Scott Burns Article........

[Art G]

Tires too... oh, wait, I think that's a stadium.

Yeah, I hate to see companies do this. It's like an ego trip for the execs who want a place to hang.
Hey, I didn't say I'd buy Allianz stock, AND I'd be concerned if too large a percentage of their overall assets were to go into VA's. Personally, I think what they're currently offering has failure written all over it. Fortunately, thus far a very small percentage of their overall money is in living benefits.
Moshe Milevsky writes a very interesting article on why VA's aren't charging enough.

 

[FinanceDude]

.
Moshe Milevsky writes a very interesting article on why VA's aren't charging enough.

Moshe's a fraud, Scott Burns is where it's at...........

 

[Art G]

And....

Before the game, former players will present a "Chalk Talk Preview," for the Pats-49ers game. When the game kicks off, they will kick back with you and your friends to watch the action on the Gillette Stadium Jumbotron screens and the flat-screen TVs in the Fidelity Investments East Clubhouse.

 

[Marquette]

Hey, I didn't say I'd buy Allianz stock, AND I'd be concerned if too large a percentage of their overall assets were to go into VA's.

Well, the majority of their business is EIA, a market that is under assault. Further, they're losing market share in the EIA space. So, something is going to have to give.

Personally, I think what they're currently offering has failure written all over it.

So, then, why would someone want to buy a Vision annuity with a 6% step up if the cost is carrier risk. A risk that "has failure written all over it".

edit:
Or, maybe ol' Bob Mac will come back and save the day... he seems ready to:

http://bobmaconbusiness.com/?p=80
http://bobmaconbusiness.com/?p=74
http://bobmaconbusiness.com/?p=70

 

[Art G]

Vanguard® Variable Annuity Portfolios by Name Prices and performance...

Talk about your dilemmas here.

 

[Art G]

Well, the majority of their business is EIA, a market that is under assault. Further, they're losing market share in the EIA space. So, something is going to have to give.



So, then, why would someone want to buy a Vision annuity with a 6% step up if the cost is carrier risk. A risk that "has failure written all over it".

Because I think the product will disappear, not the company. I want to get in before it does. Sometimes a deal that looks too good, just is.
BTW, I'd like to see them wipe out all EIA's. THIS is a product I think is a ripoff. (you see, I don't just blindly buy things for commission).

 

[cute fuzzy bunny]

So I guess this means you don't plan to post any actual facts? OK

Actually I did, but if fearmongering works for you, knock yourself out.

Hey, you arent the Art that was also a fish oil salesman and looked to web sites that were full of articles about Nazi zombies for his information, are you?

I don't know how much you're adding annually, but how many down 11% years before you change your attitude?

I dont know. I'm not down 11%. I guess if I had a bunch of double digit losing years I'd have a pretty crappy plan.

Plenty of mutual funds out there with >6% annualized returns, no double digit losing years and no consecutive losing years.

 

[Art G]

Actually I did, but if fearmongering works for you, knock yourself out.

Hey, you arent the Art that was also a fish oil salesman and looked to web sites that were full of articles about Nazi zombies for his information, are you?



I dont know. I'm not down 11%. I guess if I had a bunch of double digit losing years I'd have a pretty crappy plan.

Plenty of mutual funds out there with >6% annualized returns, no double digit losing years and no consecutive losing years.

Fear mongering?? How so?
I'm guessing there's more than one Art in the world.
In hindsight, I can pick quite a few great funds. FWIW, Scott does it every year in his annual summations.
You're very fortunate to be such a stock selection guru. Apparently you're beating the heck out of most of the large money managers. Why are you here? Shouldn't you be hiring out your services?

 

[Art G]

BTW, if you're in ANY Vanguard funds with a stock in it, you're not doing so hot this year...

