Free Lunch, FIA

[Free To Canoe]

Got my $100 gift card today in the mail, good for the following; Outback Steak House, Bonefish Grill, Carrabba's, Roy's and Flemings.

Not exactly a free meal but not bad for a two hour lesson on FIA.

A well deserved congrats! To paraphrase Mallory: we win free lunches from FIAs "because it's there".

I have friends who win junk off of time share people as a hobby. Not me.

 

[mickeyd]

Op's story and the balance of the thread reminds me a bit about the year or so (maybe 2005?) that I decided to attend as many of the free lunch financial seminars as I could take as a form of entertainment. Cocktail hour (cash bar) always preceded each presentation/meal. I thoroughly enjoyed the food, friendly chats with fellow attendees, and avoiding the free office visit that all attendees were "entitled to."

Most of the sales pitches/dog and pony shows were about EIAs and were very predictable and vague. Like I said, entertainment.

I don't seem to get those offers in the mail any more.

 

[haha]

I only have been to only one of these. I had fun. The meal was average at best, and the pitchman close to insufferable, but I enjoyed having a glass of cabernet and talking with a nice Chinese American businesswoman at my table. She had already bought several of whatever it was that the guy was selling, and was quite happy about it all. I appeared interested in this, and mentioned that perhaps I might get one when I have the money.

But I later decided not to.


Ha

 

[target2019]

I've been to about a dozen and a half of these things. It is really a mixed bag. We can sort out the beginners from the real sharks. Sometimes the meal is very good. Sometimes it is rubber chicken. Depending on your area, you may get these offers once a week. In the beginning I looked at it as a personal challenge--how many free meals can I get in 2010...

There are definitely one or two strategically placed couples who are in the know. They are usually current customers who were invited to say a few words, or maybe give feedback later on how the presentation was received.

I did see the nice Chinese-American businesswoman at a few of these, but she was quite busy.

 

[KRobby]

Cool story, I often wonder what the % is of people who buy these things that actually have any idea what they bought. I would say it's very low as anyone that knew what it was wouldn't buy it.

When I had a broker I asked him how he got paid on a product he was trying to sell me on. His answer was the same, it didn't cost me anything as the ins company paid him. Gotta love it!

[Mod Edit] Believe it or not, some people don't want to put their many at risk, (or at least a portion.) The rates are beating CD's, treasuries etc.. but the catch is it's long term.
So what, if you're long term, it may be great,
If it's short term, it's not the right product.
If you want stock market gains, it's not the right product.
If it's long term and you want guarantees, it may be great. Is it really that hard to understand?

And yes, the broker does get paid by the insurance company, not from the client, look on the balance after purchase. It's not from your contribution. It's all figured in the caps etc, but again, it's not designed to COMPETE with stock market performance. Surrender charges apply, NOT up front charges. It's not short term. Do you think insurance companies can charge no upfront OR surrender charges, they lose out when one bails early, as they're using the funds as well to make this guarantee possible.

Any broker that tries to persuade anyone to buy this is wasting their time. Find the buyers. There's plenty of intelligent people out there.

 

[KRobby]

except that it was a good deal and it was insured by the FDIC ! This person is no dummy, college educated, retired early but has no clue when it comes to financial instruments.

It's backed at the state level, not the federal, what likely happened is your friend got it mixed up or the broker is new. In my state:
Cash Surrender: $250,000 for deferred annuity per contract owner
Annuity in Benefit: $300,000 per contract owner

In addition to sheer size and worldwide exposure of many insurance companies backing up their promises. Safe as a CD with better potential, um, yeah.

 

[Speculator]

I enjoy attending these presentations when the seminars fit my schedule. For a few hours of my time, I am able to learn about different financial instruments, time-shares, new condo and town home developments, and travel opportunities while getting a meal, and many times, some free stuff in the future, too!

Most of the time, the products or services being "pushed" don't fit my needs and I'm certainly skeptical of many of them. But, "who cares?" The folks who sell them are only trying to make a buck and it doesn't cost me anything to listen. Plus, I learn something at each one, so if nothing else, I'm a more informed consumer when I leave. Maybe not a "free" lunch, but for me, a great educational opportunity.

 

[noone]

[Mod Edit]. Believe it or not, some people don't want to put their many at risk, (or at least a portion.)

Noone likes annuity salesmen who show up here to call posters dumb - especially when pointing out how some people don't like risking their many. Do you have much success getting clients to put their few at risk with you?

 

[brewer12345]

[Mod Edit] Believe it or not, some people don't want to put their many at risk, (or at least a portion.) The rates are beating CD's, treasuries etc.. but the catch is it's long term.
So what, if you're long term, it may be great,
If it's short term, it's not the right product.
If you want stock market gains, it's not the right product.
If it's long term and you want guarantees, it may be great. Is it really that hard to understand?

