The Common Resistances To Using Annuities With Retirees | 7 Figure Annuity Sales Podcast | Ep. 302

On this week's episode, we are going to talk about our third part of.

Our series, which is common resistances to using annuities with retirees.

There.

Hey, everyone. Welcome to this week's episode. I am Chad Owen. This is my sidekick. You know what I haven't entertained. Introduce my sidekicks.

I just thought I was the star of the show.

This is my thorn in my side, Caleb north.

Placed here by God to keep Chad's ego in check.

Oh, God. Okay, you know what? Out of honor, I'm not even gonna say a rebuttal with that because I like 15 different things I could say right now.

I love you, Chad.

I know you do. I'm not a lot to love. 215 pounds of a lot to love.

So good.

What are we talking about? You already said what we're talking.

I did, but yeah. Common resistances to using annuities with retirees. And I've got kind of got a few things outlined here. Right. We're talking about brokers and financial advisors and their opinions and their advice to retirees, kind of how to navigate that and handle that some. I've got three for this one. Yeah. Three of the more common objections that clients give. And then we're going to talk about how to effectively position annuities with retirees. How you should be doing that.

So is this like, objection handling here?

Well, and there's. There's three objections that we'll handle for them. But the. Really, the start of this don't.

We have. We have like a major objection thing we just did, right.

We just launched it or we released it. So if you want to see that, reach out to me.

Yeah. Don't just email. You just need an email address and a phone number and their contact information will send it to them. Right?

Yeah.

So how do we get that to.

Reach out to me? You can email me Caleb North, Calab n o r t h@retirementrealized.com or call 512-798-3500 extension 5.

Yeah. And for those who have been listening to us for a long time and they sent their email to us, I decided I was on my vacation when this happened. And Caleb's talking about doing a PDF and I'm like, you know what? That would be so hard to do a PDF. What? Why don't we just t take out time and record it? And that's what we did. It's a long one, too. I can't.

Hour and a half.

Hour and a half. Yeah. And it's. I. I wanted to swallow My shoe when I said that, because I was like, something.

Objections.

Yeah. And I did. Yeah. When that happened, I'm like, what did I just commit to? But you know what? Now it's done. And is it ready yet?

Yeah, it's already been released.

Already been set. Yeah. So it took a lot of extra time. But, man, it's going to be so much easier to just have it where you can hear what's going on versus trying to write it down. And people still may not understand by written, but they'll understand by voice fluctuation, tone, involvement, engagement, you know. Yeah.

And it's. And it's good too, because most objections, the first thing comes out and then you handle it. And then sometimes there's something else that gets said. So I try to bring that element to it, the conversational side of things.

And I did not know what these objections.

That's true. They were. They were random. They were submitted by agents, and we love them. But brokers and financial advisors, advice regarding annuities. And I think it's a fair. It's a fair disclaimer to make that. We don't hate brokers or financial advisors. We love you guys. The thing that we don't love most. We love most. The thing we don't love is when a piece of somebody's retirement that should be founded on guarantees gets placed into something that can be lost.

Yeah.

Or in totality.

I mean, at some time during your retirement, the market will fall.

Right.

I mean, that's just a fact.

It goes up and it goes down.

And when you're pulling money out while the market's falling and you're paying broker fees, that's why just, you know, make sure you're doing safe money for what needs to be safe. And then whatever you want to gamble with, that's fine. And that's not by any means meant to slam someone. It is okay for someone to do what they want with their money. And if they're fine with a certain risk tolerance once they have their safe money, then great. Their money, their decision.

Yeah. What's interesting to me is that you as an insurance agent who I guess, yes, by. By all legalities, when you're dealing with ERISA funds, you have to legally operate as a fiduciary, but you consistently tell clients, this is your money, this affects your retirement far more than it affects mine. But we don't always see that same mentality on the risk side of things. I'm not saying there aren't great financial advisors or great brokers out there. There are, but it's just not as. It doesn't seem to me like that mentality is as present. There's so much conservation effort that gets made when somebody's trying to move something that creates guarantees. And there's so much conservation that gets made to keep them in something that is risky.

You know, if you do suitability right too. A lot of times when they call their broker, they'll say, you know what that amount seems right now? Sometimes I get a bigger percentage out. Why? Because they have a phenomenal income. Sure. They, you know, both of them, if one of them dies, it stays the same. So you know, it just goes into. How can you even remotely try and plan someone's income for life off of hypothetical.

Well, you can't and you can't. You sum it up with clients in two questions is how long are you going to live? Nobody knows. What's the stock market going to do in five or ten years? Nobody knows that.