Asset Allocation VAAPXBalanced–11.91%–10.56%7.12%4.47%10.19%11/03/1988Balanced Index VBINXBalanced–5.81%–3.62%6.68%4.75%8.29%11/09/1992Convertible Securities 
Redemption Fee:1% if held < 1 yrVCVSXBalanced–5.44%–1.41%8.99%7.61%8.65%06/17/1986LifeStrategy Conservative Growth VSCGXBalanced–5.42%–2.48%6.39%5.11%7.92%09/30/1994LifeStrategy Growth VASGXBalanced–11.06%–8.65%8.73%4.69%8.85%09/30/1994LifeStrategy Income VASIXBalanced–2.42%0.89%5.26%5.19%7.41%09/30/1994LifeStrategy Moderate Growth VSMGXBalanced–8.18%–5.33%7.69%5.03%8.51%09/30/1994Managed Payout Distribution Focus VPDFXBalanced————–6.21%05/02/2008Managed Payout Growth and Distribution VPGDXBalanced————–6.70%05/02/2008Managed Payout Growth Focus VPGFXBalanced————–7.83%05/02/2008STAR VGSTXBalanced–7.75%–5.67%7.99%6.18%10.25%03/29/1985Target Retirement 2005 VTOVXBalanced–3.91%0.05%——5.65%10/27/2003Target Retirement 2010 VTENXBalanced–5.90%–2.37%——5.21%06/07/2006Target Retirement 2015 VTXVXBalanced–7.35%–4.12%——6.24%10/27/2003Target Retirement 2020 VTWNXBalanced–8.35%–5.33%——4.76%06/07/2006Target Retirement 2025 VTTVXBalanced–9.40%–6.60%——6.62%10/27/2003Target Retirement 2030 VTHRXBalanced–10.39%–7.83%——4.41%06/07/2006Target Retirement 2035 VTTHXBalanced–10.94%–8.40%——7.46%10/27/2003Target Retirement 2040 VFORXBalanced–10.94%–8.45%——3.94%06/07/2006Target Retirement 2045 VTIVXBalanced–10.87%–8.47%——8.11%10/27/2003Target Retirement 2050 VFIFXBalanced–10.98%–8.50%——4.18%06/07/2006Target Retirement Income VTINXBalanced–1.72%2.54%——5.23%10/27/2003Tax-Managed Balanced 
Redemption Fee:1% if held < 5 yrsVTMFXBalanced–3.77%–3.52%5.89%4.75%7.62%09/06/1994Wellesley Income VWINXBalanced–4.04%–1.09%5.96%6.20%10.30%07/01/1970Wellington VWELXBalanced–6.52%–3.38%9.07%6.89%8.27%07/01/1929500 Index VFINXStock–11.83%–11.17%6.90%2.83%11.30%08/31/1976Capital Opportunity [IMG]https://personal.vanguard.com/web/images/icons/closed.gif[/IMG]
Redemption Fee:1% if held < 1 yrVHCOXStock–6.63%–5.59%13.40%15.14%12.85%08/14/1995Capital Value VCVLXStock–20.00%–30.47%4.70%—1.59%12/17/2001Diversified Equity VDEQXStock–12.35%–13.55%——3.14%06/10/2005Dividend Appreciation Index VDAIXStock–7.41%–6.51%——1.89%04/27/2006Dividend Growth VDIGXStock–5.04%–4.36%9.67%3.97%7.50%05/15/1992Energy 
Redemption Fee:1% if held < 1 yrVGENXStock–2.44%12.97%31.02%19.67%15.12%05/23/1984Equity Income VEIPXStock–12.59%–11.06%8.43%5.27%10.23%03/21/1988Explorer VEXPXStock–8.85%–10.20%8.59%8.63%9.06%12/11/1967Extended Market Index VEXMXStock–7.22%–7.91%10.97%6.44%11.10%12/21/1987FTSE Social Index VFTSXStock–13.32%–15.59%3.76%—–2.27%05/31/2000Growth and Income VQNPXStock–11.12%–11.98%6.85%3.00%10.35%12/10/1986Growth Equity VGEQXStock–17.89%–6.85%6.39%1.49%7.76%03/11/1992Growth Index VIGRXStock–8.04%–4.17%6.76%1.94%8.74%11/02/1992Health Care 
Redemption Fee:1% if held < 1 yrVGHCXStock–3.67%–2.98%9.26%11.32%17.81%05/23/1984High Dividend Yield Index VHDYXStock–13.21%–13.65%——–5.85%11/16/2006Large-Cap Index VLACXStock–11.35%–10.26%——5.05%01/30/2004Market Neutral 
