Why Chad Calls Brokers "BOOKIES"! | 7 Figure Annuity Sales Podcast | Ep. 203

On this week's episode, we're going to talk about why I call brokers bookies.

Hello, everyone. Welcome to this week's episode. I am Chad Owen, the annuity sales coach. Happy fourth of July. I think we just had fourth of July, didn't we? And why do I say that? Because we pre record these. Because I will just be getting back from my trip where I would have been gone for two weeks, so I won't look like this. I'll be a little more refreshed, I hope. We'll see. I love traveling. I love getting away. This year, I think I've only taken two or three weeks off. It's not a lot.

Not a lot.

And I need it. I can definitely feel, you know that. But now we're reverting back to, hey, I'm back from my vacation. Now.

Figure this out. But here's a serious thing. You know, I've been calling brokers bookies for many, many years, and there are brokers. They just get so ticked at that. And I'm like going, okay, first of all, know who I am, because I'm never going to slam someone intentionally unless they deserve it, which some bookies do. But. They do. But there are some great guys out there, too. And the reality is, when you think of a bookie, and I lived in Vegas for four years, if you were called a bookie, what did you normally do, like horse racing, dog racing, things like that. A really good bookie. Were they smart?

Probably.

Absolutely. Did they know the entire lineage of that horse or that job? They did. Did they know the jockey?

Yeah.

Did he know how many ways races that jockey's probably run? Did they know the owners? Yeah, they knew everything about those horses. Right. So were they intelligent? Yes, very. And were they good at what they did? In other words, did. If you could talk to a bookie and you could go, hey, you know what, Tell me about this horse. They are generally going to be the best of the best. Because first of all, if you mess with someone's money and you lose it and that arena, you could end up getting hurt really bad. I mean, we're talking Vegas gambling, right?

Yeah. That seems sketchy.

Yeah. It's a little different of arena, so I'm not questioning the intelligence.

Sure.

Is the intent of that bookie to win for their clients?

Absolutely. Yes, 100%. Yeah.

Now, do they?

Not all the time, no.

See, so we have to remember, the reason why I call bookies is because it's all gambling. Now, why can I say that? Clearly we just had The Kentucky Derby not too long ago. Right. Who was the number one horse supposed to win?

I believe it was either Teba or Epicenter.

Epicenter. Okay, so Epicenter. So did Epicenter win?

No.

What place did Epicenter come in? Way towards second.

Second? Oh, they actually got second.

Okay, did get second. What was the horse that won?

Rich Strike.

And how far was that horse down at the beginning of the race?

Like, what was the lowest odds in the field at? 80 to 1.

80 to 1. But it's still. This little horse goes, I really hate this view back here. I'm getting dirt kicked up in my face. I'm tired of being the loser. You know, this horse knew this because, you know, he would get the halfway treatment. You know, just everybody. All the horses like, Loser, Loser, you know, they just. These horses didn't like them. And so when you look at what's going on, this little horse decided it was going to kick everybody's tail. And if you haven't seen that race, which I am not a fan of horse racing, I don't watch a lot of them. But I'll tell you, I saw the replay of that, and that was phenomenal, how that horse came from pretty much last place. Right. And the horse, he parted. And how that horse still, this day, I watch, I'm going, how did that horse take that position? How did that horse beat everybody on there?

Yeah.

Because it not only. It wasn't like a race car where you zoom on the outside.

Right.

This guy went right up the middle.

Yeah. He had to bob and weave around a couple others.

So did it mean the bookies that place literally place the bets and the odds on this race, did it mean they were intentionally trying to lose their clients money?

Of course not.

Did it mean they were dumb?

No.

No. But it was gambling, right?

It's gambling.

So we have stocks, bonds, mutual funds. We have these companies that are supposedly going to do incredible. What have we been experiencing lately where if you talk to most brokers and. And financial guys that are into the variable world, most of them would have told you a month ago. And this is just what I hear from my clients, because my clients talk to their brokers, they say, oh, my broker said it's gonna bounce back. Okay. I hear that all the time. You can't tell me unless you're one of the rare exceptions of bookies out there that say, well, no, I've told all my clients to get into cash, and I'm gonna protect it. And I really think the market's gonna tank really hard. I.

Can't recall anybody I've ran into the past month that they said their broker told them to do that.

Yeah.

Now, I'm not saying they're not out there.

Sure.

Because I am personal friends with some really good brokers out there, and they are really good at going, hey, you know what? Things aren't looking good. Let's try and protect it, diversify it, whatever it is.

Right.

But here's the thing. They just mentioned again that stock, bonds, mutual funds, and commodities are all being beat by cash.

So where's that form of diversification? Because it's supposed to be stocks, mutual funds go up, bonds, commodities go down, vice versa. But that's not happening right now.

Right.

And that didn't happen in 2018. So. And I'm always clear, please understand, if you are a fixed license, you're not securities license, you never tell anybody to get in or out, but you can educate. And when I'm saying educate, I'm literally saying, here's what I know brokers say you need to risk money to make money. I believe that's a complete lie, because I have products out that you can make money without risking money.

