do. We have some phenomenal partnerships out there. And you know what? We joke around, we play around, but we, we really do want to make a difference in this industry.

That's why we started.

Yeah, it is. That is the original reason why I started this, because I make nothing off the podcast. And even if somebody signs up, you know, if I'm writing, I'm over 20. Probably by this time I'm going to. I Hope I'm over 31 million. We'll see. But, you know, I am just about, you know, what I make in annuities. I want to do this because I want to help people.

Right.

I mean, it's not just about helping clients, about helping agents. And if I help agents, I'm helping clients.

That's why I do what I do.

Yeah. Even if it's not my client.

I've had agents ask me all the time why I'm not out in the field, and I just tell them, I say, well, I can go out and I could meet with people and maybe I, you know, make 50, 60 clients over the course of the year if I'm doing pretty well. That's pretty good.

Pretty good. Because everybody would be saying, I got a great, great grandkid that's older than.

You, but if I can help 250, 300, 400 agents over the course. Yeah, well, how does that. Yeah, so I love it, man. It's great.

Yep. Okay, so what do we got going on how.

And so last week we talked about the current market landscape and if you haven't heard that episode, definitely go back and listen to it. We talked about some statistics this year.

3.

This is part two of three. And we're going to talk about how annuities fit into that market landscape. Right. We're talking about the stock market being down, the Fed rates being high in interest rates across the board, obviously inflation being high, and then real estate inflation also being high. Talked about retirees and what they're needing in all this. And now we're going to talk annuities and how they fit into that stupidity.

Being at an all time high. Dodoism being at all time high.

Guilty as charged. Yeah. Yeah.

Well, that's. Ever since I've known you. But anyway, of course you're getting smarter.

I try.

But annuity rates, MYGA rates are high. Yep. Right. And then we can, we can thank interest rates in part for this.

Everything symbiotic. I mean, here's the thing, you know, I have people going, I used to have a CD in the 80s at 18%. Yeah, but your loans were at 18 and 19%, which it would not surprise me if we're heading that direction.

Yep, yeah, it's true. But my good rates are high. Par rates are as high as I've seen them in a long time. You know, when you're looking at annual and two year point to point, which.

Remember when you're explaining an illustration, make sure you say that this is based off of today's par rate or today's cap or today's spread. Because I want to make sure we're not giving unrealistic expectations.

Absolutely. I literally have that. The last thing we're going to talk about, how to leverage annuity benefits properly. And I literally say don't sell from the illustrated historical scenario. It's inflated on everything, Right?

Yeah. Always use worst case scenario.

But caps are high also, spreads are low. It creates some great opportunity if we can get some market rebound here. Like I say, the rates that people are coming into right now are really great. Now a lot of people saying we're not going to see market, market rebound, saying get move positively from where we're at over the course of the next year Now I don't think that that's necessarily going to happen. There's a lot of people saying it's going to be another two.

Yeah, well, there. I've even heard that in, in granted, you're always going to have, we don't know, you're always going to have your gold people or your commodities people saying the sky is falling, sky is falling. Buy gold, buy silver. And I'm like, God, if it gets that bad, where we're bartering with gold or silver, bullets are far more valuable than that. And I'm a big commodity dealer there. I have a lot of lead. So. Yeah, but you know, it's, it's when we're looking at where we think it's going to go, why would you want to follow it all the way down?

No, well, you wouldn't want to. Yeah, you certainly wouldn't want to. And when I'm talking about, well, 2020, for example, you know, March of 2020, we see a phenomenally steep drop.

Yeah. And then they printed 4.7 trillion and.

It ended up moving positively by 20% or something.

That type of money printed.

I can't imagine we would. I think what we're dealing with now is largely repercussions of it.

Yeah. You know, something with a client recently and she flipped her lead lid. She's extreme left. And I'm not making a political statement here at all. I'm just telling you what happened. So I'm saying generally when there's a president that doesn't have a high approval rating, I on either side, the House and the Senate move the other direction. Right. That's just statistics. It's how it works. So if you have a Republican that's not popular, you're going to generally have the House and the Senate move the other direction. If you have a Democrat that's not popular, you're going to have the Senate and the House generally move the other direction. That's what's happened. And then I think there's 24 or 26 minority minorities running for Republican office, which is the highest number there's ever been. So that generally means you're going to have more minorities voting Republican. So that switches it over. Then you have the. I think it's 34 or 36 incumbent Democrats that are not rerunning for office. Well, whenever you have an incumbent on either side, a lot of times they have this advantage. So if they're not rerunning, once again, statistically, it looks like you're probably going to have more Republicans doing that. So when you talk about that, let's just say hypothetically the House and the Senate's taken over by Republicans and they're still Democrat as president. That's not going to fix anything. Sure. But then we've also had many Democrats say they're not approving any more bailout money because they're too close to midterms. And you've also noted how magically gas prices have went down. How did they go down? Because we're tapping our reserves instead of pulling it out of the ground. And, and so when you look at that, if the Democrats got back in for House and Senate.

