Why Selling Worst Case Scenario is the Best | 7 Figure Annuity Sales Podcast | Ep. 128

Hello, everyone. Welcome to this week's podcast. I am excited to help you get better and better. I really am. I love getting to do this. I mean, this, this academy, this FMO that we've been building. I mean, I've had the academy now for four years and I have not taken a dime personally for anything. I've been able to support quite a few people that have worked with the company and I love that because literally, we've had two people be able to buy houses with. We have one that had a baby. We have another one that's about to have a baby. I mean, it is exciting to watch everybody else thrive off of this growth. 2021, I am going to be taking some money from this company.

There you go.

I don't know what it may buy me a pack of gum, but yeah. Because the reason why I bring that up is because I've had agents. Sure, you make X number of dollar in annuities. Why would you ever do an academy? And I'm going, do you realize how many success stories we have and how many agents that literally said flat out, I never would have made it in this business if it wasn't for your academy. I never would have made it if your marketing organization didn't help me when others would not. And what I mean by that is there's a ton of marketing organizations out there that say, well, we got leads. Yeah, but you're not teaching me how to leads. And by the way, handing me the phone book is not leaked.

Right.

You know, oh, we've got this incredible training system. Yeah. All you're doing is you have the videos from the insurance companies linked onto your website and that's where the training's coming from. They don't have people in the field like we do. And that's what I get to do. I'm literally regurgitating. That's a horrible word. But I'm just putting back up what I've done the week before or whatever my situations, I get to use experiences that happen all the time.

Right.

And just, hey, this is what I ran into. This is why I did. This is how I overcame it. So what are we talking about today?

We want to talk about something that's pretty important. We talk about it sometimes, but it's selling from worst case scenario. And I don't remember the last time we did a podcast on this. We talk about it with agents in the training and we talk about it with agents in our FMO pretty, pretty frequently about selling from worst case scenario because it is so Important. But I want to break it down a little bit for our podcast list listeners today and, and just kind of walk through that. And so the first thing I want to start with, though, is if we're supposed to be selling from worst case scenario, why is selling from best case scenario? And I'm going to use air quotes again. Chad always gives me a bad time about my air quotes. But why is selling from best case scenario do what?

This is such a millennial. Oh, yes, Everything's quotes.

I've barely. I barely made it.

I'm totally joking. You know, I love millennials. I want to slap the parents of it. I love millennials. I really do. O. Okay, stop getting me sidetracked.

But how, How. Why is. Is selling from quote, unquote, best case scenario not a smart idea?

Well, think about marriage. You know, when you have your vows, you say for better, for worse, right? If I ever were presented best case scenario to my wife, it would have been bad because I never could live up to that. I mean, the reality is, I will always be there for you, babe. Which is true, but human error. If I'm tired sometimes, I'm not always there for her. Why? Because I was spaced out and I didn't hear anything she said. Right? So, I mean, it's a reality. I'll rub your feet every day. Nope, that hasn't happened either. But the reality is I. I don't ever do anything from best case scenario because there's reality now. Worst case scenario. Now, I didn't do that either. I didn't say, well, this is as good as it's going to get, babe. Everything from here is perfect or better. But I always talk about worst case scenarios are absolutes. And the worst case scenario in an annuity is you earn zero, right? Minus your fee if you have an income rider. So you can never go backwards due to market volatility. Now here, you see, here's someone say, yeah, but what if the insurance company goes under? I personally have done a lot of research on this and I have not personally found any fixed annuity company that has disappeared. Right? I've seen some that have been absorbed, but I have never seen one disappear. I never seen benefits from an annuity go away. Right Now, I've seen pensions go away, but those weren't insured by an insurance company. So the worst case scenario. Now, if somebody can do that, shoot me a quick email and let me know which company. Because I've spent so many hours trying to find one company in the past hundred years that has not Paid its, its clients from an annuity.

Right.

Now, once again, I'm not talking property and casualty, I'm not talking variable annuities. I'm talking about straight fixed annuities. Right. But if I'm using that worst case scenario, if I'm using. Okay, let's take. If somebody says, hey, I'm working part time right Now, I earn 24,000 a year. I get 24,000 from my Social Security and I get 15,000 from my wife's Social Security. What's the worst case scenario there? 24,000 from the One Social Security. Because worst case scenario is he's lost a job, can't work, she's dead. Now only one Social Security or vice versa. He's dead. He's no longer working out because he's dead. Can't do that. And then the lower the two Social Security. So the worst case scenario is the 24,000 a year. So I try and make it work off of the worst case scenario. Right. And that's in an annuity. What's the worst case scenario? 0% return. So if you have an income rider, you know, your worst case scenario is the income is going to grow till you start to draw from it, then that income value stops. Generally for most, there are some that don't. But your income will never go backwards due to market volatility.

Right.

So I love using worst case scenario.

Absolutely.