Sure.

But you need to risk money so they make money. Now, it sounds kind of like a bookie, right?

Yeah.

Because a bookie doesn't make money if their clients don't make money. And so now I don't know exactly what it's like now, but I knew before the. The bookie would get a percentage of the client's winnings.

Probably it's a little different in the financial world because.

Because they get paid whether they're winning or losing, regardless. So. But yeah, but it's not. I don't mean this as an insult.

Right.

Because the people that are in my academy that are training with me, that are under my fmo, if they are protecting the client's money that needs to be protected and making sure that portion that they need doesn't lose, and then they take their other money and. And they want to put in stocks, bonds, and mutual funds, do I ever give them a hard time?

No. In fact, we've got a bunch of agents that do that.

Yes. And I always sit there and go, good job.

Right.

You know, but when you take 100% and I run into this all the time where a client says, well, I'm diversified and some of my money's safe, and I look at their statement, and out of a million dollars, there's $25 in cash. I mean, literally, I run into that all the time where A client has A hundred thousand 99.5% of is all at risk and the rest is in a money market. But they were told that their money safe and protected. Now they don't use the word safe. Sure, risk adverse, you know more and they can't use the word guaranteed but they use words that refer to protected. Right. And so when you do that and you look at the statement, like I said, I do not tell people to get in or out of the market. I will never advise on.

Right.

But if you're sitting there trying to do that, that's where I came up with the term bookie.

That's a good, I mean it's, it's an accurate term when you consider, number one, somebody who like you say is remarkably intelligent, understands the concepts of things. They know, they've got all this information, they've got all the tools and resources to be able to understand it and learn it. But simultaneously there is a force outside of their control that can determine whether something is one or whether it is.

It's not just a force, it's forces.

It's.

I mean when you, it's all about what goes against the variable world. You have inflation, you have interest rates, you have political, you have people just starting to freak out and pick up their phone and start selling or buying. Emotionally driven. I mean, it's not like the old days before you had a phone that could do all the trading. Used to be able to, you know, go to a broker and a broker to have a pretty good guess on what is going to be doing based off the company's financials, what the economy looks like. Now you have a whole bunch of people that have power to trade and buy stocks that have no knowledge whatsoever.

Right.

And so even the smartest brokers are at the mercy of that.

It's true.

Even the smartest brokers are at the mercy of some government decision that is now completely tanked the market.

Right.

And that broker is trying their best to figure this out. Right. And that's why a lot of really good brokers actually have annuities as one of the options. Not variable annuities. They actually have indexed annuities, one of their options. And so if you have that scenario, more power to you.

Right.

It's just I can't stand it when people gamble other people's money when they know deep down inside there is nothing good that's going on in the market right now. There just isn't.

Well, and then really in any area, I mean when you, like you say, you look at interest rates, you look at inflation, our arena at the market. Well, and that's. This is like the one area right.

Now, what, three and a quarter percent or three and a quarter percent for one year? Right now, fixed rates look good. They looked really good without risk, right?

Well, downside risk.

Yeah.

I mean, to me, the way I describe it is, right, the idea of, like, you've got to risk money to make money. It's not true. You don't have to risk it, but there is, I guess, an exchange of goods. Right. For the making of the money. Right. In a fixed indexed annuity, you're not at risk to market losses. You just are giving up on full liquidity to it for a set period of time. So it's a trade off. Right.

But if you lose 20% in the stock market, do you have accessibility that 20% that's lost?

Not that. Not that 20.

No, that's true. And so if you have a high surrender charge in the first year of 9% and you have a 20% loss in the market, which what the NASDAQ as of this meeting right now is probably, it's a little over 30% down. The s and P just reached bear market. So we're now at two weeks back off when we're recording this. But either way, so. And you say, well, don't worry, it's only lost if you sell it. Yeah. It's only a gain if you protect it.

It's true.

You know, if somebody tells me right now, they go, you know, I don't want to sell it. My broker told me, I don't want to sell at a loss. So you haven't made any money for 12 years? Well, no, I made a ton of money. So are you really selling at a loss?

No. Right, right. I mean, and once again, we're not advising them to buy or sell, but I'm just bringing up points of good points. They're saying, well, don't sell at a loss. If you've done anything, a blind man in the stock market throwing darts over the past 12 years could have made money.

Yeah, it's true.

And so you would honestly say almost any stock within reason, you could have done well at least in the past 12 years. Yeah. So you would not be selling at a loss.

Right.

And so it's just important we understand we got to be honest and remember, you guys, are you. Anybody who's been listening to me for a while knows that we have a bunch of dodos in our own industry, too. They tell me indexes are going to average 7 to 12%. They use illustrations that well hey, you know what, look at this is made 12% the past 10 years. That's probably what's going to do it. No, it's not. Show the worst case scenario. Show the guaranteed and sell from that standpoint. Don't use the moderate or the best case scenario. Say this is what I'm presenting it as, a worst case market does nothing the rest of your life. This is a worst case scenario. Now here's what it's shown the past 10 years. But I also tell them the participation rates have never been this high before.

