The 3 Keys to Planning Income For Life | 7 Figure Annuity Sales Podcast | Ep. 199

Hey, everyone. Welcome back to this week's episode. Today we are talking about how to plan income for life.

Hey, everyone. I am Chad Owen, the host with the most. Caleb's the most today, so he's gonna be the most of the host. Something like that. Yeah. I'm gonna be nice to you today.

Oh, really?

Yeah. I'm not gonna call you Robin because that is an insult.

Is it?

Oh, he's a pip squeak. He is not a superhero. He's a sidekick to a billionaire. He's actually the servant of Batman. That's really what he is. Okay.

Income for life.

Income for life, Right.

So I had. I had kind of writing, I guess, casting some vision for today. Three kind of core areas within planning Income for Life that I'd like for us to spend a few minutes on each one and break it down. Number one, fact finding for income. Okay. And what that looks like, how you do it. Obviously, if somebody wants to use your exact fact finder, they can go to retirement Realized Agents Academy and then get signed up. And they can use all the documents that you use.

And you do need to be signed up for that. There you go. Yep.

The second part there, determining the needs. So taking what you find and now assessing. Okay, what's the actual problem here? And then lastly, the solution.

Right.

Figuring out what the solution is going to be. Because we're in a world where there are fixed indexed annuities. Obviously there's income riders, and there's a plethora of other ways that agents will often try and use and strategize for the sake of creating income. But most of those, and I would argue actually all of them, with the exception of annuitization, don't have lifetime guarantees. So that's why for us today in this episode, we're focusing on lifetime income generated by way of income rider.

I just like the fact that you use the word plethora.

Plethora.

That's a good word.

That's a big word.

That's a good word. Yeah.

Okay, so those are the three key areas. So starting number one there, fact finding, really getting into the nitty gritty of their income situation. How do you do that?

You know, I've. Well, you ask the questions. You pull out the fact finder, you start asking the questions.

It's that simple.

It's that simple. But, you know, I've been to a lot of these conferences and everything, and we just had an agent ask a question.

Commented on something. I can't remember where it was, but they're talking about, well, was it the industry standard is 10 or 15% of income writers get activated.

Well, somebody was asking, yeah, basically of the income riders that get sold, what percentage actually get issued? Their personal guesstimate was 10% actually get used.

Yeah, that's an absolute guesstimate. I would say 90 to 95% of my income riders will get used. And it's because that's how I fact found.

Right.

You know, fact found. There's a new one. Not fact finders. Fact found, fact found. And when I was talking to the clients, you know, the income became a concern. So I'll lay out, okay, you want to retire at age 65. So this is when your income is going to start. We design the product that way.

Right.

And so I'll hear someone say, well, why don't you use an indexed annuity? Okay. So with what's going on in the market right now, where's that index annuity going to be there? 60, they turn 65, they want to retire. Where's the indexed annuity going to be at age 65? We don't know. Yeah, we know it's not going to be backwards.

Right.

So, well, there's no fees. So, you know, if you put in 500,000 at age 65, you're going to have 500,000. But if you have the income rider, which generally comes with a bonus, they're going to have a set amount more than what they had. And if you do it right with a good index strategy, a stacked option, then it's incredible what it can do. But they're not going to get to age 65 and go, I'm not going to start to draw income. That's how we designed it through the income plan.

Right.

Then that's where that question comes in. Do you want to plan for living or plan for dying? Right. If they want to plan for a living, we're going to enjoy it. Don't tell me they're not going to activate income. So here's what I found, and this is just my own opinion, but I've been doing this for 18 years, so it's opinion with a lot of revelation and watching agents, most the time agents don't want to do income riders is because they don't want to miss out on the renewal opportunity.

Interesting.

So I had a client just reach out to me. We did a full income plan, but she had another 500,000 that is now grown to 800,000 that was in a straight indexed annuity. Why didn't we do it in an income plan at the time? Because she didn't need more income in that area. Now she does. So now we're taking that indexed annuity and we're rolling it into a better product to give an income rider on it. And I'm telling you, that amount of money that she's going to get for incomes, phenomenal. But the reality is I just got paid again or will get paid again on that new annuity. When 90% of my cases are income plans, I am literally shooting myself in the foot for future business. That's true.

Unless somehow they've got other accounts out there that.

Yeah, but I'm talking about the ones where I'm putting income riders. I know I'm shooting myself for business.

Business pretty much locking it up.

You are.

Especially when that gets activated. I mean, even before placement suitability standpoint, it's if you've got a good income rider, it can be really tough to replace those.