If I set the bar of this is your worst case scenario. Think about it. What other thing can you ever sell? I just did air quotes. Sell and use worst case scenario. Think about this. What if you went to buy a car? Yeah. This will probably break down about two or three months. Yeah. This is going to be really expensive to maintain. Think about anything you bought. You go to buy a tv. Yeah. This is a piece of junk. It's probably going to fall apart. If you did everything from worst case scenario, you wouldn't buy a lot of things. But our products, we can.

Absolutely, absolutely. And I remember talking with a gentleman who was talking, this was back in, I mean this was 20, 2016, maybe 2017. It was, it was just after President Middle School, I guess, just, I mean, just a year after maybe at the most President Trump's first election. And well, yeah, so anyways.

Let'S not go on.

We won't go down that rabbit trail. But I remember this gentleman telling me that he had done 25% in a year in his Iraq. And I go, wow, that's really, that's really something pretty good. And so when I think about that And I think about what people have done in their variable accounts of sorts, and, you know, a plethora of different options there, what they can do and what they maybe have done historically. And now you bring in this annuity that you're talking worst case scenario. How do you paint that as a good option?

Because what's the worst case scenario in the variable account?

You lose it all.

I mean, everybody loves to talk about their unrealized gains, and then their unrealized gains turn into unrealized losses. And then all of a sudden, it's like this client that I had, and some of you might have heard me talk about this, but he got stock options for a company at $19 a share. It went up to $92 a share. And he's like, man, I really don't want to sell this. I don't want to pay the capital gains on that. And I said, yeah, but look how much this has increased in that timeframe. $19 to $92, $93 a share. I don't want to pay the capital gains. Well, then the stock market 2007-2009 hit, and he went down to $16 a share or something. And I said, well, you don't need to worry about capital gains anymore. Yeah, was that harsh? But it was stupid to think that you've more than quadrupled your money yet you don't want to pay the capital gains. It doesn't make sense. And so everybody loves to talk about the 15, 16%. If you were averaging 15 to 16%, we wouldn't be dealing with $200,000. We'd be dealing with millions. If your broker knew when the top of the market was and the bottom was, then we'd be dealing with millions of dollars. So nobody can tell me their, their stock accounts averaged X number of dollars plus. The reality is, is most people don't even know how to calculate what their account actually has earned. Another case where I had this client tell me, well, they've averaged 8% on their 401k. No, you haven't. Oh, yeah, since 2020. Excuse me, since 2000, I've averaged 8. Nope, you haven't. Yeah, absolutely. I say, okay, let's meet. It wasn't. I didn't care if I got the deal or not. I just want proved you're wrong. Okay? And it wasn't a matter of proving you're wrong. I wanted a reality check. So I meet with him and I said, okay, so here's your account. Sure enough, 8% gain. And I knew it Wasn't right because I knew what time of year it was. It wasn't 2020. It was back when the market was still recovering. I said, how much have you put into this account? And he goes, well, I put in 6%. I said, okay, so what does the company match? They match 50% of that. Oh, so they match 50% of 6% is 3%. So it's actually 9% is what you've put in. The company's matched, but you've only made 8%. He's like, I've lost a percent per year? Like, yes, you're not. They, they calculate their gains based off of how much they're still putting in and their company's matching. That's not how you calculate G. No, I mean, I could say I could have $100 in the bank and put another hundred dollars in and say I just had a hundred percent growth. I mean, it's like I joke around with people all the time and say, you know, when I lived in Las Vegas, I go, you, you want to know how to get your money back. And if you put your money into machine, you want to know how to absolutely 100% get your money back. Wow. I want that machine. Yeah, it's the coin. It's the machine that turns dollar bills into coins. So you put the $10, you get $10 in co get your money back. That's the only place in Las Vegas you can get it in any machine. Those casinos were not built off of winners. The entire city was built from losers. That's the reality. So risk does not work. Right. You know, if you want it's whole story, this tortoise and the hare, you know, the rabbits running all over the place, being crazy and the tortoise always wins. Why slow and steady?

Well, and that's. That sounds like, I mean, the brilliant key there, Chad, is when you're talking worst case scenario and you're selling from worst case scenario, don't compare worst case of 1 to best of another. That'd be like. Yeah, that'd be like taking a 70 year old man and saying, well, he's 70. And you pull a 22 year old, you know, fit athlete guy and saying, well, physically they're so vast, it's. You're not comparing best case to best case. You're comparing.

Am I the one, the 70 at the.

Well, yeah, you would be the.

I could beat that 22 year old.

I mean, well, just even compare here.

You're right, you're right. Yeah, let's, let's see we always, we always carry guns, though. Yeah. Youngsters, you know, you know, well, cap guns don't work.

Yeah. Okay, but that said, you can't compare worst to best. You got to compare worse to worse. And when you compare worst to worst, what's the best worst case scenario? It's with a fixed product. Safe money product.

Yes.

Best worst case scenario. Yes, it would be. Because your best worst case scenario would be zero.