Right.

The fixed rates, it's been a long time since they've been this high. So here's how low they can go. So I show them the minimum guarantees on the participation rates, the minimum guarantees on the spreads. The maximum or the minimum that a cap. Now I don't use caps and haven't for a while. Yeah, they're just, they're not. It's spreads on participation rates. But that being said, I show them and I highlight it on the illustration because nobody can go back and say Chad, you never told me that. Really. I have every page highlighted here and anything I highlighted we talked over. So the surrender charges, the fees, the high and the low. It can be an index strategies. The worst case scenario, the best case scenario, the last 10 years, everything the payout percentages. I go over everything that illustration during that appointment.

Yeah, yeah.

And I and I leave that with them.

You do. So brokers do a great job when they use guarantees to actually create the safety security guarantees that are needed.

So once the amount guaranteed is protected, then you can say hey you know what, I got some stuff we could risk a little bit over here. Maybe a long shot. But I'm educated and I think this is going to do very well. But there's a lot of super educated people right now that are eating every word they've said the past four years. I mean it's down 30%. The NASDAQ sound over 30%.

Right.

And do we think it's going up? Most people will tell you no.

Right.

But we also don't know.

Sure. And in the immediate.

Yeah. 2003, the stock market went up for four years. Was it back to where it was? No, is the same point it was in 2000. So it made up for losses. But it didn't made up in long term. Right. Approximately from 2020 13. Approximately. The s and P was at the same place. You know, if you had dividends into. That's a Little higher. But the reality is still, even if you said 11 years later, the market wasn't back to where it was. Any guaranteed with an income rider type FIA would have been higher in that income account value, 100%.

I mean if you've got guaranteed crediting.

Yeah. And so this is why I'm saying distinguish what the purpose of the money is. For now, I have clients that I meet with that they are more than set in income. They have pensions that are carried on from top to bottom there. It's, it's a full scenario. 100% survivorship. That's a time where we don't really run into that. Sure. You know, but that's rare right now, volume wise, it's probably 20% of my volume because a lot of my really, really big clients. Incomes. Not an issue.

It's true.

I mean. Yeah.

When you're dealing with multi. Multi million. Especially if they have low expenses too, which, I mean, you've had some of those where they just had tons of money, but they.

Oh yeah.

So frugally.

Yeah. They require 7,000amonth, but they pull in 25,000amonth.

This is.

Yeah.

So do a good job. Make sure you're using guarantees when guarantees are needed. And only risking what can afford to be lost.

Yes. And that's the thing, you know, when I'm trying to help clients, I'm not trying to slam bookies, I'm not trying to slam. I mean, if you've ever been appointment with me, I'll hit my own industry just as hard as I'll hit the variable world. Yeah. I mean we've got, I mean, you got guys out there that still don't leave the, the Buyer's Guide, which is a bare minimum requirement. They don't leave brochures, they don't leave illustrations. And I'm like, I'm just as hard on that as well.

Yeah.

But don't get mad when I'm calling someone a bookie. I mean, bookies are often very intelligent. They're very good at what they do.

Yeah.

It's just, it's all gambling.

Well, I mean I, I'm not a bookie by any means regarding the horse racing stuff.

But I study it. I love it. It's a fun sport. I enjoy it. I've been keeping up with it for almost a decade now.

It keeps the glue industry supplied. Well.

And I would have never.

My daughter is killing me right now.

She hears this and I would have never. I would have never thought that Rich Strike would have won the Kentucky Derby. I would have never. I mean, the only reason for me that I would have ever even put money on him is because he fetched 80 to 1 odds. And maybe he goes the second longest shot in history. But it's like as somebody that actually looks, you don't. You don't look at that and think you're going to have a winner.

And how many stocks do we look at right now where they are right now? We're just like, what the heck? What happened? You know, it's just we get blindsided. Yeah.

So things happen. Markets are markets.

Markets.

Why they call them markets.

And gambling is gambling. And I mean, we. You cannot, I mean, anything you're betting on that you don't have a sure thing is considered a gamble.

Yeah.

That's a reality. And so as you guys know, be sure and like subscribe or YouTube channel. Ring the bell. We still have our Stress and rocking chairs book available. I'm telling you, it will close deals for you 100%.

Oh, it already has for agents.

Oh, I'll get stories. Yeah.

Left and right.

It does for me as well. I mean, I know it. And so that we are potentially going to be doing a revision, but that's going to take a long time to do. So I keep using the books and they work well for me. So order them before they go away because I do keep my own supply there. And once we get rid of the agent supplied, you're not going into my supply. It's that simple.

So that's a whole lot more.

Yeah, exactly. Absolutely. We hardly make anything, but I hope this helps you guys. You have a great day and of course, happy selling.