Redemption Fee:1% if held <1 yearVMNFXStock–2.28%5.82%5.49%—5.18%11/11/1998Mid-Cap Growth VMGRXStock–10.51%–9.11%9.73%8.85%10.08%12/31/1997Mid-Cap Growth Index VMGIXStock–11.95%–7.88%——6.32%08/24/2006Mid-Cap Index VIMSXStock–10.90%–11.75%11.35%10.02%9.24%05/21/1998Mid-Cap Value Index VMVIXStock–9.98%–15.68%——–2.23%08/24/2006Morgan Growth VMRGXStock–10.70%–8.26%8.39%4.01%10.46%12/31/1968Precious Metals and Mining [IMG]https://personal.vanguard.com/web/images/icons/closed.gif[/IMG]
Redemption Fee:1% if held < 1 yrVGPMXStock–8.90%13.70%32.72%24.56%9.31%05/23/1984PRIMECAP Core 
Redemption Fee:1% if held < 1 yrVPCCXStock–3.88%–4.32%——7.76%12/09/2004PRIMECAP [IMG]https://personal.vanguard.com/web/images/icons/closed.gif[/IMG]
Redemption Fee:1% if held < 1 yrVPMCXStock–2.76%0.22%12.14%8.90%14.54%11/01/1984REIT Index 
Redemption Fee:1% if held < 1 yrVGSIXStock–2.03%–3.62%13.35%11.51%12.20%05/13/1996Selected Value 
Redemption Fee:1% if held < 1 yrVASVXStock–13.15%–17.94%9.91%7.61%7.61%02/15/1996Small-Cap Growth Index VISGXStock–5.78%–5.87%11.09%8.14%7.05%05/21/1998Small-Cap Index NAESXStock–5.52%–8.27%10.73%7.42%10.70%10/03/1960Small-Cap Value Index VISVXStock–5.23%–10.78%10.18%8.46%7.06%05/21/1998Strategic Equity VSEQXStock–9.48%–14.54%9.59%8.64%10.97%08/14/1995Strategic Small-Cap Equity VSTCXStock–6.36%–11.45%——–3.24%04/24/2006Tax-Managed Capital Appreciation 
Redemption Fee:1% if held < 5 yrsVMCAXStock–11.16%–11.41%7.81%3.85%9.34%09/06/1994Tax-Managed Growth and Income 
Redemption Fee:1% if held < 5 yrsVTGIXStock–11.82%–12.03%6.96%2.90%9.29%09/06/1994Tax-Managed Small-Cap 
Redemption Fee:1% if held < 5 yrsVTMSXStock–2.71%–8.65%11.02%—10.68%03/25/1999Total Stock Market Index VTSMXStock–10.74%–10.16%7.88%3.69%9.31%04/27/1992U.S. Growth VWUSXStock–9.14%–6.85%5.62%–3.07%10.35%01/06/1959U.S. Value VUVLXStock–10.60%–12.22%7.34%—5.71%06/29/2000Value Index VIVAXStock–14.83%–16.39%8.18%3.98%9.67%11/02/1992Windsor VWNDXStock–17.59%–22.32%5.83%4.74%11.66%10/23/1958Windsor II VWNFXStock–14.14%–15.79%8.63%4.69%11.48%06/24/1985Developed Markets Index 
Redemption Fee:2% if held < 2 mosVDMIXInternational–18.42%–11.74%15.18%—4.01%05/08/2000Emerging Markets Stock Index 
Purchase Fee: 0.25%
Redemption Fee:0.25%VEIEXInternational–21.11%–4.86%26.30%14.94%9.51%05/04/1994European Stock Index 
Redemption Fee:2% if held < 2 mosVEURXInternational–19.36%–11.49%15.87%5.11%9.54%06/18/1990FTSE All-World ex-US Index 
Redemption Fee:2% if held < 2 mosVFWIXInternational–18.19%–9.00%——0.40%03/08/2007Global Equity VHGEXInternational–18.73%–14.58%14.21%10.17%10.63%08/14/1995International Explorer [IMG]https://personal.vanguard.com/web/images/icons/closed.gif[/IMG]
Redemption Fee:2% if held < 2 mosVINEXInternational–20.42%–21.82%17.71%12.57%11.97%11/04/1996International Growth 
Redemption Fee:2% if held < 2 mosVWIGXInternational–18.37%–9.62%15.50%5.96%12.32%09/30/1981International Value 
Redemption Fee:2% if held < 2 mosVTRIXInternational–16.94%–10.39%16.78%8.17%11.20%05/16/1983Pacific Stock Index 
Redemption Fee:2% if held < 2 mosVPACXInternational–16.27%–12.39%13.69%6.20%1.92%06/18/1990Tax-Managed International 
Redemption Fee:1% if held < 5 yrsVTMGXInternational–18.35%–12.50%15.32%—5.05%08/17/1999Total International Stock Index 
Redemption Fee:2% if held < 2 mosVGTSXInternational–19.11%–10.48%16.72%6.42%6.28%04/29/1996Total World Stock Index 
Purchase Fee: 0.25%
Redemption Fee:2% if held < 2 mosVTWSXInternational————–2.00%06/26/2008