So that's why I don't like it. Even when our own industry ties tries to use straight indexed annuities to provide income for life. Sure, I don't like that either.

Just straight indexed annuity. And then you just make withdrawals or whatever.

Still no guarantees. I mean you got your zero floor, sure. But loss, man, you just.

Oh yeah, no, it's, it's true. You know, I think often, probably the majority of the time you're dealing with financial advisors and brokers that are going to lose fee based revenue when clients move their money.

In other words, the client is their annuity, which you, and you say that I do.

Yeah. You tell, you tell clients, tell the.

Client that all the time. Your broker doesn't want you to move your money in or out of the market. Actually they want you to stay in the market because you're their annuity. As long as you keep your money with them, they keep making the fees year after year, whether you're winning or losing. So do you want to be your broker's annuity or do you want to have your. That guarantees income for his life or do you want to have your own annuity guarantees income for your life.

Right.

That always goes very well. Not for the, not for the broker. It always goes very well.

Well, and then you'll come across some client objections. I put three down that I'll shoot out to you and we can go through these three and then we'll talk about how to effectively position the annuity. But first one is I don't want my money tied up that long.

So when you lose 50% in the market, is that money tied up? No, it's gone. Yeah, it's not needed.

It's.

Yeah. If you need it, it's not there. Or are you truly tying up your money now? I'm very straightforward with people. If you are ever thinking of surrendering this, I will not write it for you. And I tell them exactly like that. I say, if you ever plan on surrendering this annuity, I'm not going to write this right now. If that's your intent to go in with surrendering it. But if an emergency came up, outside of most policies having a long term care or terminal illness or death where it's 100% liquid, there's no surrender charge. But you do have accessibility to the money. Right now we're a 1010 state, so the highest surrender charge you have is 9%. So that's the worst. We are 20 plus percent down in every indice as of the timing of this podcast. One of them's over 30%. That is way higher than 9%. And you say, well, you can let it bounce back. Oh, so you're telling me this is guaranteed gonna bounce back right now when they need it, it's going to be bounced back? No. So you do have accessibility of your money. It's through a surrender, which do not do this if you're planning on surrender. But that's also why we make sure you have plenty of emergency funds and savings.

Right?

So when you look at that scenario, right, there you go. Okay. You don't, how can you say you don't have accessibility to your money? Right.

You do, you do just may not have 100% liquidity, which you don't have.

That guarantee in the market either.

Right.

I mean, you're like you said, worst case scenario I think is 22% right now. Up to what, the NASDAQ 30? You said that. I think it's over 30%. It doesn't matter. Yeah, so that's a 30% surrender charge plus your broker's fees. I mean, yeah, let's, let's get real with this one.

Let's talk about surrender charges.

Yeah, let's, let's talk about. This is stinking. Tell me I have a surrender charge of mine when you just lost your client. 30%. Right, that's, that's just, that's. Yeah. Anyway, find a happy place. Find a happy place. Find a happy place.

Okay, well, you know, Chad, I could get better returns in the market.

Oh really? So we're 30% down and that's a better return in the market versus zero in mind. Oh, wait, we have the one year fixed strategy which has 3.4% minus your rider fee. So you have guaranteed returns right now, number one. Number two, if that's the case, why did you even reach out to me? If you think you can do better in the market, why did you reach out to me? Number three, if you think that's the case, why are we not dealing with $10 million right now instead of $300,000? Oh, because you don't know how to time the top or the bottom market. Neither does your broker. That's charging you to have a little crystal ball and hypothesize or think or whatever. I can time the market, which you can't. I could go on and on on that one. That's just three, right. Just boom. Don't tell me you can do better in the market. If that was the case, you would never reach out to me or your wife. Made you one of the two.

Riled up. When it comes these stupid objections that you're just going, how can somebody even remotely say that?

Right.

And feel good about themselves?

It just. Yeah, yeah.

Well, I mean, okay, here's.

I think you purposely picked the ones that get me riled up, which is pretty much all of them. I mean, there's, there's a lot of them that get me riled up. Because if you just stop and think about what you're saying.

Right.

You wouldn't say that. True.

RIM from 2000 to current. Well, to 2021, I guess technically, the S P 500, which is the benchmark of managed accounts, has averaged 7.13%, including dividends.

I'm not sure if that includes dividends.

That would be important to know that.

That would be important to know.

Yeah.

But I don't actually know if it does. That's a good question.

But it does also.

I don't remember when I crunched those numbers. This was weeks ago that I was looking at this.

