Friend is trying to get me into his annuities

[bingybear]

what annuities.... looks like universal life. What insurance company is he using? I had a local guy pushing what sounds like the same thing. The thing that looks the most interesting besides only getting the up side.... is a tax free income stream. The scary parts are what happens if you pull too much out and the policy terminates. With whole life this can happen if you can't keep up paying back the loans to keep the policy open. If it closes, does all the loans become taxable as well as interest paid by internal policy cash? Not sure about UL. An just how much does this suck your money into fees. I could not get details on these questions.

For me.. I would avoid.

 

[ArkTinkerer]

You might feel otherwise if you look at the friend/sellers resume, he knows full well what he's doing.

https://www.linkedin.com/in/tomrutkowski

I noticed he got his start working for the "Superior Cleaners". Same line of work just that now he concentrates on client's bank accounts!

 

[brewer12345]

Incidentally, if you like the idea of this goofy strategy you can DIY without dealing with insurance companies:Life, Investments & Everything: Rolling Your Own

 

[samclem]

This cashing in on friendships is so distasteful. Many here are probably aware of "First Command" (formerly "USPA/IRA") that specializes in signing up military members into high-cost retirement products. The business model frequently involved friends getting other friends to sign up (and there were many cases of inappropriate command influence, too, according to lawsuits and press reports). But, as scummy/shady as it was, it at least had two mitigating factors: 1) some of the salespeople really didn't realize how crummy and overpriced the products were and 2) They likely did convince may people to save for retirement who otherwise wouldn't have done it. So, even if a person pays a huge load and ER, if he ends a 20 year career witha few hundred K in investments that he wouldn't have had otherwise, that's not all bad. They are poorer than if they'd gone to an up-and-up outfit (fee-only advisor, read a book and get with VGD, TRP, Fido, etc), but better off than if they'd done nothing.

But guys like those in the OP aren't ignorant--they know the full value (?) of what they are pushing. And their marks are not people who would otherwise have nothing in savings--they are people who have successfully saved some money, and these guys are trying to help themselves to it.

 

[Mulligan]

I would just ignore him or respond that you are happy with your investments and have no interest in IUL.



The loss of principal claim is a joke. Ask if if you put $100,000 in the contract on 1/1/2012 after the market performance for 2012, 2013 and 2014 and then you cashed it out, what would the surrender check be and what would the taxable gain be. I suspect that the 13% would be largely eaten up by expense charges, cost of insurance charges and surrender fees and your net return would be minimal if positive at all.



The zero floor is also a joke. Use the same scenario except that the index has zero return for each of the 3 years and I'll bet that the surrender check is less than $100,000.



He'll hem and haw about it being a long term investment but if he gives you the correct numbers you'll see that their claims that you can't lose money are a lie.

I would also be willing to bet what they verbally highlight, doesn't coincide with the buried fine print no one reads. Thus getting them off the hook of their "guarantees".


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[PatrickA5]

You might feel otherwise if you look at the friend/sellers resume, he knows full well what he's doing.

https://www.linkedin.com/in/tomrutkowski

I imagine this guy is pretty good at what he does based on his resume. Ten jobs in less than 20 years, all dealing with sales (for the most part). I imagine he knows his stuff pretty well and will have a quick comeback for anything negative you can come up with.

I didn't really know people put their "sales pitch" on LinkedIn, but this might be the first sales guy I've looked at. Pretty impressive.

Meanwhile I'll just stick with my Vanguard 4 fund portfolio and not worry about all of that complicated stuff.

 

[Shanky]

Why or how would your friend know you are worth 7 figures? Are you flashy with your wealth? Do you tell folks how much you are worth? If so, keep that stuff on a need to know basis, and you won't have to deal with situations like this.




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[rodi]

He's a salesman.

Interesting - I clicked on the linkedin link that midpack posted... And I know people who know him. (We have a former employer and industry in common.) Who knows - I may have even been on conference calls with this guy.

Keep the friendship and the sales pitch separate. I like samclem's approach of the new email inquiring about his life/family/etc... then mention that you're not interested in his product line. Simple.

 

[Ready]

When I get pitched products like these, the first question I always ask is "So if I buy this product from you, how much will you earn on the sale?"

It usually makes for very interesting conversation.


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[Nords]

This cashing in on friendships is so distasteful. Many here are probably aware of "First Command" (formerly "USPA/IRA") that specializes in signing up military members into high-cost retirement products. The business model frequently involved friends getting other friends to sign up (and there were many cases of inappropriate command influence, too, according to lawsuits and press reports). But, as scummy/shady as it was, it at least had two mitigating factors: 1) some of the salespeople really didn't realize how crummy and overpriced the products were and 2) They likely did convince may people to save for retirement who otherwise wouldn't have done it. So, even if a person pays a huge load and ER, if he ends a 20 year career witha few hundred K in investments that he wouldn't have had otherwise, that's not all bad. They are poorer than if they'd gone to an up-and-up outfit (fee-only advisor, read a book and get with VGD, TRP, Fido, etc), but better off than if they'd done nothing.