Right.

And you have a Democratic president, then you're going to likely have gas prices skyrocket because the fact is they want to push this agenda of electric vehicles. While if you have electric vehicles, where are you getting the electricity from? Usually coal, gas, power plants. So when you have that happening, you have the market that's still responding because if you have high gas prices and everything else is going to cost more, which causes the mark to fall. If you have the Republicans taking the House and the Senate, then you're still going to have a split group that nobody's going to agree on anything and nothing's going to get done.

Sure.

So I do believe we're in probably a two to three year where the market's going to be in some big challenges. And notice I didn't ever tell you whether I'm Republican or Democrat. I'm not saying that. I'm just saying this is all statistics of what normally happens. And no matter what happens, it doesn't look good for the market.

Right. We'll get to this when we talk about product changes. But there, I'll just give you a little teaser. There are more and more products coming out now with guaranteed participation rates for the duration of the surrender period, which you're looking at say a seven year surrender or a ten year surrender period. Should we be past this? Hopefully right by seven or ten years. But your par rates are still guaranteed and the par rates that you're coming into are still impacted currently by the hire. So there is some, there is some potential carryover once we do get rebound. I don't, again, we don't know when that's going to happen.

But you know my gut feeling on that once again, I've sat in a lot of meetings with actuarials and you know, it's, it's all about numbers. But if you're locking in, the insurance company is locking in rates at 10 years right now, they Believe that it's going to become more challenging in the future. It's easy for them to say, we guarantee it's going to be at this. And if they think the market's going to fall for two or three years, what is it to them if they're locking 140% of no gains? Yeah, that's why I often do the fixed accounts until like year one, year two, do the fixed accounts. And then if we start to see the potential of a market rebound whenever their anniversary comes up, then we could potentially move it into an index. That's why I always tell my clients every year, when you get your index allocation statement, call me.

Right.

And we'll go over that.

Yeah, well. And depending on what inflation looks like at the time and their attempts to try to curb inflation with their interest rates, we could, we could have renewals on the fixed account looking pretty good, depending on again, what those are, are cranking at.

But here's a thought.

So if inflation's going up right now, I just thought of this. Inflation's going up with the cost of goods, but you raise interest rates on the cost of goods, housing, electronics, cars, Isn't that still a form of inflation? If I was able to pay 2% on a loan or 2 and 3 quarter, and now I have to pay 6 and a quarter on that.

If you're buying on loan.

Yeah, if you're buying a loan. I mean, obviously if you, you don't, you, you pay everything outright, then that's not going to affect you. But how many people do you know that don't take loans out on cars and homes and things like that?

It's true.

Huh. Interesting.

Yeah.

That's a freebie.

Yeah. Yeah, it is. And, but what's weird is that obviously they use the.

They use the interest rates to try to somehow curb the inflation.

Well, even lines now for inventory, a lot of people use lines of credit for inventory, and that's an adjustable rate. So therefore, if you're using interest rates for lines of credit on the product you have in your warehouse, that means you're going to be charging more for the product as well. Yeah, I mean, this, it's true. If people would really dig down into the cost and why things are what they are. Now here's the major issue we have is everything we're talking about could be chalked off as an opinion. That's true, you know, because anything I say could be contradicted. Just like studies on medicine, you know, whoever's doing the test on the medicine, that is the One that's gonna be the one that gets the grant money, which is never gonna say anything negative about what they're running the test on.

Right?

Yeah.

When I say things though, like Celine Dion is the greatest artist of all time. That is objectively accurate. So not subject to opinion.

You know what? We don't have enough time to go into number one. She's Canadian. That's Czech. No, number one failure. So.

I can say that safely because we have a lot of US citizens that are listening to our podcast. You know what's funny though? We are all over the world.

Yeah. We come up in European countries pretty frequently, which is kind of interesting.

Even some Asian countries and. Yeah, interesting. Okay, so continue.

Yeah. Okay. Let's talk annuities fitting into the landscape. We talk different products, MyGas, FIAs, SPIAs, just that's primarily what we'd be dealing with. I would encourage you don't get sucked into the flash of MYGA rates or the high guaranteed income of the spias, but definitely consider the benefits of the fia.

You will never see me get sucked into any spia ever. Period. Well, I don't like, and I know you can say, well, Chad, they're paying a little bit higher than your income riders, but hey, they lose complete control of that money if they need anything for long term care, terminal illness, they can't get that money. The amount they get will never go up. Now there's inflation, inflation adjusted, where they can say, well, yes, it will, but you have to take a much smaller amount in the beginning.