</DIV>

 

[lightwaves]

Hi Art,

Just wanted to thank you for presenting the Annuity case. I have just started studying them and I like to read both the pros and cons on these threads. Seems like a lot of new products are coming out that just were not there a few years back. Some folks may not be aware of these changes. It always pays to keep on on the latest innovations from companies that are realizing that the Baby Boomers are yearning for a pension like product that delivers steady, dependable income at a low premium. Not sure how I will proceed but I want as much information as possible.

 

[cute fuzzy bunny]

Simple. Annuities prey on peoples fears that they'll outlive their money. Statistically, they're very unlikely to. What they're more likely to experience is a need for their principal late in life for a health emergency. Or that over a long period of time their annuities buying power has been eroded.

Hire out my services? Sounds like a job. BTW, I havent selected a stock in a good many years.

I was talking with someone else about this and I thought I'd wrap it up with a comment I made to them.

There are undoubtedly some good annuity products and some customers who would benefit from them.

However, the route that customer would have to go through to get the right product depends on a professional who isnt incented to sell only the right products to the right customers. In fact, its quite the opposite.

So given the challenge of the sales situation, and the very great chance that a customer will be sold the highest commissioned product rather than the one that will work best for them, and the ridiculous heap of documents one must read to comprehend the benefits and areas of concern for some of these highly complex products...its just awful hard not to try and rain on the parade.

 

[Art G]

Well I was just about to state that I've beaten this horse to death and back and then lightwaves posts and says he appreciates the other side, so the only thing I can offer is, don't be closed minded to any investment and do your own homework.

Bunny, sure, like in any business there are good and bad people. At the very least, with a VA you're dealing with someone who has had to go through some rigorous training to be able to offer the product (unlike that of the EIA, in my opinion).
My sister and spouse were told years ago by the same doctor that they needed a medical procedure that proved to be totally unnecessary and dangerous. Should I hate all doctors because of it? I would totally disagree that there are many professionals that sell only the highest commissioned vehicles, although I admit to knowing a couple. However, here's the bottom line, when guys like Moshe Milevsky and Scott Burns who were both haters of VA's are now taking another look at them and concluding there are benefits, then why are most of the people so unwilling to?
If you go to the stock picking section on here, you'd see that I've picked a decent amount of stocks that have done quite well this year. That doesn't mean that I'm still not concerned about the overall market and I don't see a great value to protecting your assets. I think, based on modern medicine, living income is more important than ever before. People should be living longer, and pensions are disappearing. Consider this, if I'm wrong then I'm destined to live on a bit less income for the rest of my life. If you're wrong, you can go broke or be paralyzed by the market and miss upsides.

 

[Marquette]

Consider this, if I'm wrong then I'm destined to live on a bit less income for the rest of my life. If you're wrong, you can go broke or be paralyzed by the market and miss upsides.

If you're wrong then you're out your annuity money because your carrier folds and you're out your stock money because you picked wrong. If he's wrong, part of his portfolio goes down in response to market forces and some goes up. Or, it all goes down and it doesn't matter what happens because we're all toast.

 

[cute fuzzy bunny]

If doctors were paid on commission for procedures, yep...I'd be a bit worried about their recommendations.

As far as my prospects for going broke...well...again...if that happens I must have had a bad plan.

As it stands and the way I'm invested, if I go broke I'm pretty sure your insurance company will have been plundered by street pirates.

 

[FinanceDude]

What they're more likely to experience is a need for their principal late in life for a health emergency.

The amount of folks that self-insure this risk with nowhere NEAR enough assets to handle it is staggering..............

Or that over a long period of time their annuities buying power has been eroded.

SS and pension payments for the most part have eroded purchasing power too. No real answer that's 100% right for everyone......

So given the challenge of the sales situation, and the very great chance that a customer will be sold the highest commissioned product rather than the one that will work best for them, and the ridiculous heap of documents one must read to comprehend the benefits and areas of concern for some of these highly complex products...its just awful hard not to try and rain on the parade.

