Risk Money vs Safe Money | 7 Figure Annuity Sales Podcast | Ep. 154
A podcast episode (7 Figure Annuity Sales Podcast, Ep. 154) featuring Chad Owen and Caleb discussing the distinction between "risk money" (assets exposed to market loss) and "safe money" (guaranteed income-focused assets, often annuities). They emphasize purpose-driven allocation (protect retirement/income first, then allocate remaining assets to risk), client examples, practical sales/communication tactics, and training resources (academy tic-tac-toe document, free business strategy session). The episode includes personal anecdotes (client case, safety/health analogies, and industry cautionary tales about advisors under stress).
Questions this video answers
July 26, 2021.
$1,000,000 in non-qualified funds and $350,000 in qualified funds (approx. $1,350,000 total).
61 years old.
Approximately $100,000–$125,000 per year.
annuitysalescoach.com (click Free Resources → Business Strategy Session).
Chapters
Well, welcome back, everybody, to another episode, another week. We've got Chad here.
You know what I'm gonna do, though? I did. I told him, I said, you open it, you open it. And so you start open it. Just, you know, want to keep him in his place a little bit, you know, make him feel like he has a little bit of power for a second. But. Okay, but welcome to this Weeds. Pot, Weed Weeds, this Weeds podcast.
Want to do it? You don't want me to do it?
This is the advantage of having caffeine right before I start to talk. But hey, you know, we keep this live, we keep this real. I mean, it's so easy. We could start over. We can make it polished. It's. I could put some makeup on and actually just put a bag over my head. It might be better there. Somebody goes, oh, you got a perfect face for radio. I'm like, ah, you're right. But okay, so we're gonna get right into this week's podcast. What are we talking about today?
Talking about risk money versus safe money and how we kind of talk about the differences.
Yeah, a little bit. When I said risk money.
Risk money versus safe money. When one is appropriate over the other. What are the, what are the key indicators there? How are we explaining those to clients and whatnot? So, Chad, give us real quick, just kind of a brief, you know, 30,000 foot view. How do you think of those two topics?
Risk money? Actually, I mean, I joke about it a lot and I am anti risk for people's retirements, but I think once you have the retirement money taken care of and you have the income taken care of, risk is fine. I mean, you know, as long as you have that foundational base that goes, hey, I can retire, I know I can never outlive my income. I mean, that's really important to me to make sure you have that taken care of. So I joke a lot, but, you know, there's some really good people out there that can do risk money appropriately. And the people I train, it's the same thing. You know, if they are using risk money appropriately, I'm like, oh, for them, go for it. But if you're using risk money saying you're a long term planner getting income for life, you cannot guarantee income for life. You can't even say the word guarantee. Compliance will eat you up if you're a variable person. So they'll eat you up. That's saying there's no way you can guarantee that. That's why I'm so big into the safe money. Side of things. So risk simply means anything you can lose money in.
Right.
You know, and I've heard people say, oh, you can lose money in annuity because it's only as good as the insurance company that backs it. Yeah, that's why we use fixed insurance companies. Yeah. I mean, I personally, and I'm not saying there hasn't been, but I personally have never found an insurance company the past 100 years that does fixed annuities that has disappeared.
Yeah.
And you know, like I said, I'm sure maybe, I don't know because I've looked really hard, I googled it, I've researched and, and I'm saying a reputable company, B plus plus or higher, asset to surplus ratio above 4% at any given time and then they just implode. I just haven't seen that.
Yeah, well, I mean you look at some of these, have been around over a hundred years. You know what I mean? It's not uncommon to see that.
Correct.
Obviously there are some newer ones that are starting to climb the ratings ranks and ladder, so to speak, you know, and they're starting to get up, up to speed with some of the others. But you're absolutely right. And I think too one of the things you talk about all the time is the purpose of the money. Right. I mean, it's, if you go back to purpose of the money, you can very quickly decide, okay, this is not money that can be at risk or this is money that should be, could be whatever you want. I mean, well, however that needs to be structured, if you've got a 401k or an IRA or some kind of retirement plan, the purpose of the money is what for retirement. So if you're taking that and you're keeping it at risk into your retirement, you're not able to accomplish what that account was designed for in the first place.
When I think about this, I literally just got off the phone right before we came in here with the client that he has a million dollars in non qualified funds, $350,000 in qualified funds. He has a lot of money in real estate and he's just like, I am just tired of market risks. So he's $1,000,000, 1, $1,350,000 right now in cash. Why? He was 1, he's 61 years old. If he from this point puts his money into something with an income rider because his primary concern is income, not passing errors. Yeah, he doesn't, but he's not, he goes, I love what I do. I'm not going to retire till a minimum of 72. So even with that age, 72, you're creating your own pension, like product guaranteed. Not if the market does this or if the market does that. Now, in my mind, and this is how I operate my own life, once I have that security right there, I can now take risks on greater things. Sure. So if we use 850,000, we lose. Leave 500,000 out in whatever accounts and he can do some more investing or he can take a little more chances. He's more willing to do that because he knows he literally. We ran it out just approximately. He's going to get about 100,000, 125,000 a year, which if he does 125,000 a year, it's 10,000amonth. I mean, he's. And he has his house paid off. His house is almost paid off. But the reality comes down to he has enough real estate where he could sell a property and easily pay it off. So would you be more apt to risk some money if you knew everything was taken care of?
