How To Leverage The Golden Age Of Annuities | 7 Figure Annuity Sales Podcast | Ep. 257

What I really want to share with you is how we can leverage the golden age of annuities. I mean, the reality is there's very few times we have an opportunity like what we have right now in a season like what we have right now, and it's producing. I mean, we talk about the summer slump. The summer slump doesn't exist if you're working in your. You're keeping your lead flows going and you're basically focused. It doesn't mean you don't get to take trips. It doesn't mean other people don't get to take trips. But if you think about this, you're making your calls consistently. As you know, my leads kind of dried up for a while and now finally are starting to come back a little bit, but the volume hasn't slowed down. That's true. It really hasn't.

So kept writing. Good business.

Oops. Go ahead.

Well, I was just gonna say, part of what makes this the golden age of annuities as we talk about is the baby boomer generation, but one of the challenges is that the people born in that baby boomer generation on the very tail end are already 59, 60 years old.

Yeah. And they're worried about skin cancer and things like that. They don't want to be on the sun too much. It's too hot. So really, is there a summer slump? Right.

There shouldn't be. But because they're already 59, 60 years old, we've realistically got five to 10 years of the baby boomer generation being the prevalent retiree demographic. Right?

Yeah, I think a little longer than that.

Longer than five to ten.

Yeah, I think so. Because remember, you have retirees that are retiring later now, and therefore, you know, a business that we normally would have gotten five years, we may get in 10 years now or 15 years. The key, as you know, is the 59 and a half rule for 401ks. But, you know, I think we've got a good 15 year run. I really do. Okay. Yeah, that's.

That's pretty generous.

Well, I mean, I'd. Look, I'll be optimistic. Five then. So it's, you know, as long as it goes through my retirement, I mean, I'm not as concerned about yours. Yeah, you'll still be here.

One of the other things to consider in the golden age of annuities is the pension issue.

Yes.

And we talk about this a lot. Pensions are way fewer and further between because in the 1980s, they really started to taper off. Well, if you look at the demographics, the current Baby boomers that are entering retirement would have been teenagers as those pensions started to dwindle. You go back 5, 10, 15 years previously when you were working with baby boomers, they were on the front end of that. They probably were late 20s, mid-30s. They could have had some period of time there where they were working for a company that had some kind of pension retirement plan. But the majority of retirees now are dealing with employer plans and IRAs.

Well, it's funny too because when I ask clients, you know, we go through the mini fact finder, then we go through the full fact finder and say, so what other income do you, what pensions do you have? And they'll say, my 401k. Yeah. I'm like, that's not a pension.

Right.

We can turn that into a pension like product. But that is not a pension. Right. So you know, it's very, it's, it's kind of how they've been trained. That generation have the pensions when the true generation was the generation before that or pen pensions were more. And I just really thought about this recently. I'm going, you know what, Obviously you had companies want to get away from pensions because they don't want the longevity risk. But I also feel like there was a little bit of a push, a lot of push, a massive push into wanting the stock market to grow. So if you don't have a pension, you start a 401k. What is in the 401k? Stocks, bonds, mutual funds. Right. So it causes the stock market to accelerate. So anybody who knew that ahead of time would have put their money into those types of stocks, those types of funds, knowing the stock market was going to take off and probably they did something more like just straight S and P, NASDAQ or Dow knowing it would go off.

Oh yeah.

I mean, the more I get into this business, the more I start to realize how corrupt our financial system is. And I'm really digging deep into all these politicians that make these trades before major decisions. And so they'll be on these committees. And there's even websites I'm finding where you can track when these politicians trade, where they buy or sell. And if you see them dump a company, you know, okay, they're probably going to make a decision on that committee that they're. And you trace that company and it's on a committee they're on.

Interesting.

And so they dump it or they buy a whole bunch of stuff and then that causes us to have the major problems with it. So when you look at the 401ks pensions. You have to realize, I think it's all kind of a scam.

I mean the problem becomes distribution. It does because when you have a pension from an employer you worked with for decades and you're pretty well set and you're pretty well geared, I think.

You'Re pretty well set.

Well you think? Sure.

Tell that to the people at United and Cottonwood.

That's fair. I mean, yeah, it's not, it's not necessarily guaranteed.

It's not. Now balancing though. I've never seen an annuity backed pension ever go away. I've seen plenty of corporate backed pensions go away, but not, not any interesting.

And you ask that.

I do ask.

You ask if the client does have a pension, you ask if it's corporate backed or annuity backed.

For example, TSP is almost always MetLife. That's usually what they want to use for their annuity. And it's been a little while since I've ran into that. But the last time it was MetLife. And so USAA used to, well does do vernable and so you know, they'll offer these types of pensions so. But they're backed with annuities. But once again we know that type of annuity, you lose control of that. Sure.