But. But they do. Or they don't include a dividends, but you also need to have like little disclaimer talks about. This doesn't include broker fees anyway. Because broker fees can range. I mean, if you're in any sort of mutual funds or, I mean, you could have broker fees, including your fund fees of two, two and a half, three. I mean, I even saw one three and a half percent when they added the mutual funds into it. Yep. So you can have very, very high fees. And so it depends what the dividends are as well. But that being Said that means nothing when the market's really high right now. So that's through 2021. You redo that number. Now with the market being down 30% in the Nasdaq, 20 plus percent in the SP in the Dow, that changes those numbers, we drop another 30%. Oh, you made a whopping 3% since 2000. I need it. You know what, Put that in your notes. Figure out what inflation has been since 2000. Oh, I can tell you since 2000. Yep. Oh, well, there you go.

Inflation history.

Calculator. While you're pull or while I'm pulling.

This up, give me another stinking objection that's going to rile me.

Well, it's not a, it's not an objection. What it is though is this concept of that's the 7.13% that I gave. That was the S&P 500 as the benchmark of all managed accounts. But you take none of the loss and half the gain over that same period of time, you average a hair over five and a half percent.

And wasn't there a big.

But it ends up money.

Yeah, there's a big publication in the past 10 years that said 85% of certified financial planners and brokers can't even beat the S and P. And 85% don't even put their clients in the same funds they would have themselves.

So if you could, if you could get the exact returns of the s and P500 for the last 21 years, 22 years, you would average 7.13% each year. That's your annualized average. But you would be money behind if you had half those gains and none of the losses. And that 7.13% doesn't include any fees for managing.

You know what, I want to go back to thousand right now and I want $100,000 and I want to know, I want to go do like that back to the future thing. Would it be back and then I'll just pick from here on out, from 2000, I would be easily the richest man in the entire world right now.

If you had a hundred thousand. If you bought something in 2000 for a hundred thousand dollars, it would today cost you 171.9 thousand. That is a 72% cumulative rate of.

Inflation, which is about a 6. About 6% compounded rate of inflation. If I'm doing that right.

Not sure that'd be. That's a 22 year.

I mean, because generally. See, that's odd. That can't. Because. Well, I guess you could because if you took home prices almost always would double every 20 years. If you go back before 2000, actually, if you went. I think it was 2010, home prices would double about every. Excuse me. Every 20 years they would double. So, yeah, that's got to be over 6% compound inflation rate. Well, which I know technically that's not how they do that, but.

Well, if you have 70, you've got 72%. So another 22, you've got a. Basically a what? A 3.3.3. 3.27% each year. So it wouldn't be of 6% compounded, it'd be.

No, 3.3 and a half percent compounded will double your money in 20 years, just like 7.2% will double your money in 10 years. So this would be shy more. Oh, that's right. It's under that. Okay, okay. Yeah.

But. But nonetheless, 3ish percent compounded.3.

That's where the market is.

Simple.

That's inflation.

Right, it's inflation.

So if you took what your money is actually. And that's posted. That's posted because I'm sure they're not calculating. Like, for example, gas still is way, way, way more than what it was before.

Right.

And so that's the.

Yeah, that's the official inflation rate, which is.

Right. Man, I need it.

Egregiously.

I was like, there's so many numbers. I mean, here's the thing, I gotta be cautious. Cautious of this too. I could numerically challenge anything just by studying. But the fact is, is no matter what the numbers are, there's no guarantees.

Right.

And that's where the income riders come in with the guarantees.

You can sum it up in a way that's more easily understood than having to go into the depth and detail of the fact that we've had a 72% cumulative inflation rate since 2000. Like that you lose clients quick. You can sum it up in ways that are easier to understand.

I can? Yeah. Boy, my brain likes to go down.

Oh, I love it. It's fun.

You know, I talked to someone recently about. They're very analytical and he's a. He's very good at what he does, but he's very analytical as well. And I'm not, I'm more simplistic. But I fight that analytical side all the time. Like, if I wanted to go toe to toe with anybody that wants to go analytics, let's do it.

You just. You find them in their own fight.

Yeah. Fight them in their own fight. I mean, I. When I was in Colorado, I used to have ball Aerospace and Lockheed Martin right there. And these guys were brilliant, way smarter than me. But when it would come to analytics, I could go toe to toe all day long on that. And it would all come down to the one thing. You can't guarantee anything you're talking about. And I even had one guy, he had all this math equation up on the board. I said, sit down. And he looks at me like, what? I said, sit down. Everything you have up there is all hypothetical, right? And he goes, well, yeah. I said, so there's no guarantees on what you're doing? He's like, no. And I said, then how can you even try and calculate your income off of nothing, you know?

