It’s Your Money, NOT Your Advisor’s: Shootin' It Straight With Stan

Welcome to Shooting It Straight with Stan. I'm your host Stan, The Annuity Man, America's annuity agent, licensed in all 50 states. Today's topic will bring me a lot of hate mail, which I love because it comes from the industry. But here's the topic, it's your money, not your advisor's. I'm going to repeat it again. It's your money, not your advisor's. And I want you to think about that for a second.

Now, there are a lot of great advisors out there that are sitting on your side of the table and trying to help you. However, many of them are out there under the false assumption that they control the money and you shouldn't be questioning them. You shouldn't be asking these questions about annuities or whatever else you're looking at, have heard about, or researched. And they honestly kind of berate you and talk down to you. And if that's happening, you need to find another advisor.

Client Example

I got a call the other day, and you can schedule a call with us. You'll either get me or one of my really smart people, and this person was on the phone, and we really came up with an excellent contractual solution to solve for income for both him and his wife, lifetime income. We structured it so the money would go to the kids if something happened to them, not in a lump sum format but in a payment format.

It was a good allocation. It was in proportion. It made sense. It was a transfer of risk that he really didn't have based on what he told me he had. And by the way, I don't give advice on non-annuity assets. I used to do that for a long time with Dean Witter, Paine Webber, UBS, and Morgan Stanley. But I do not do that anymore. I do not ask those questions, "What do you have? What kind of mutual fund do you have?" I don't have that. My questions are, "What do you want the money to contractually do?" And then, "When do you want those contractual guarantees to start?" I'm dealing with contractual guarantees.

So, we reached the conclusion, and of course, we didn't do anything high pressure. I'm like, "So what do you want to do? Do you need more information from me? Here's how the process works if you want to move forward." And he goes, and I hear this often: "Well, I'm going to go speak with my financial advisor about it." I said, "Well, I can pretty much guarantee, unless that's a one in a hundred advisor, that they're going to shoot it down." They're going to shoot it down because it's contractual. They'll shoot it down because you can't charge an annual fee for the annuity type I'm talking about.

And by the way, agents charging annual fees to manage annuities, I'm just against that. The only one that makes sense is a no-load Variable Annuity in a non-qualified, non-IRA account, where someone manages the mutual funds for a small fee. That's the only one. All the rest should never be charging a fee. I got blasted the other day incorrectly, of course, by the industry when I said, "You should never be charged a fee for managing an Index Annuity because you get to change the allocation one day per year. So why are they getting paid the other 364?" I mean, that just makes sense.

Overconfident Advisors

But advisors sometimes feel like they're masters of the universe, and they're taught to feel that way. When I was at the four firms, they wanted you to be the big dog in the room and have confidence. And let's face it, the people doing that, and when I was doing it, you're throwing calculated darts at things. You don't know where things are going. And yes, you can look at historical back test and stuff, and I don't like the back test numbers, but that's that because the world is changing. But I told this person, "You're going to take it to the advisor, and they're going to say, 'You shouldn't do that. I can do that for you. I can manage the money, and we can just peel off whatever we need for income.'" That's garbage. I've gone over that in a few other rants of mine where we're talking about the 4% rule or the Monte Carlos simulations and all that stuff. It's garbage. This "Let me manage the money and peel off the gains, and then we won't ever have to annuitize or transfer risk to an annuity type product." Nonsense, absolute nonsense.

The advisors know that. And those who will argue against that might still be wearing leisure suits. I mean, they are in the past period. You need contractual guarantees in place. You already have the best inflation annuity on the planet with Social Security. If you have a pension from your company, if you're so fortunate, that's your second annuity, and the Required Minimum Distributions from your IRA function like an annuity because you're getting payments forced or otherwise by the government every single year.

The Old Model

To have guarantees in place isn't a bad thing. But large firms, non-annuity investments, those firms want those people to be charging fees for that. Wrap fees for that. I was there back in the day when Dean Witter had no wrap fees and there were no management fees. It was a transactional business. Way back, with Dean Witter and Paine Webber in that group, you paid for a stock transaction, you paid for a bond transaction, and you paid for a mutual fund transaction. I'm that old. I was there. And then I saw the transition to companies and firms wanting to do fee-only, fee-based, or charge a fee. And what that was about nothing more than projecting future revenue. If you ever got into the smoke-filled rooms with the bagels, donuts, and marble floors, that's what they're doing. They want to track future revenues. That's because in the transactional model before, they could not track revenues.

In general, a lot of the bias against annuities and contractual guarantees comes from a model that I believe is broken and will eventually not exist. It's going to be kind of like a boutique, and it is right now. There are a lot of do-it-yourselfers out there. But if you still have a relationship with an advisor or financial planner, they carte blanche shoot down annuities and say stuff like, "All annuities are expensive." Or "All annuities are bad." Or "You shouldn't own an annuity." That's dumb.