Right.
The answer is yes, absolutely. And think about it. If you're a variable person, like you do, variable counts as well. If you do incredibly well protecting the retirement part of it, and then the stock market has a 50% hit on the other funds. Do you think your client's going to be more ticked at you if you have all the money at risk? Or you go, hey, you know what? This is why we did this. We, we knew the markets volatile. So the reality is we have this money protected right here. And then that's your safe money. That's your income for life. And then we have the money over here. We already knew it was a risk. And you let them know that's what this money is for. This is a risk money, safe money. You also don't want lazy money either. You don't want money that's not sitting.
Around doing nothing for you.
Oh, the baby boomer generation hates the word lazy. Yeah. And so when you talk about lazy money, they don't like that they want. They always want their money doing something for them.
Yeah.
Yep.
That's good. I love it. Well, one of the things we have in the academy is a document, so retirement planning, tic tac toe.
Yes.
And it really brings. It shows the juxtaposition between the two.
I heard you're trying to create something like that.
I was.
I was one of your sidekicks. No, Chad's already done something like that, right?
Yeah, I was looking at trying to create a four square way of explaining why you actually want some of the gains with none of the losses.
When you bring all the lack of mindset though. So it's four. I did a nine square, you know, so that's where the ticket.
Yeah, but you only use like six of them.
Well, that's true because I solve it.
So if your interest is piqued, you need to get into the academy and see that document. It really does a good job though of explaining why safe money is absolutely necessary. But I think too, I think about men, if you are on the risk side, if you're a broker, a financial advisor selling variable products or whatever that looks like for your situation, you take care of the guarantees they need. Listen, worst case scenario is a market falls and you've got them set at a floor of essentially no loss. If you're not using fees on your index strategies. Right? Okay. Market goes up, you still look like a hero. Point is, market goes up, market goes down. Either scenario because you've taken care of their what they need to have secured and guaranteed, you look like a hero. Regardless of what the market does when.
The reality comes into, I always want to make sure the worst case scenario is addressed.
Absolutely.
I woke up this morning thinking this. I don't know why my brain thinks of this, but I was like, we were at the redwoods and.
My wife was a little concerned because we're out on a jetty. Okay. And I decided to jump out onto the jetty on these huge kind of look like jacks, you know the jacks you throw down. Oh yeah. And you step on them and you die, you know. But they were giant and they were in the jetty and I jumped out onto this one and I looked down and it's about a 30 foot drop down to the bottom. And I'm like, man, if I would have slipped off of this, would have probably hit a couple of them on the way. Ended up in a situation where I probably, I mean, she wouldn't been able to save me, right. And I started thinking about as I'm getting older, I should probably think more about safety, just not in the financial world, but also physical health. And I just think about how many times people jump out on a stock or jump out on a mutual fund or jump out on a bond and then they look down and they go, God, that's a long way to fall.
Right.
You know, I need to protect and do something a little safer now. You know, if you're 20 years old and I mean I used to do some stupid stuff with my body Where I, you know, I get hurt. But at 20 years old, I could bounce right back. You know, 48 years old, I can still bounce back pretty quick, but I'm still going to be hurting for a few days. You know, when you're 60, 65 years old, you don't want to. I mean, it's legit when you're 70 years older. So you can break a hip and it's serious stuff. You know, you break a hip at 20. Well, actually, our cousin did that, got a bad motorcycle accident. And they literally repeat. They said it looked like a cup that just dropped and shattered and they glued everything back together. You're 70 years old, 75 years old, you're not capable of that type of surgery. And so there's certain things in the financial world and your retirement, you just take the risk anymore.
Right.
And you got to think about that. And you got to think about that. That's pretend. I mean, you may not have any relationship whatsoever with a client. I still don't go through. Want them to go through that pain and suffering.
Right.
I'm trying to reassembly something that I didn't do my job in protecting it.
Yeah.
I've never had a client call me and say, hey, I ran out of money. I've never had a client call me and say, oh, hey, I lost my principal when the market fell. That's a very rewarding thing.
Absolutely. Yeah. Well, I mean, I remember back to when we were. We were in Hawaii actually, on a trip. It was a business conference last year.
Right.
Last year's. And the market started acting all wild and crazy and you started getting some news and some things about some, you know, the way that.
How bad things were going.
Well, yeah. I mean, realistically, how bad it was because, I mean, we were out there right as it started to just, just fall apart. And there was some things on the news with some different, you know, brokers and financial advisors and kind of the, you know, the downside of the stress of a falling market and that kind of thing. And, and you kind of sat there and obviously concerned for, for people in the way that they would be, you know, reacting to the situation, but. But simultaneously very pleased to know that there hasn't been a penny lost for.
