Free Lunch, FIA

[frayne]

Quote:

Originally Posted by REWahoo I notice your snappy response avoided answering the question of why you are wasting your time here trying to convince us to believe fairy tales like this: I can only surmise there must be a shortage of clients old folks out there in the early stages of dementia willing to buy your "guaranteed, no cost, risk-free" magic money making machine. Times are tough.

Damn, that is going to leave a mark, or maybe only a flesh wound !

[brewer12345]

Quote:

Originally Posted by KRobby Sales pitch? I quoted the Federal Government Accounting Office (GAO), from an official study. The other guy quoted a blog that is filled with misrepresentation from an unlicensed 'guru'. Belief what you wish. Besides, how could any common sense person be pitching on here, you realize the industry is regulated right? Why so jumpy and defensive? Did a fixed index annuity assassinate Archduke Franz Ferdinand?

Hahahaha! That is a good one. Holding up a state insurance agent license as the acme of legitimacy. I think I had to jump through more hoops to get my hunting license.

[KRobby]

Quote:

Originally Posted by REWahoo I can only surmise there must be a shortage of clients old folks out there in the early stages of dementia willing to buy your "guaranteed, no cost, risk-free" magic money making machine. Times are tough.

Then go ahead, tell me how much they cost (other then surrender charges, as it's not designed/appropriate for a short term goal)

*crickets

[KRobby]

Quote:

Originally Posted by brewer12345 Hahahaha! That is a good one. Holding up a state insurance agent license as the acme of legitimacy. I think I had to jump through more hoops to get my hunting license.

It's quoted from, the Federal Government Accounting Office (GAO).

-Robby

[ERD50]

There is always the definitive reference for all things finanacial... YOUTUBE and XtraNormal!:

The Truth about Fixed Indexed Annuities - YouTube

Maybe KRobby produced this?

-ERD50

[NW-Bound]

Watching the above youtube video reminded me of my brother-in-law.

He is not very knowledgeable about financial matters. I try to steer him to some literature, so that he can self-educate. I think at least he should know some basic terms and concepts, such as dividend-paying stocks and growth stocks, different types of mutual funds, etc...

He is just too lazy, I think, to even bother to read anything. However, he knows the following, just from instinct. Whenever someone tells him that he can only win, and never can lose, he runs like hell!

[KRobby]

Quote:

Originally Posted by ERD50 There is always the definitive reference for all things finanacial... YOUTUBE and XtraNormal!: The Truth about Fixed Indexed Annuities - YouTube Maybe KRobby produced this? -ERD50

I've seen that before, almost fell off my yacht chair

Notice: 35 likes, 3 dislikes.

[brewer12345]

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Originally Posted by KRobby It's quoted from, the Federal Government Accounting Office (GAO). -Robby

What? That thing about your mother?

[haha]

Quote:

Originally Posted by KRobby Bond mutual funds are guaranteed? Clearly you're having a difficult time comparing apples to apples. You may be smart, and have excellent strategies that will help many people, but your common sense pertaining to what MANY PEOPLE actually want is disheartening. Further, you think the average person can safely diversify an individual bond portfolio?

Harry James with Helen Forrest - I´ ve heard that song before - YouTube

[clifp]

Quote:

Originally Posted by KRobby Sales pitch? I quoted the Federal Government Accounting Office (GAO), from an official study. The other guy quoted a blog that is filled with misrepresentation from an unlicensed 'guru'. Belief what you wish. Besides, how could any common sense person be pitching on here, you realize the industry is regulated right? Why so jumpy and defensive? Did a fixed index annuity assassinate Archduke Franz Ferdinand?

No you didn't quote from a GAO study. What you did is tell us your interpretation of a GAO study.

In order to properly quote a study on this forum is customary to do it like this. FINRA, The Financial Industry Regulatory Authority, issued this very unusual warning a couple of years ago about EIA/FIA.