Reevaluate Who You're Working With

Listen, if they say that, you need to reevaluate who you're working with. That's like if I said, "You should never own a mutual fund. You should never own a stock. You should never own a bond. You should never own a treasury. You should never own a CD." If I did that, my credibility would be gone. I never would say that. I always ask people, "Do you want to shoulder the risk or transfer the risk?" But I would never say that about a specific product category. But in the non-annuity advisory world, it's commonplace, cavalier, and almost expected for advisors to say, "Oh, no. Don't do annuities. Annuities are bad." Annuities are bad? Are restaurants bad? Are shoes bad? I mean, if they're saying that, that disqualifies them, and they should say something like, "Well, that's not what I do. But in some cases, annuities do work. Annuities for lifetime income or annuities for principal protection or annuities for long-term care, or annuities for legacy do work. Mr. And Mrs. Jones, I just don't do that."

Now, we work with a lot of fee-only planners that don't handle annuities, but when it comes time for them to recommend something and the annuity type fits, whether it's an Immediate Annuity, Deferred Income Annuity, a Qualified Longevity Annuity Contract, whatever, they're honest enough to say that. But if your advisor just carte blanche says annuities, no. Then you need to find another advisor. They're not in reality; they're stuck in the '70s. They're listening to disco music and wearing flared bell bottoms with platform shoes. Nothing against that, but that's what they're doing.

Getting back to the story, I said to this guy, "Listen, you're going to go, and you're going to show him this." Because I sent him the whole contractual guaranteed proposal and all that stuff, the numbers that were going to happen, I just showed it to him to see what he says. I said it knowing what he would say; I was predicting it. I hope I'm wrong. But guess what? He came back, and the guy called me and said, "Stan, he just didn't like it at all. He doesn't think we need to put those guarantees in place, and he thinks he could manage it." And I just said, "Hey man, good luck to you. I wish you the best." I never tried to talk people out of a decision they've made or been talked into by somebody else because they've already made it, and I respect them. Do you know why? Because it's your money. It's not my money; it's your money. I respect that. I might disagree with it, but I respect it. And I always tell people, "I respect your decision. It's your money. But don't allow that person to bully you on something that makes sense or to bully you and act like it's their money and they're managing it. You should be happy that they're managing it."

It's Your Money

I talked to a couple in Texas recently that were very successful, but their money manager from a former employer of mine, I'm not going to mention the four but one of those four companies I used to work with, was literally bullying them and berating them and talking down to them. And these were two very smart husband and wife entrepreneurs: high IQ and advanced degrees. And I finally said to them, "Why do you allow that person to talk to you like that? Would you allow them to talk to you like that face to face?" And the guy's like, "No, I'd probably punch him." I'm like, "Yeah, why are you doing that? He has your money. It's not his money. It's your money. You are allowing him to charge a fee to manage the money. I hope you're monitoring his success with the ability to pull it from him at any time."

Yet, this person was putting them down, berating them, and telling them that the contractually guaranteed principal protection, MYGA that I was telling them that might make sense for their fixed portion of their portfolio in combination with bonds, treasuries, and CDs might make sense because they didn't have that. He just went off. I don't even know if he knew what a MYGA was. Most people don't because it's such a low-commission product and pro-consumer that nobody knows about it. That's the reason we're the top company out here with MYGAs, Multi-Year Guarantee Annuities, the annuity industry version of a CD.

You Need an Advisor

What I want you to ask yourself is if you have an advisor relationship, first, if it's a friend, you don't need any friends in the business. I'll never be your friend. I'll be the best advisor you've ever had. Number two, they can't be a frat brother, frat sister, sorority sister, or sorority sister. You can't, no, none of that. No friends. You don't need a friend. You need an advisor.

I always tell people, "If you've got cancer and you go see the oncologist, you don't want it to be your friend. You want that person to eat garlic all day, never bathe, but tell the truth." That's what you're looking for with advisors. I need you to ask yourself, "Is this advisor bullying me? Does this advisor discount my questions? Does this advisor steer me where they want me to go in the conversation?" Because if that's the case, hey man, it's 2023 at the time of this blog; you don't need to take that crap. There are numerous avenues for you to choose from to get good, solid, honest, truthful advice, whether it be annuity assets through us or non-annuity assets.

I'm seeing this happen a lot, and many of the reasons it's happening is with all these baby boomers at the time of the blog, 11,000 baby boomers hitting 65 every single day. There are a lot of people that are looking for contractual guarantees. Then you have some megaphone like me out here with a thousand videos and counting, pounding the table with contractual guarantees, pounding the table with transfer risk, pounding the table for lifestyle type planning. And now a lot of that messaging is getting through to these masters of the universe advisors, and they don't like it, and they don't know what to do with it.

Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.