So when you look at that scenario, why would I do an income rider unless I thought it. Well, was that's what was best for them?

Yeah, I think, I think one area too is a lot of times agents don't go enough layers deep in the fact finding process to actually uncover the income problem. So yeah, a lot of times agents will ask like, okay, what do you have in income? And there may be somebody still working or they've got a good pension or you know, they're drawing on Social Security or whatever. And in most cases, it seems to me where they don't go deep enough is actually pre retirement. Right. The client has not quite.

Yeah.

Reach retirement, they're still working. And so they look at their income situation and think, okay, well you're still working, you don't really need income. You could do penalty free withdrawals. So let's not go any further. And so they don't get into the next questions of well, what, what pension options do you have? What is that looking like it's going to pay you if at your, you know, expected retirement date, what is your Social Security going to look like? What happens if one of the two dies? Right. And all these things need to be considered and it's going those many layers deep to actually forecast and look into two, three, four, five years down the road. What, what is their situation likely to be obviously forecast?

That's where we have to really look at. You know, the fact is for most people, when one of them passed away, the lower of the two, Social Security goes away. For most people, just straight living off of one, Social Security is not enough.

Not enough. So a Lot of pensions, don't have full survivorship.

Yeah. I can make a very bold. And I would back this up with a lot. Once again, do this for many years. I don't know any producer that has been doing this right in 15 million plus a year that doesn't do full complete fact finding.

Yeah, it's you. Because you won't. You won't.

Yeah. I don't know of anybody. They. The. Some of these people have eight pages right now. I think that's kind of crazy too because you can. And I see their eight page and a lot of them big spaces and it, I don't know, their thought process is it makes them look more professional when they're doing that. But you know, it's get scared of those. They do, they, they see that, oh my gosh, I gotta answer that many questions. So that's why I keep it one simple sheet. I did just do a disclosure again today where I updated the disclosure that will be coming out pretty soon. This is what you need to let the client know. As far as I'm not a licensed variable person, I can't make any recommendations. Anything you choose to liquidate is on your own. That you do need to call me month 11 and month 12 when you get your index allocation and your annual statements. So I updated that as well. But one of the things that is on there is if it's at the point of activation, you also need to reach out to me for that too. Because I do get someone, we plan for 65 and they get 65, they go, you know what? I really like what I do.

Right.

Or they get hired back on a contract work and it needs to change. So the income plan thing is so important to disclose. Not only disclose, but find out what their entire situation is.

Right.

And that's why I can honestly say 90% at least of income riders will be activated of my clients, if not 100%. Yeah. The reason why I can't say that for sure right now is because I have a lot of people that are still live and they haven't started drawing their income.

Yeah.

But I get calls all the time, all the time, every single week of people activating their income. Yeah.

Yeah. And they should. I mean, if you're doing like we say, if you're doing the fact finding process right and you choose to use an income rider, it's because there's a need for it. Or they've said they want to live on their money and for them the. Or use the money while they're alive, rather than just, you know, accumulate straight in fixed indexed annuity, pass it on to their heirs, right? Like they're, they're, they're wanting the income, they're needing the income. One of those two options, if it's a needs based assessment and you've determined that that's needed, then due diligence needs to be done on the back end to make sure that it does get well.

I'm going to shamelessly plug this product we have and if you want access to it, reach out to Caleb. We can get you access to this product. But it's had a phenomenal index return. When I said phenomenal. Anything to me above 5% is phenomenal. But this one's actually at close to 7.8. And then remember that's the worst. It's performed in a 10 year time frame. And the reality is I tell clients, I always tell them, I say here's what you base everything off of this guaranteed return.

Yeah.

Well, the income side of it has a guaranteed income growth on the benefit base, correct? The index, of course. What is the worst index could do? 0. Minus your rider fee.

Right?

That's the worst it could do. But when you add in someone who says they want an income plan or a plan for living, then obviously you should attach the income rider to it. But even the worst case scenario off of the income rider, which is how I use, I say, hey, you know what, we're going to focus on the worst this does the market blows up, does nothing. Here's your guaranteed your income bonus and your income roll up rate. This is your worst case scenario. If you're 60, you're turned 65. This is the worst it could do, right? And you can't do that with an indexed annuity. Right now, right now we have a 3% fixed rate on this thing plus the 4% on the income, minus your 9, 10% fee. Right. But to get that guaranteed for the next two years under two current market conditions, that's pretty stinking.

It is, it is. So, and I like you make a statement there, right. You say anything over 5% you consider a good return.