Quote:

Equity-Indexed Annuities—A Complex Choice Why an Alert on Equity-Indexed Annuities? Sales of equity-indexed annuities (EIAs)—also known as "fixed-indexed insurance products" and "indexed annuities"—have grown considerably in recent years. Although one insurance company at one time included the word "simple" in the name of its product, EIAs are anything but easy to understand. One of the most confusing features of an EIA is the method used to calculate the gain in the index to which the annuity is linked. To make matters worse, there is not one, but several different indexing methods. Because of the variety and complexity of the methods used to credit interest, investors will find it difficult to compare one EIA to another. Before you buy an EIA, you should understand the various features of this investment and be prepared to ask your insurance agent, broker, financial planner or other financial professional lots of questions about whether an EIA is right for you.

It is important to include a link to the study so that we can judge if our interpretation is the same as your and to the validity of the source.

If you don't want to quote that is fine but you do need to post a link.

If you are too lazy to do a google search for the study then you should include some weasel words like IIRC (if I recall correctly) to indicate that you could be misremembering the study/source.

For instance I assume this is the GAO study you "quoted". But you neglected to mention a really key point. This 2.5% mark up only applies to individual municipal bonds hardly a significant portion of most early retirees portfolio (1% in my case).

Quote:

The Government Accountability Office report on muni bond transactions released in January said that retail investors paid an average 2.5% markup when buying $5,000 worth of municipal securities in the secondary market. By comparison, investors paid an average of 0.4% markup when buying $2 million worth of securities

I think most of us understand the bond market is less efficient and transparent than the stock. Professional like Brewer buy individual bonds and I do on occasion (especially if he recommends them) but most everyone else using bond funds or ETF who also get the institutional rate.


Oh and welcome to the forum.

[FinanceDude]

Quote:

Originally Posted by KRobby 3. FIA's don't cost money. There's no sales charges or fees unless you elect a rider or bail out early.

Time to quit using that line that Banker's Life taught you........... Everyone knows EIAs and VAs and instruments like that are created to sustain a distribution network and keep all those nice internal wholesalers paid.

The day FINRA requires an agent to have a Series 7 to sell an EIA, sales will drop 50%. The insurance lobby in Congress is about as powerful as the oil industry.............fact remains, EIAs are about as oversold as bottled water in a 100 degree day........

[FinanceDude]

Quote:

Originally Posted by clifp I think most of us understand the bond market is less efficient and transparent than the stock. Professional like Brewer buy individual bonds and I do on occasion (especially if he recommends them) but most everyone else using bond funds or ETF who also get the institutional rate.

For the most part, people don't need to buy individual bonds, there's a lot of efficiencies unless you have a lot of money. An ETF or low lost bond fund can do all the things an individual bond ladder and do, and better. I normally stay out of debates like these but since I actually advise clients for a living, I have a problem with a 2-bit insurance agent pounding square pegs in round holes........under the guise of being a "financial advisor".......

[FinanceDude]

Quote:

Originally Posted by ERD50 There is always the definitive reference for all things finanacial... YOUTUBE and XtraNormal!: The Truth about Fixed Indexed Annuities - YouTube Maybe KRobby produced this? -ERD50

[brewer12345]

Quote:

Originally Posted by FinanceDude For the most part, people don't need to buy individual bonds, there's a lot of efficiencies unless you have a lot of money. An ETF or low lost bond fund can do all the things an individual bond ladder and do, and better. I normally stay out of debates like these but since I actually advise clients for a living, I have a problem with a 2-bit insurance agent pounding square pegs in round holes........under the guise of being a "financial advisor".......

I generally agree. Buying individual bonds at less than institutional size quantities generally means you get skinned. I do so very selectively and only when I see a "shooting fish in a barrel" bargain that more than compensates me for the skinning I will get. Stick with funds, etfs and target maturity date variants if you plan on straying outside the realm of CDs and treasury bonds.

[Marita40]

I listened to one of these variable annuity spiels without the promise of a free lunch/dinner or any other compensation. Stupid me! The killer was when I asked for the prospectus to further study the matter. The presenter seemed a bit put off by the request, but I was surely put off when it arrived via e-mail and was over 300 pages long. I was equally stupid enough to print it out so I could actually read through it, thus wasting a full cartridge of ink. My eyes glazed over at about page 70, so I happily (and thankfully) ditched the whole idea. Incidently, I have found the book Annuities for Dummies quite helpful. I may purchase a SPIA when the time is right, but that's a different matter (and, I hope, a shorter prospectus. . .)