Exactly.

Wow, that one hurt. I had to think of that one a little bit.

It's, it's not looking at the best best case scenario.

Well, because that's a pipe dream. No, it is. And, and I say this all the time. How do you make an unrealized gain a realized game?

Protect it.

You have to protect it. You don't say you have to get out of the market or you have to sell it because that means you're giving advice.

Yeah. Especially if you're not serious.

I just say those. You have to protect it. That's a reality. I'm not telling you what to protect it with. You just, you have to protect it.

Right?

Yep. Okay, what do we got next?

Well, we're going to keep going down this because I want to talk a little bit about lead companies and how sometimes lead companies will, as clickbait, use a very high percentage. Right. And so my curiosity is, how do you, if you have somebody come in saying, hey, I saw this, use some lead, or they don't use the word lead, but I saw a website saying, you know, 10%, 12%, whatever it may be.

Yeah. The promise is clients don't read.

Okay.

It says based off of last case, last year's returns. Okay. Some annuities have made X number percent. That's true.

Sure.

That's a true statement. And I will say that. I'll say, you know what? They. I haven't seen anyone that says average X number percent.

Right.

Say last year's return was approximately X percent. Sure. And I'm going that that was a true statement. It did. There are some annuities that made more than that because the highest I've ever seen was like a 12% return.

Right.

And the year I saw the 12% return, I had clients that made 18% on some of theirs. I had clients that made 0%. I had clients that made a small percentage from a fixed amount. So it's, it's a matter of what were they actually in from an index standpoint? You know, I mean, once again, we can't predict the future, so we don't even necessarily know if the index we're putting them is going to be a high producer, Right. I mean some of these volatility control indexes, the market does really good over a year span, but there's a ton of volatility. They're not going to do that. Well, sure, so we just don't know. But the reality is their worst case scenario is zero.

Right. So how do you, how do you segue taking those factual statements that the lead companies will use sometime, but then segue that into selling worst case scenario where now the client is interested because of this 8 percentage that they've seen, but now you're flipping it to be a worst case scenario. How do you do that and do that well and still explain it in.

A way that I'd say something along lines, what's the best year you've ever had in a variable account? I mean, because there can be some really good years, variable accounts where you're getting double digit returns, some triple digit returns and I mean I've had some stocks, I have stocks that I have right now that are up 200%. Right, but does that mean anything? No, no.

You haven't realized the game.

I mean. Exactly. And the reality is those stocks could easily. And what I'm in situations could not improve and I could lose it all.

Sure.

But I know that and I'm aware of that. It's when the client thinks, well, I've only made gains and I've never had big loss. Day traders are horrible at that. I made 55% return last year. No, you didn't, number one. Number two, even if you did day trading, I mean It's a fact, 98% actually they even say as high as 99% of day traders do not even break even. Right. I mean it's literally a slot machine on your computer. That's all it is. And there's all these software programs. I love it when people, when I say I love it, I'm being very sarcastic. Is like 2000, 2003, 2007 to 2009, 2018, in 2020, all these new fancy products that help protect you against market volatility. All these people are still losing money, right? And so it's crazy. I just, if you have someone that says, hey, they had 12% return, I just say that is true. That is what some annuities made last year.

Right?

But what I'm going to show you something that can earn from zero or it can earn 20%, we don't know. There's also income riders, there's bonuses, there's all sorts of things that can come into play.

Right.

So what are we doing in that scenario? What is your situation? This is we meet. That's find out what your situation is and which product's going to suit best.

Take control of that conversation. Loop it back around to fact finding. Don't bite the bait of talking returns and percentages with the clients because that's what they want to talk about right there. But it's important for you as the agent to get the information so that you can make a recommendation that's best for their situation. It all comes around.

It's also important though, because some people will say, well, what have annuities averaged over the past 10 years? And I've heard agents say, oh, 8 or 9%. Don't ever say that. I say between 2 and 6%. If you took an average indexed annuity over the past 10 years, it's between 2 and 6%. Are there some that have made more? Yes. Are there some that made less? Yes. But that is a very safe average. Now if we have six or seven years where the market's going straight down, which once again, I don't think that's going to happen either. I think we're going to see a lot. I mean, I can predict the future of the stock market. I can. I believe I can. Right? Yeah. It's going to go up, it's going to go down, it's going to go up, it's going to go down, it's going to go up, it's going to go down. That's the future of the stock market. We're going to see this. And nobody can tell me what the stock market is going to be tomorrow, let alone five or ten years from now. We just don't know. I mean, the economy was booming great before the Great Depression and then the Great Depression happened. Now I don't think once again we'll ever run into that type of situation in the near future, but we just don't know and nobody can. That's why we are true long term planners when we use income writers, because we can know beyond any shadow of a doubt this would be your income for the rest of your life.

Absolutely.

So good deal. I hope this helps you guys. You have a great day and happy selling.