And yes, the broker does get paid by the insurance company, not from the client, look on the balance after purchase. It's not from your contribution. It's all figured in the caps etc, but again, it's not designed to COMPETE with stock market performance. Surrender charges apply, NOT up front charges. It's not short term. Do you think insurance companies can charge no upfront OR surrender charges, they lose out when one bails early, as they're using the funds as well to make this guarantee possible.

Any broker that tries to persuade anyone to buy this is wasting their time. Find the buyers. There's plenty of intelligent people out there.

Even if all this blather were gospel truth, why on earth would you take credit exposure to an insurance company, pay a salesman's mortgage and get locked in for years and years when you can do the exact same thing on your own in about 15 minutes with expenses of less than $50 a year? Voila: Life, Investments & Everything: Rolling Your Own

 

[frayne]

It's backed at the state level, not the federal, what likely happened is your friend got it mixed up or the broker is new. In my state:
Cash Surrender: $250,000 for deferred annuity per contract owner
Annuity in Benefit: $300,000 per contract owner

In addition to sheer size and worldwide exposure of many insurance companies backing up their promises. Safe as a CD with better potential, um, yeah.

Wonder what may have happened if AIG went belly up ?

 

[brewer12345]

It's backed at the state level, not the federal, what likely happened is your friend got it mixed up or the broker is new. In my state:
Cash Surrender: $250,000 for deferred annuity per contract owner
Annuity in Benefit: $300,000 per contract owner

In addition to sheer size and worldwide exposure of many insurance companies backing up their promises. Safe as a CD with better potential, um, yeah.

Its not "safe as a CD." CDs are FDIC insured and have the full faith and credit of the US gubmint behind them. State insurance guaranty associations are significantly less financially capable. Details to your heart's content here: nolhga.com :: welcome

 

[FinanceDude]

Its not "safe as a CD." CDs are FDIC insured and have the full faith and credit of the US gubmint behind them. State insurance guaranty associations are significantly less financially capable. Details to your heart's content here: nolhga.com :: welcome

Always amusing how many people think FDIC is solvent......... Yeah, they can borrow more money, and get Congress to allocate more funds, but with all the bank failures lately, you have about $60 billion covering $ 8 trillion or so in assets...........

 

[brewer12345]

Always amusing how many people think FDIC is solvent......... Yeah, they can borrow more money, and get Congress to allocate more funds, but with all the bank failures lately, you have about $60 billion covering $ 8 trillion or so in assets...........

Last I checked, you have the full faith and credit of the us treasury on the line. Uncle Sam can tap you and me any time he likes.

 

[FinanceDude]

Last I checked, you have the full faith and credit of the us treasury on the line. Uncle Sam can tap you and me any time he likes.

These days, I am wondering about that "full faith and credit" thingy........ I think we are about a decade from austerity measures but what do I know? And yes, taxes ARE going up in the future, up to early 90's levels at least, probably higher.......

If we can give AIG a couple hundred billion, certainly we can bail out a few thousand banks........

 

[brewer12345]

These days, I am wondering about that "full faith and credit" thingy........ I think we are about a decade from austerity measures but what do I know? And yes, taxes ARE going up in the future, up to early 90's levels at least, probably higher.......

If we can give AIG a couple hundred billion, certainly we can bail out a few thousand banks........

If you are worried about full faith and credit, you should be buying guns, ammo, MREs and a mule, not annuities.

 

[73ss454]

[Mod Edit] Is it really that hard to understand?

And yes, the broker does get paid by the insurance company, not from the client, look on the balance after purchase.

Any broker that tries to persuade anyone to buy this is wasting their time. Find the buyers. There's plenty of intelligent people out there.

Yup it is, anything that has 100 pages of disclosures is over my head.

So where does the company get the money to pay the broker?

So you think the people who buy these are intelligent or are you looking for coconuts?

 

[KRobby]

Yup it is, anything that has 100 pages of disclosures is over my head.

So where does the company get the money to pay the broker?

So you think the people who buy these are intelligent or are you looking for coconuts?

Like any product, the insurance company makes money on the deal or they wouldn't offer it. They commensate brokers that make it happen. Ins companies use their vast resources to earn a spread, if you can do the same, and diversify that risk, by all means do it.

Absolutely some people that buy them are intelligent, why would you think otherwise? The underlying problem is so many of you simply don't understand the market for them. For people that want more risk discuss other asset classes.

 

[KRobby]

Even if all this blather were gospel truth, why on earth would you take credit exposure to an insurance company, pay a salesman's mortgage and get locked in for years and years when you can do the exact same thing on your own in about 15 minutes with expenses of less than $50 a year? Voila: Life, Investments & Everything: Rolling Your Own

Ok.. now what's the minimum guaranteed rate?

You see, no matter how great your strategy is, SOME people will prefer to have guarantees in place by a large worldwide insurance company.
Others will place all their trust in you and prefer you to work your voodoo (for fees).. neither is right or wrong, just different preferences.