Ever read a MF prosepctus? Those are ridiculous also. BTW, I am geek, I read ALL prospectuses.........

 

[cute fuzzy bunny]

Ever read a MF prosepctus? Those are ridiculous also. BTW, I am geek, I read ALL prospectuses.........

Yep, but about 98% of them are boilerplate and most of the costs and risks are pretty well identified. I can also choose and purchase mutual funds without the assistance of a sales person who would rather I buy FundA than FundB because FundA pays more, even though FundB is better suited to my needs.

I had to read pretty much all 500-something pages of the Lincoln Financial VA prospectus before I had a handle on the costs, expenses, surrender fees, etc. In fact, when I was done I still wasnt 100% sure and had to ask the agent several questions...and she wasnt sure what the answers were either.

 

[FinanceDude]

I had to read pretty much all 500-something pages of the Lincoln Financial VA prospectus before I had a handle on the costs, expenses, surrender fees, etc. In fact, when I was done I still wasnt 100% sure and had to ask the agent several questions...and she wasnt sure what the answers were either.

You bought one??

 

[cute fuzzy bunny]

Yeah, my wife was in one when we met.

So I do speak somewhat from experience.

By the way, we paid the surrender fees to run away.

 

[FinanceDude]

Yeah, my wife was in one when we met.

So I do speak somewhat from experience.

By the way, we paid the surrender fees to run away.

You and 2B must be brothers............

 

[REWahoo]

You're questioning my honesty and then telling me your trust issues are none of my concern?

I thought we'd already established you were looking out for the best interests of your clients and only interested in their complete satisfaction, not in how much commission you made. Should we revisit this issue?

BTW, do you allow your doctor to eat lunch or play golf, or do you expect him to daily be reviewing your charts for possible polyps?

Based on the 23 posts you've put up in the past 4 hours, I'm very glad you chose to spend your days selling annuities and not reviewing medical charts.

 

[Art G]

I thought we'd already established you were looking out for the best interests of your clients and only interested in their complete satisfaction, not in how much commission you made. Should we revisit this issue?


Based on the 23 posts you've put up in the past 4 hours, I'm very glad you chose to spend your days selling annuities and not reviewing medical charts.

Yes, I detect the sincerity in your posts. Now I'll just run along so I can watch my annuities grow. You go watch your mutual funds also. When your done, go check the oil in your car, the preservatives in your cereals, and fertilizer blend on your lawn. You wouldn't want to lose control of anything.

 

[Art G]

If you're wrong then you're out your annuity money because your carrier folds and you're out your stock money because you picked wrong. If he's wrong, part of his portfolio goes down in response to market forces and some goes up. Or, it all goes down and it doesn't matter what happens because we're all toast.

Well first off, the money is kept separate so the insurance company going under only means it'd be a bit tougher to get your assets back, but I also don't plan to stand by and watch as insurance companies fall by the wayside. Are you assuming they all do it overnight? If the largest insurance companies in the world go under, we will all be suffering the economy. With that said, don't think I don't lose a little sleep over the thought of it anyway.

 

[Art G]

If doctors were paid on commission for procedures, yep...I'd be a bit worried about their recommendations.

As far as my prospects for going broke...well...again...if that happens I must have had a bad plan.

As it stands and the way I'm invested, if I go broke I'm pretty sure your insurance company will have been plundered by street pirates.

Doctors absolutely are on commission. I know I called mine the other day and he wouldn't give me an answer over the phone. I had to come in for a visit first. Our sit down took about 15 minutes, he told me he didn't need to see me again for a year and he charged me $20 for the visit. No idea what the insurance company will pay.

 

[REWahoo]

Now I'll just run along so I can watch my annuities grow.

Based on the amount of fertilizer you've spread so far today, they should really be taking off. Sincerely.

 

[growing_older]

who has had to go through some rigorous training to be able to offer the product

I do not think this is so. Certainly it is nowhere near as much "rigorous training" as it takes to become a doctor, which seems to be a comparison and analogy often cited. In fact, having gone through this training and received my license to sell these products myself, I can tell you exactly how "rigorous" it was. It was NOT difficult at all, and anyone who tries to obscure the details of these investments with "trust me I've been to rigorous training" should be highly suspect.

For what it's worth, the generally lackadaisical attitude of the class did change and students perked up considerably when we got to the section that discussed fees and commissions to be earned selling these annuities. Fascinating to see people's self-interest kick in.