Right.

So yeah, you'll never see me get pulled into that.

It's good, it's, and I think, I mean, you look at annuitization and it's, it's a bit of a, I don't necessarily want to call it outdated, but it to some extent is. When you've got the, the income riders doing what they do now, you don't have to annuitize anymore. And when you consider the benefits of riders versus annuitization, it isn't. You can't hardly hold annuitization can't hardly hold a candle to an income rider because you're not actually giving that much up from a guaranteed income perspective, but you're gaining a lot of benefit.

Sure. It's, it's archaic. It's an old way of doing it, in my opinion. I mean, that's just me personally.

It's true. So, okay, so let's talk about some carrier and product updates. Obviously not going to get into specific products, but we're, and this goes Back to what I was saying earlier, we're seeing more and more carriers use guaranteed PAR rates for the duration of the surrender period, which I think is bringing in an element of guarantees to the fixed indexed annuity that can and should help it against Mygas right now.

Oh yeah. You know, it's funny, I've been in this business for 18 years and I remember back when they used to have some really good participation rate spreads, caps. I mean, just everything was really well planned out.

Right.

And now they're starting to get back to that again. So this is a super exciting time. It is. You know, you're gonna see payout percentages potentially increase.

We're already seeing it.

Yeah. I mean you're gonna see all that happening. Why? Because the insurance company can get more than 2% or 3%. They can do very well on that. So I'm excited for this time, honestly.

It will be interesting. We might. Over the past couple of years there's been a product you've used a lot that has really great increasing income potential in the first 10 year period specifically. And you look at the design of the product and it's to me, not just potential, but it's on paper, it's probable. Maybe look at the payout factor.

I would not go right now. And I tell them so I'll do the 10 year historical off of that and I'll do the guarantee and say, hey, do not plan. Even though the 10 year time frame is the worst out of a 20 year, 22 year time frame, still don't plan on that.

Right.

I would split between what it's performed and then between the guarantee and meet some way halfway in the middle. And I'm very confident. I mean I'd be very surprised. Now I always say this, we don't know, right? And every time I use a product, I always use the worst case scenario as the baseline.

Right.

And I circle the guaranteed and I say this is what we should plan everything off of. But if.

Right.

And so.

Yeah, well, and you used to, I mean you hit your four criteria for product selection, right?

Financial stability, best benefits, best customer service, highest payout or potential likely growth.

When I first started working with you, it was or highest payout because at the time products weren't such that the potential for growth was even a relevant thing. It was just the highest guaranteed income.

Yeah. Because there's a lot of annuities out there with income riders that were just straight. Once you drew it, that's what it was. Income roll up, rate stopped and they're still out there right now. And once you started to draw from it, that that was the amount you're getting and it will not increase. Even though they say there's a likelihood. Not likelihood, they say there's a potential and it's not going to know.

But I think we could be getting into a. Into a season because we have seen payout factors there. Chad. There's a company out there right now with a product. I don't necessarily love this, but I've seen a payout factor at 6% of income, account value, which, or benefit base or whatever you want to call it, which is, to me, absurd. That's so high. And there's virtually. You will never outlive that and you'll never outlive that. Now.

Death benefit will be gone.

It'll be gone.

Yeah.

In.

Yeah, 17 years or 12 years or whatever. It depends how long they defer it for. Yep. But. Yeah.

Okay. Another thing that we're dealing with right now on the annuity side of things is processing times. I know we're taking a little bit longer today, but processing times are definitely slower than normal. But it's because of good things. It's because people are moving.

I tell clients it's six to eight weeks at least to get anything processed and through, because it's not just about getting money sent over to the new institution. It's a new institution that's receiving money that's way backed up as well. Just like your favorite restaurant, if you're going to go into your favorite restaurant and they're running some sort of special, or they got some great reviews or they were shown on tv, you're going to have a long time till you can make a reservation for that. It's what's going on right now. We're in reviews. We're having positive outlooks for our industry.

We're having.

Having record numbers. I mean, some of these places are taking three to four times the number of applications they take in in a normal month. So in that scenario, your restaurants booked up for a while, your favorite hotel's booked up for a while. That's just, you know, and it's a good reason. You know, you're going to a good place, and right now we're going to safety and security in a very uncertain market. So the reservations are backed up.

They are, they are. And that's the nature of it. And you just need to prep your clients for it. On the front end is really the biggest thing.

Well, that should be it. Right?

That is it.

That's.

That's how annuities are fitting into the landscape. But next week, give you a little teaser. We're going to talk about common resistances to using annuities with retirees and then how to properly position the annuities with it.

There's no resistance. It's a myth. Okay. Hope this helps. You have a great day. Happy selling.

Sam.