As pensions have become fewer and further between and now you've got, you know, more employer plans and IRAs, the problem becomes the distribution. Right. So as they're contributing to it and markets are performing and it's growing, everybody's happy. But the issues arise when it actually hits retirement and now they've got to start distributing those funds. And the questions arise around how much can I take and how frequently can I take it and what's the stock market going to do and how long am I going to live? And they don't know. Right. And those are the two unknowns that we talk about all the time. And so to try to put together a retirement income plan based around some kind of expected life expectancy, some kind of projection and then some kind of projection around market performance, it creates a unstable foundation for that retirement income.

1. I find too that most of our annuities nowadays, the good ones, can be any pension most of the time. Yeah, it's, I mean especially when you take into the factor of not losing control, liquidity upon hardship situations, I'll take that, I'll always have someone, why don't you look at what the lump sum option is and we'll see what we can pay out versus what they can pay.

Right. And then compare not just the payouts, but the benefits in each.

Exactly.

That's the key, is the benefits. Another thing you got to consider when you start distributing 401ks and IRAs, not in an annuity, but just in the 401k or in the IRA and you're pulling on that, you've got sequence of returns risk, which we talk about actually pretty frequently in the academy.

Speaking of which, if you actually would have showed up on time today instead of working from home. I need a sequence of returns chart.

My email still works, my phone still works.

I'm a face to face person, man. I'm not virtual. Yeah, Call me old school, but yeah, I do want to, I really want to start to push that actually. I'm going to start using that as one of my handouts. You know how I. The four handouts, I'm going to have that as my fifth handout.

That's a good handout and we've got it made.

Is there any way you can combine that on one sheet of paper and.

Still tell the story? No. You could articulate.

I could put it in chat GPT and I could say consolidate this and they'll do it, no problem.

Probably, but that becomes the problem. Right. You've got sequence of returns risk. If the market starts regressing, it starts moving backwards as they're drawing funds out of their 401k or their IRA. Now you have a compounded loss in that account value and the ability for that account to actually stay intact for their life becomes seriously in question.

Correct.

The other thing is the, the old for. And I say old for a reason. The old 4% rule. The idea that, okay, you draw 4% and you should be okay.

Heard someone talk about a 6% rule.

That's insane because it's stupid. Well, most are.

I mean brokers talking about you could pull 6% and it should last you the rest of your life. I'm like, show me anywhere where that type of return. Maybe if you. For the rest of your life, you had a 2009 to the buzz Lightyear Infinity, then maybe, sure, you know, but still. God, man. What? I don't understand how these brokers get away with the quotes they do now. Balancing statement. Same thing with annuity guys.

That's true.

I mean some of these illustrations the fixed indexed annuity guys are presenting, I'm like, what are you doing? You are a lawsuit waiting to happen. I mean, it's already happened. It has already happened.

Company.

Yeah, we're not going to say who, but yes, it has. But the thing I look at.

The reason why you've got to be very realistic in your illustrations is because, you know what, they're not generally going to sue you. They may, and they'll shred you to pieces. But they sue the insurance companies, they affect the industry and our reputation. And, you know, I remember I went to this awards benefit and, you know, from one of the insurance companies, and this guy, I just, I was talking to him, I'm like, this guy, there's no. Why is he here? There's no way he made it here off of logic or intelligence. And sure enough, I found the product he was pushing. I said, do you realize what the index returns are on that? I don't care. You get a 14 bonus. What does it matter to me? I'm like, that's all he pushed for every single person?

Just the bonus?

Just the bonus?

Yeah.

I'm like, oh, man, we were in a foreign country. I could have made him disappear.

I wouldn't hurt him. I didn't say I was going to hurt him. I just said I could make him disappear.

Interesting. So 4% rule. If you look actually at most financial professionals, most economists, they would say that 4% is too much.

Yeah. 2.3 to 2.7 is the latest from what I've been hearing.

It's crazy to me, so. But you look at a fixed indexed annuity with an income rider that will guarantee five and a half, six percent of the benefit base, which is a larger value.

Yeah, I was gonna say it's actually larger than what you put in. So.

So you can be certain that account value is going to run out eventually. The odds of that index, those index strategies, actually protecting it in a high guaranteed income product, is not really going to happen. But you do have guaranteed life.

That's why you don't have to worry. What's more important, plan for living or plan for dying? If they flat out say, my number one concern is just the income I get, I don't care what passes on to the heirs. Some of these defer very high and have very high payouts. Now, I'd say probably only 10 to 15% of my business, if even that is those type of products. Because I do like a really good index strategy as well.

Totally. If you can try and protect that account value with slightly less guaranteed income, but still covers the needs. But you have a death benefit at the end. Most clients go for that. Because if you ask, well, do you want a plan for living or a plan for dying? It's pretty frequent that you have people desire Both.