A classmate has been with FirstCommand since 1982. That's over 33 years of the notorious 50% front load plus annual fees (although their expense ratios are considerably cheaper today). They did a "free seminar" at USNA and he was just too busy to do his own investing.

He and his spouse were both on active duty for at least 20 years (and today they have an O-6 pension and an O-5 pension). At one point in 2002 he was the CO of a submarine while she was the XO of a shore command. One weekend while we were hanging out on the beach together (a very rare occurrence), his spouse asked me if something was wrong with the stock market. She said they'd been making their usual paycheck deductions to USPA-IRA but their account balances weren't going up anymore. I was the first person to explain to her what the NASDAQ is and what had happened.

But as far as I know they're still with FirstCommand. Investing is scary stuff and they'd rather do other things than keep track of their finances.

 

[ERD50]

When I get pitched products like these, the first question I always ask is "So if I buy this product from you, how much will you earn on the sale?"

It usually makes for very interesting conversation. ...

Personally, I would not go that route. For one thing, everyone is looking to make a profit when they provide a service, nothing wrong with that. The bottom line is - will the client benefit (the baker, brewer, etc)?

The second thing is, these are professional salespeople. They will have an answer for you.

-ERD50

 

[gcgang]

When I get pitched products like these, the first question I always ask is "So if I buy this product from you, how much will you earn on the sale?"

It usually makes for very interesting conversation.


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Don't go there, asking about how he gets paid, unless you are up for listening to a song and dance.

I knew a guy who had a "financial planning" firm who would answer this question, "you don't have to pay me anything", and then would digress into obfuscating things with talk about his annuities and mutual funds that would make your head hurt.

The guy at one point was "disciplined" by some regulator for collecting up front loads when he was putting people into fee based platforms. Most of the consequences were born by his firm for lack of supervision, even tho this guy was the manager of the local office. He simply left his firm and went to another, and never seemed to miss a beat.

Just a smaller scale version of Jordan Belcort, the Wolf of Wall Street.



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[Rick_Head]

If you want to be blunt, and I have been on occasion, what's wrong with "we're the same age, I have a lot more than you, who should be advising who?"?

 

[haha]

Screw this guy! He is trying to screw you.

The lowest kind of scum, canvasses his old friends. I have sold things I would never have bought, but not to my friends or family.

Actually, no one will ever buy anything valuable unless he goes out and finds it. If it is for sale in an institutionalized market, and commissioned salesmen are the vector, it sucks. Always. Period.

Ha

 

[petershk]

I stole an idea from Guy Spier's book.

It goes like this: I know people who sell stuff are very good, knowledgable and persuasive and know more than I do. So... In order to ensure I make good decisions I can't buy anything that someone is selling. So.. If they want to talk to me about it... That's fine... But then I can't buy it. If they want me to buy it... They can't talk to me about it but are welcome to send me all the information and I can make an informed decision when I'm not in a hot state.

If they persist I just say "ok... Just know now I can't buy it 100%... Nothing personal... It's just a policy."

It works well .

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[MooreBonds]

Screw this guy! He is trying to screw you.

The lowest kind of scum, canvasses his old friends. I have sold things I would never have bought, but not to my friends or family.

Actually, no one will ever buy anything valuable unless he goes out and finds it. If it is for sale in an institutionalized market, and commissioned salesmen are the vector, it sucks. Always. Period.

Ha

While I detest those that sell financial products at a significant markup to the unsuspecting victim with little value added (and oftentimes, massive NEGATIVE value added to the process), this, in principle, is no different than a Mary Kay "sales rep" (or insert your other favorite MLM company) or a real estate agent or insurance agent hitting up their friends and family for business leads. Or your friend who started up a lawn car business.

Are the Mary Kay products over-priced? To some - while others swear by it. Is State Farm higher than Allstate or Amica? Sometimes they're lower, sometimes they're higher. Is a real estate agent really THAT valuable, for the 6% commission you end up paying? Sometimes they truly aren't (while a few are).

Are the financially poor products pedaled by the likes of this ilk bad compared to Vanguard - or even 'lesser' loaded families like maybe American Funds? Obviously.

But are they any worse than a host of other financial firms that make their living by selling the financial version of a Chevy investment at the price of a Cadillac? Or a credit card extending credit to financial rubes, who end up paying 15%+ interest just because they're too damn lazy to open their eyes and see that making that "just $50" monthly payment results in paying more than double for a product? As some have pointed out, perhaps these financial illiterates would never have saved, and at least have some small meager savings amounts.

If Vanguard paid an army of financial reps to go door-to-door and educate people on the benefits of products from Vanguard, then they would probably have some success at it - but remember that many people simply don't WANT to know anything related to "that investment stuff", and are happy having a 'professional' take care of them. They view it probably the same as relying on a medical professional to take care of their health, or a mechanic taking care of their car - why should they have to bother themselves to learn it when there is already an investment professional out there who can do all of that for them?