I want to create a qualifier, I think for agents that may be newer to the industry because I think the ones that have been around a long time can probably look at current back tested returns on illustrations and recognize that numbers right now are inflated. If you're newer to the business, you're probably looking at some of These illustrations, seeing 8, 9, 10, 12% returns and thinking oh my goodness, it's not realistic. I heard somebody Say one time that in an Fiat you're shooting to do 100 to 200 basis points better on average than in a myga of the same surrender period. I think that 200 to 300 basis points better is a fair statement.

I think that's a fair statement.

Like if you've got mygas that are paying out, you know, three and a half percent to say that you're going to do five and a half to six and a half percent, that's fair. But the idea there is that's on average that's not going to be every single year. You're still going to have your zero years, you're going to have your years that are better. That's the nature of it.

See, that's why your primary focus is on worst case scenarios.

Exactly.

Because I tell clients this all the time. I go, if I present a product to you that shows a worst case scenario and it does the worst case scenario, then I kept my word.

Right.

But if I show you something where it's actually growing and done well, then that's just gravy, right? That's everything on top of it.

Well, in my thought process is the annuity should always be sold based on what it will do, not what it might do. Because if somebody's intrigued, that's a very.

Good way of saying that if they're.

Intrigued in annuities for what they might do. Well, that's the whole essence of the market.

I was going to say go, go to Vegas, pull that slot machine arm, you might win.

You might, you might.

Yeah, it's so go buy that lottery ticket.

What it will do, not what it might do. And bear in mind too, just as we're talking index strategies and illustrations, bear in mind that when you're looking at back tested returns, 10 year averages on your illustrations, or 7 or you know, whatever the time period is, you're, you're seeing current rates being applied to those.

Historical rates, current purchase. So you're talking about purchase based rate spread. Exactly, exactly.

But if you actually go back in time and you look at, oh man, this year, you know, was a great year in this index, probably the rates were not as high as they are. Probably. So when you apply these crazy high par rates to a past 10 years, that was a really solid 10 years in the market. But over that 10 year period there were pockets where rates were really high, but not consistently, you're not going to be able to bank on those high average returns that you're seeing on illustrations.

Once again, goes back to why I use worst case scenario because it's just we don't know what the participation rate spread caps, we don't know what they're going to be five years from now. Right now I will tell you the company that I'm talking about has an incredibly high, high rate integrity.

That's good.

So in other words the renewal rates are phenomenal. Even when the market, when other people's caps participation rate spreads dropped, they can't, they held steady. Which that is very rare. I mean I have companies that I it was a 60% participation rate on the S and P and now it's down to 30. So you know. Well but we have the income rider.

I think options costs have gone up well so I think rates and in high volatile index strategies probably will while volatility controlled indexes will probably well at least stay where they're at for a little while maybe go up because it's the options are cheaper in the ball. Ball control.

Yeah. I mean the thing we look at it when it comes down to everything, this is why income is so important to address. Because you cannot and do not know what future caps, participation rates and spreads are. You do not know what the market's going to do in the future. But you do know if you have a 5% bonus and a 4% minimum roll up rate or whatever day it is, you know that's the worst case scenario for income.

Absolutely.

So I think that's absolutely a better part of the plan.

Yeah. So when you start with good fact finding and you're asking the right questions and you're getting good responses and the accurate information it makes it pretty easy to determine the needs because then you're just doing some math.

Agree.

You can apply an expected inflation rate, obviously not saying that's what it's going to be but you could apply that to determine each year what's going to actually be needed and then find products and good companies and products out there that their guarantees meet those needs and that's how you find your solution.

And if you like this type of training, remember we have an entire platform based off of this retirement realized agents academy. And I have everything I do, every document, every form I have available, you just need to go there, subscribe to the one that makes sense to you. There's a breakdown. Caleb did a phenomenal job of the breakdown of what subscription provides, what services. But I'm telling you even if you did the top level, which is the top top, what is it, thirteen hundred a month, one three hundred thousand dollar annuity pays for all of that and then some.

And we've got agents that have been using that for years. They really don't do a whole lot within it, but they'll come across a million dollar case or a, you know, eight hundred thousand dollar case or whatever and call you up. Hey, Chad, kind of want to gather your thoughts here, Chad. Help them, you know, close the case or help kind of coach them.

I just had a guy, I haven't talked to him for eight years and he's been our. Eight months. Eight years. Eight months. And hey, he's been paying the subscription but he just called me for some cases and if any, if one of the cases closed, he's more than way more than paid for what he's doing. So yeah, totally. Okay, that's it for this. I appreciate your time, guys. You have a great day and happy selling.