Right. I would say more than I know because I word it this way. Most people nowadays are saying, well, my kids, they do better than I ever do did. Or they say, oh, they get the house when I go. Or you know what? They didn't appreciate anything. You know, I mean, so it's actually more common. They want to plan for living, but they don't want to lose control of the money.

They don't want to see that go to nothing.

Correct.

Interesting.

Because many times, and this is when I used to do the high income, high roll rates, high bonuses, I would go and present it to them. They go, why? Why does this go down to zero? You told me the number one thing was income, right? Yeah, but I don't want everything going away. Okay, well. And so since I do the new way where I have a really good indexed annuity with an income rider that has really good indices, I don't run into that issue anymore.

Yeah, it is generally going to be a trade off. When you look at product, it's generally going to be a trade off. If you're using an income product that has good rates and good renewal rates on good indexes, you're probably going to have slightly lower guaranteed income. So you got to make sure that that Guaranteed Inc. Covers the need. And we're actually going to talk next week about determining which way to go, guaranteed income versus accumulation. So that'll be a good one. You can tune in for next week. But you also got to recognize that Social Security wasn't designed to be the sole source of retirement income. So you have fewer pensions, you've got 401ks and IRAs exposed to market volatility and questions around distribution. You've got Social Security as income, but wasn't designed to be the sole source of income. So what does that create for you? Alongside the largest retiree demographic that's ever existed? You've got a the golden age of annuities. So you leverage it by discussing those very things that Chad and I just talked about with your clients. They don't know how long they're going to live. They don't know what the stock market's going to do. So building a retirement plan where there's assumptions in both of those things is faulty. You take those out where it doesn't matter how long they live and it doesn't matter what the stock market does. And now all of a sudden, you've got a solid foundation.

That's one of the triggers I get for most people is when I say, you know what? No Matter how smart your broker is, no matter how great their heart is, no matter what they want best for you, there's two questions you nor they can't answer is how long are you going to live for? And where's the stock market going to be tomorrow, let alone five or ten years from now? That is such a revelatory moment for them because they're going, wow, that's so true. And that's where the annuity comes into play.

That's right.

With an income rider.

That's right.

Not an indexed annuity that you use in a hypothetical number to project income, knowing that you can replace that in 10 years.

But anyway, yeah, and I would say too RMDs, like RMDs isn't, that's not, you can't consider that a guaranteed income stream. In fact, most of the time a good income product is going to actually pay out more than RMDs and it will likely draw that account value down to a point where RMDs likely won't exceed the income. So they actually end up able to draw more in an income product versus RMDs over the long term.

Absolutely right.

And then that's guaranteed for life where RMDs are not.

Correct.

So yeah, that solves the problem. So discuss those things. Discuss the fewer and further between pensions, discuss the 401k and IRA distributions, discuss Social Security and the fact that that's not designed to be the sole retirement income source. And then do really, really, really good fact finding.

When I tell people this all the time, I mean, the reality is, and this is why I can confidently go into any appointment and know that I have the best solution if they want to have a guaranteed retirement plan and the fixed indexed annuity or fixed indexed annuity with an income rider. Actually if you just say the FIA with the income rider is the only product they can offer the safety, the security, the guaranteed income you can never outlive with no risk to the market. That is the only thing. CDs, cash, stocks, bonds, mutual funds, commodities, REITs. Nothing can provide when I'm what I have right there. And when you walk into that appointment, I just had a conversation with an agent last week. A top performing agent. He's in my inner circle. And if you want to be part of the inner circle, we are going to have three spots available. That is all I'm going to take. Because the reality is I don't want to take any more than that. I want to be sure. I mean it is crazy busy right now. Like I said, even with the summer, it's been so busy. But the agent was, is really good. But he gave me his conversation. I said, you're just not confident enough on the phone. And if you're not confident enough in the phone, you're probably not confident enough in the appointment. And so by doing that, he actually ended up closing a deal. And so you know it. You got to believe in what you're talking about. That's the reality. And that's why no broker can do a guarantee where they can look you straight in the eye honestly and ethically and say this right here, million dollars will guarantee you income for the rest of your life. First of all, you can't even get past compliance. But that being said, and I'm going to say it, I always have to balance this. I don't hate brokers. I think for the right person, the right situation, once you have your safe money done and your guaranteed income taken care of, fine, do whatever you want. But don't ever use a variable product to do a guaranteed solution. Right? So, yeah, I think that's it. A little groggy today. Been doing these 4:30 mornings and last night normally I was able to get to bed maybe around 10:30. Last night it was midnight and so I was like, oh God, man, 4:30 came early. Don't know what's going on with me. Keep me in prayers. I keep getting up at 4:30 in the morning and coming into work. But I do have a trip coming up, so time to relax. You have a great day. Happy selling.

Sam.