 

[brewer12345]

Ok.. now what's the minimum guaranteed rate?

You see, no matter how great your strategy is, SOME people will prefer to have guarantees in place by a large worldwide insurance company.
Others will place all their trust in you and prefer you to work your voodoo (for fees).. neither is right or wrong, just different preferences.

What the hell are you talking about? The linked article simply explains how you can do exactly what the insurer would do with your money, except if you DIY it costs a tiny fraction of what the insurer would take from your hide. There is no magic, the insurance policy is a wildly overpriced scam.

 

[KRobby]

What the hell are you talking about? The linked article simply explains how you can do exactly what the insurer would do with your money, except if you DIY it costs a tiny fraction of what the insurer would take from your hide. There is no magic, the insurance policy is a wildly overpriced scam.

Nice job. Now, when a particular client inquires about what the minimum interest guarantee is, what is the answer? Is the client wrong for asking?

This strategy can work excellent for people that want this. Not everybody wants this. Replacement to your idea does not equate to scam.. You'll have to try again.

 

[REWahoo]

Now, when a particular client inquires about what the minimum interest guarantee is, what is the answer? Is the client wrong for asking?

Clients? This is predominantly a DIY forum, most of us strive to minimize the fees and commissions associated with being "clients".

 

[KRobby]

Clients? This is predominantly a DIY forum, most of us strive to minimize the fees and commissions associated with being "clients".

Which is great.. I'm simply countering the inappropriate bashing of products designed for people that don't fit this DIY category. Lots of blanket statements being made.

Also, no upfront fees, and no commission paid by the buyer. The insurance co pays the broker. It's probably a sore spot, but they have resources and opportunities that 99.999% of individuals don't have unless you're a billionaire.. the spread goes to insurance company and the broker, and client gets what they signed up for. There's no 'hidden fees'

 

[brewer12345]

Which is great.. I'm simply countering the inappropriate bashing of products designed for people that don't fit this DIY category. Lots of blanket statements being made.

Also, no upfront fees, and no commission paid by the buyer. The insurance co pays the broker. It's probably a sore spot, but they have resources and opportunities that 99.999% of individuals don't have unless you're a billionaire.. the spread goes to insurance company and the broker, and client gets what they signed up for. There's no 'hidden fees'

Haaaahahahaha! Pull the other one: its got bells on.

If the agent and the insurer are eating well, there is really only one place that the meal is coming from: the [-]sucker's[/-] policyholder's plate. Don't kid us or yourself. As for the ridiculous supposition that insurers have fabulous investment opportunities unavailable to the rest of us, I invite you to look at the portfolios of the industry. They by and large own a giant pile of investment grade bonds, mostly corporates. You can own those via an ETF or mutual fund for under 25BP annually (probably a lot less). Considering the massive overhead, regulatory expenses, premium taxes and various other expenses insurers have but individuals do not, I think we can safely say that the DIYer has the edge.

The minimum interest rate is up the the investor if you DIY. There is no shell game of raise the minimum rate, reduce the participation rate/lower the cap and make the rube policyholder think he is getting something special (he isn't). If you DIY you have control and everything is transparent. Best of all, you are not locked in for 5 to 12 years as you would be with an EIA/FIA. If you decide you would rather pursue another strategy, you can collapse the DIY structure at your convenience or simply wait for the options to roll off and the bond(s) to mature. Easy as pie. Try getting your money out of an FIA/EIA after a year without taking it in the bakehole in surrender charges.

And for the record, the only clients I have ever had have been institutional investors. To a person, all of those folks would have laughed until they peed themselves if I suggested they buy a EIA/FIA. At my current job I currently am in a role best described as a giant game of Whak-A-Mole where I am using the hammer. I rather think it fits my temperament.

 

[REWahoo]

It's probably a sore spot...

Yes, it is.

You're one of a very long line of insurance/annuity salesmen who show up here convinced we are all ignorant and misguided when it comes to the virtues of non-SPIA annuities. We've seen the movie many, many times and can recite the script from memory.

While it is amusing to spar with you, it gets tiresome, so I'll sign off for now.
Don't worry, someone else will be along shortly to pick up where I left off. Why don't you have another glass of Kool Aid while you wait?

Never mind, I see brewer is already in the house...

 

[brewer12345]

Yes, it is.

You're one of a very long line of insurance/annuity salesmen who show up here convinced we are all ignorant and misguided when it comes to the virtues of non-SPIA annuities. We've seen the movie many, many times and can recite the script from memory.

While it is amusing to spar with you, it gets tiresome, so I'll sign off for now.
Don't worry, someone else will be along shortly to pick up where I left off. Why don't you have another glass of Kool Aid while you wait?

Never mind, I see brewer is already in the house...

At least credit KRobby with truth in advertising. After all, the word "Rob" is prominently displayed on every post.