Right.

And he sat down. So there you go. Because it, it goes in when you sell by statistics. You, you still. It's all speculative, right? I mean, historically, it can be factual, but the future is still speculative.

Yes.

So we have to use the guarantees to where it takes that. Those two questions. How long are you going to live for? Where's the stock market going to be? Tomorrowland in five or 10 years from now? It takes, it answers those two questions.

Absolutely. I have one more. I know we're going a little long today. I have one more objection. And then I've got a couple of notes to make about positioning annuities. But I've been with my financial advisor for 20 years.

I used to have a purple minivan. Why? At that time, I had four kids. That was a vehicle we needed. Now I get to drive a big red pickup truck that I specifically pick the five seater. I don't have a bench seat in the front. Why? I don't need that big of a seating area. I don't need seven or eight seats. When we had, we had the Excursion, which had eight seats. Seating capacity. I don't need that anymore. So there's a time based off of your season, based off of where you're driving. I mean, I could take my truck pretty much anywhere. But there's a time in life where I don't want to take that risk. Now I always have a big truck, but there's times where people go, you know what? I'm driving around the city. I don't want to have a big vehicle anymore. Why? The vehicle changes. So there's a time where you have your same broker for year after year, but they don't specialize in what you need in the future. And most elderly people will understand this. When I say elderly, I'm talking about people getting 45 and over. You used to always go and see a general.

Can I get that in writing? 45 and older is elderly.

It's elderly. Elderly. You fall in love with deep trouble. Because my wife's in that category too. But the point is, you could get away seeing a general practitioner.

Sure.

Once you get to a certain age, it's no longer about general practitioner. You need to see specialists. So your broker is a general practitioner, your safe money person is a specialist, and that's who you're going to see. Why don't they have, why do they have specialists? Because it's impossible for any human, a general practitioner, to understand everything and be an expert in that area in that part of the body.

Yeah.

It's the same thing in the financial world. I know a lot of very brilliant brokers. Well, when it comes to the simplicity of safe money, they, they, they short circuit.

Right. So I think I made a, I made a post on social media. This was, I mean, probably two months ago. I don't, it was a while back. But basically I said agents need to be two things. They need to be good leaders and they need to be good educators. A good leader is somebody that confidently and with authority serves the people they're leading. Right. But the confidence and the authority was an important piece to that. Right. And then a good educator takes a complex or seemingly complex subject and simplifies it in a way that can be.

Easily understood by anybody.

Right. If agents will do those two things and do those things well, the production takes care of itself.

You know that book that I wrote, Stress and Rocking Chairs? One of the greatest compliments I ever get is it was so easy to understand.

Right.

That, I mean, where a lot of people would be going, oh, that was so complicated. You're so smart. You're brilliant in what you do. No, it was easy for me to understand.

Yeah.

By the way, we do have those back in stock. We do. So go to stressing rocking chairs dot com. Order your books. We do. I think it's 50 is the minimum order for bulk. But you know what? Don't wait till we can't get those anymore. You know, it's we. Because we obviously protect my book supply first, but we have enough to give out to agents to where they can get them and hand them out to their clients.

So real quick, the annuity. I will make it real quick. The annuity is merely the solution to a problem.

The same as a band aid for a cut. People don't go to the store to buy a band aid because they don't have a cut. And they think band aids are cool. They go to the store to buy band aids because they have a cut that they need protected and healed. It's like the annuity is the same way. They're not buying the band aid because of the band aid. They're buying the band aid for the result that they get from it. And the same goes for annuities. So don't sell the product. It's the solution. It's the benefit that they get from it, for sure. And then the last one or the second piece here is that clients have hundreds of options for both annuity products and annuity agents. If you, as the seemingly or supposed expertise, go in and just lay out three different options for them, you're not really doing them any favors. You've maybe narrowed it down, but ultimately you're not making your recommendation. And that's what they're looking for, is an expert that's willing to make a recommendation.

It's a cheap way to make a client make a decision. So you have no accountability. If you're an expert, act like an expert and tell them this is the best product for their situation.

Yeah. And actually do the research to know that it either is or it isn't. And if it isn't, don't sell it and find the one that is. Because there is one.

Yep. Okay. Well, that's it, guys. I hope you have a happy whatever. We're actually getting pretty close to Thanksgiving. But we're not there yet.

Not quite.

Just have happy selling. Yeah, exactly.

Bye.

Bye.

It.