Of course, having said that, if a friend or acquaintance of mine tried to sell me, I'd simply tell them that I know the real total costs associated with investments, and will never purchase the products they are selling. If they attempt to continue despite my repeated "no" answers, then I would really tell 'em off.

 

[haha]

While I detest those that sell financial products at a significant markup to the unsuspecting victim with little value added (and oftentimes, massive NEGATIVE value added to the process), this, in principle, is no different than a Mary Kay "sales rep" (or insert your other favorite MLM company) or a real estate agent or insurance agent hitting up their friends and family for business leads. Or your friend who started up a lawn car business.

You may well be right. I just prefer not to be solicited by friends or family. Especially with family, it seems like an attempt to make it difficult to say no. In fact, it is an attempt to make it difficult to say no. Real estate may or may not be different, since lower cost similar services are not easy to find in many markets. And every house is different, at least used houses will be different in upkeep. Even here companies like Redfin are making transactions cheaper. Also, the 6% is not written in stone. In various environments an agent will often adjust downward if you push.

Ha

 

[brett]

We never do business with friends or relatives.


Give that bum the brush off. You do not need friends who take advantage of you.

 

[pb4uski]

When DW and I were first married two of my four BILs were life insurance agents and pitched me. I just made it clear that I was more of a BTID guy and gently rebuffed any advances. They soon learned that it was a lost cause and never brought it up again.

I doubt that I would be retired today had I bought their invest in whole life pitch.... and IUL is worse.

 

[jollystomper]

I don't mind doing business with friends and relatives *IF* it is a truly good value. I do not have a problem saying no, and I'm good enough in math to do battle against any claims of improvements over my current situation 9amazing how many sales folks cannot do not math beyond what the company provides them).

The biggest issue I have found is that folks feel you should be willing to pay much more for a product just because a relative is pushing it. Years ago a BIL really was after me to sell me a life insurance/annuity product, and I kept rebuffing him because not only did I not like the product but even if I did it was twice as much as the low cost term insurance we had. Eventually BIL became ex-BIL. DW and SIL (her sister) recently had a conversation not too long ago where SIL put some of the blame for their marriage falling apart on us, because we wouldn't "help them out" by doing business with him. DW kept pointing out how we didn't need it in the first place, how expensive the product was, how I was trying to point that out to ex-BIL etc., but SIL's main reply was "that shouldn't matter, you do those things for family".

 

[davemartin88]

For me, this would be a former friend who has become a business acquaintance that I don't actually do any business with. Can still be cordial and have a friendly conversation but could also be clear that I have no intention of investing in annuities.

 

[rayinpenn]

Life insurance was always a very inefficient way to invest your savings. These guys are scary they know well that there products are expensive but there's that commission. Guess who funds that commission you know...

dont walk away...Run!


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[brett]

When I first started working in the computer industry we had a saying.

'Where there is mystery there is margin"

I have always believed that this is the motto of the insurance business. I believe in term life. I strongly suspect that all those other complicated products that they push result in low return to the policy holder and high margins for the insurance company.

Why not simply by insurance and investments as two separate products

 

[dtbach]

Why or how would your friend know you are worth 7 figures? Are you flashy with your wealth? Do you tell folks how much you are worth? If so, keep that stuff on a need to know basis, and you won't have to deal with situations like this.




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Well, I don't know if he knows I"m worth that much, but back when he was a salesman for a MegaCorp, the subject of finances came up a few times and we talked stocks, mutual funds, etc. so of course he knows I have ample funds to invest. But back then, he was an index fund guy which I appreciated and always knew that "low cost" was the way to win. Obviously now that he has become an annuity huckster, all that is forgotten.

By the way I recall him telling me he was "all out" of the market in 2011. And I'm glad I didn't follow his advice then!!

 

[Sue J]

I don't mind doing business with friends and relatives *IF* it is a truly good value. I do not have a problem saying no, and I'm good enough in math to do battle against any claims of improvements over my current situation 9amazing how many sales folks cannot do not math beyond what the company provides them).

The biggest issue I have found is that folks feel you should be willing to pay much more for a product just because a relative is pushing it. Years ago a BIL really was after me to sell me a life insurance/annuity product, and I kept rebuffing him because not only did I not like the product but even if I did it was twice as much as the low cost term insurance we had. Eventually BIL became ex-BIL. DW and SIL (her sister) recently had a conversation not too long ago where SIL put some of the blame for their marriage falling apart on us, because we wouldn't "help them out" by doing business with him. DW kept pointing out how we didn't need it in the first place, how expensive the product was, how I was trying to point that out to ex-BIL etc., but SIL's main reply was "that shouldn't matter, you do those things for family".

Wow, placing blame for her failed marriage because you didn't buy an overpriced product that you didn't need. Most likely they still would have ended up divorced but you'd still have to make those monthly payments.

So she thinks you should "do those things for family"? How about not targeting your family for stuff like that!