Well, I say this bluntly, and I don't mean it sarcastically or joking, but you'll never see a fixed indexed annuity guy jump out of the window when the stock market falls. And every time, and it breaks my heart, you see these brokers, right, that get in over the Head because first of all, they're not budgeting, they're not saving for a drop in the market, and this stock market crashes and then they're killing themselves. And I'm not saying that jokingly at all, that's very serious. And it just, I mean, this last time we actually had ourselves, I have two agents I know directly that ended up killing themselves and who knows what the whole reason, but we hadn't had that. I don't, I mean, I don't even know the last time that's happened, but we had two very close together. And it's like, I don't know if it's because of market falling or is a relational thing, but I know, you know, when I hear of brokers doing that, it's almost always because they had a lifestyle set at X number of dollars under management. And then once that market falls, they realize now all my clients are in trouble and now I'm in trouble and they just can't handle it. And so why put yourself in that situation? I mean, if I can protect people, and this is why I think like the Bernie Maddox of the world, why are they being convicted of fraud instead of murder? Because you cannot tell me people have not had shortened lifespans when they find out their entire retirement was gone, that they weren't more stressed. I mean, there was factually people that killed themselves because they lost money in the market. And all their. And it's not because the market is because of a crook, right? And so the reality is there are people. When this market falls, it does cause health issues, right? I mean, when I go and meet with a client and they say, oh yeah, my broker, I told them I want to be in conservative funds. And I look at their statements and I'm going, you are 100, excuse me, 99.97% at all high risk stocks. And they're thinking their entire time they're in moderate or low risk. It's crazy. Now, I'm not advising them on if they should or shouldn't get out, but I'll say, I will say, hey, here's what the Morningstar report, hey, here's what it says on the stock market. Hey, here's this stock ticker symbol. This is what it's performed at. You know, does this look like something that's safer to you? Does this look like something that doesn't have a high loss? And some of these things during 2007, 2009 lost an enormous amount of money. Now, obviously, 2009 to now, they've done well, if the company's still around.
Right.
Because there's a lot of companies 2007, 2009 that disappeared. So my, my statement to that is by using that tic tac toe form that we have and getting Caleb to do a. What is it?
Business strategy session.
Business strategy session. It will help you help your clients.
In a way that gives them that peace of mind. And if you're an RIA and you do some variable things, then fine. But let's make sure you keep the safe. Safe.
Yeah.
Purpose of the money. Right.
Right. Well, I think too. I mean, it seems like just a safe rule of thumb. If your client can't afford to lose the money that you've got at risk, it shouldn't be a risk.
Yeah.
Quite frankly, I mean, I think just.
It seems like a no brainer.
But yet it's not. Right.
Yeah. In reality though, it's the draw. And I talk to brokers all the time. It's that draw. Building up that huge book of business and getting your percentage every single year. Yeah. And that's honestly one of the hard things that gets people to go away from the broker world. But now I'm seeing more and more brokers now saying, forget this, I'm not doing this anymore. Oh. And they're talked with many. I know it's in. And they'll give up their entire book of business or they'll sell it and then they get into the indexed annuity world, which is funny because if you would have taught them five, six, seven years ago, they would have hated what we'd done.
Right.
So now they're moving on over. I don't hear of many fixed or safe money people that are now turning in stock brokers and selling fixed. Right. I personally don't know of anybody who's done that. I know that some that have gotten their series 65 or 66, but I don't know anybody who's given up their safe money business to go directly into the stock world. But I know tons that have done the reverse. Yeah.
So I guess case in point is you can use both in appropriate ways and do well by your clients in both scenarios. But the point is, know the purpose of the money.
Absolutely.
And protect it according to the purpose of it.
Yes, yes.
I mean it's, it's not, it's not a hard thing. It's just something that needs to be discussed, I think, and just talked about.
Absolutely.
Well, awesome. Well, yeah, like Chad mentioned, the business strategy session. Go to the annuitysalescoach.com and click free resources and you can sign up for a business strategy session. Well, we. Where I will. Excuse me. Literally break down not editing that out. We're not going to edit that out. Absolutely not. He just got done talking about how it's real and raw. Where I will literally break down your process, look at it, examine it, cross reference that to Chad's and show you areas that can be tweaked and improved immediately to help you honestly start writing more annuity production.
You don't have to leave your fmo. We're not saying that. If you want to, you can. If you don't, you don't have to.
I mean no obligation call.
I have, I'd say half my inner circle guys. No, actually more than that are with other IMO's.
Yeah.
You know, and I'm totally fine with that inner circle. I'm actually direct coaching one on one with very successful agents that are starting to do very well. And we even have some that they don't even have their website fully done because that's included in our package. But they don't even have fully done yet. But they're preparing and they're getting ready. So when that website's up and running, they're ready to go full, full bore into this. So if you want to become part of the inner circle, we are very, very limited in that one because I will not jeopardize my relationships with my existing inner circle to pick up a few more. So as long as I know my capacity can handle to which I say probably two more I think I could handle and maybe three. But you know, if you want to be come part of that, if you do need a new fmo, let us know. I mean I don't know of any other FMOs. I don't know of one out there where you have a guy writing 27 million a year in annuities and actually just had a 27,000, a little over $27,000 target premium IUL that I just wrote nice. Which that hasn't happened in a while. I need to get better at that. But yes, I hope this helps you guys and of course happy selling.
