Retirement Expert Rants: Annuities and the Stock Market

Today, we're talking about annuities in the stock market. I've about had it, okay? When people start comparing annuities with the stock market, especially with all the volatility we're going through right now, I think we can just shut all this down once and for all.

Annuities are contracts, not investments. So, you have annuities over here, as well as guarantees and contracts. Nothing’s going to change, period. That’s why you should buy them. That’s why you should own them. That’s why you should even look at them. If you're looking at them for anything other than the contractual guarantees, don’t look at them. Do not buy them for the hypothetical, theoretical, projected, back-tested, hopeful return scenario that some agent or advisor told you might happen, should happen, would happen, will happen, or did happen if you’d owned it 10 years ago. That’s absolute crap.

My Background and Understanding of the Markets

My name is Stan The Annuity Man. I’m America's annuity agent, the number one agent in the country. I have a site called The Annuity Man, but I’ve had it. I’ve snapped on all of this stock market combination annuity stuff. That’s not the way it should work. I’ve been in the stock market, I’ve managed money, and I’ve worked for large firms. You want me to name them? Okay, I’ll name them. I’ve worked for Dean Witter, Paine Webber, Morgan Stanley, and Union Bank of Switzerland (UBS), all fantastic firms. I have nothing negative to say about them. What I am saying is I know what I’m talking about. I understand the stock market. I understand volatility. What I’m saying is if you want growth, you need to go to the stock market.

Taking Market Risks

If you want market growth, go get it. Go shoulder that risk, go for it. Roll the dice with a running start, but if you're going to do that, understand that you might miss. We're going through periods of volatility we've never seen, and people call me up. I had some guy call me the other day and say, "I'm mad at you because you didn’t tell me to buy the annuity before the market crash." Hey, we don’t make anybody buy anything. All we do is show the best contractual guarantees. We run the best quotes on my annuity calculators and leave you alone as a professional to decide on your terms and timeframe.

The Reality of Volatility

Now, I know what you're thinking. You're saying, "Stan, you're normally calm and fun and all that," but I’ve had it. I’ve had it with the stock market people telling everyone that it will always be a bull market. I know a lot of people don’t do that, and I see the same shows you do on cable, but many advisors out there have never seen a bear market. They've never seen anything go down. The bottom line that people need to understand about the stock market—and if you don’t understand, listen closely—is that most of what's happening right now is institutional, algorithmic, black-box, high-velocity, non-human trading. It doesn't involve humans. All this volatility is caused by computers fighting and trading 24/7. Humans can't trade 24/7. The market closes at 4:00, right? Not for the algorithms, not for the computers, and not for the institutions.

Deciding If You Want to Handle Volatility

With 10,000 baby boomers retiring or reaching retirement age every single day, people need to decide, "Do I really want to go into that volatility?" It’s like surfing beside a cruise ship. If you’re in the markets, it's like surfing beside a cruise ship. You might catch a wave, but you might get sucked under the boat. If you don’t understand by now, here’s the straight truth from me. I’m going to be brutally factual. I won’t be your friend. I’ll be the best advisor you’ve ever had. I’ll tell you if you don’t need an annuity. I’ll tell you if you do need one. I’ll tell you if you’re putting too much money into an annuity. I’ll tell you what you need to do with that annuity. But you have to decide: How much risk are you willing to take?

A Defining Moment

It’s a defining moment for you, and you know it. Now, the reason I’ve got the shades on is I’m pretty emotional about this. This isn’t just some rant. This isn’t just me showing up and saying, "Oh, I’m going to go off, film it, and put it on YouTube." No. This is reality. People are losing their money. They're losing their retirement, their lifestyle, their family, their marriages, their kids, their jobs—they’re losing it all. Now, do I have the answers? No, I don’t. But what I will tell you is, if you take out all the hedge fund people, the traders, the high-velocity folks, the mathematicians, the rich people, the trust funds, and all those people, there’s the rest of us.

The Rest of Us and Contractual Guarantees

So, what do the rest of us do? We look for contractual guarantees. We stopped trying to hit home runs. We look and say, "You know what? I’m okay with a bunt single. I’m okay with contractual guarantees. I’m okay with the tiny little rate of protecting my principal. I’m okay with a lifetime income stream. I’m okay with missing the next market move. I’m okay with that. I work too hard for my money to watch it drop 20% in one day." At what point will you remember 2008? Because you know what's going to happen? This market will return over time, and you’ll get hit again.

Making the Decision

There are people out there right now, maybe even you, who say, "You know what? I’m not going to buy an annuity." This isn’t some annuity pitch, so just bear with me. "I’m going to wait until the market comes back. I can’t take these losses." Do you know if the market’s going to come back? We’re in blue water now. Nobody knows what’s going to happen. So, you might want to consider that flight to safety. You might want to hold your nose and say, "You know what? That transfer of risk annuity contract might make sense. That protection of the principal might make sense. That lifetime income stream might make sense. That pension annuity might make sense."

Are You Okay with Missing It All?

Are you going to miss the next Apple? Yes. Are you going to miss the next Bitcoin? Yes. Are you going to miss it all? Yes. Are you okay with missing it all? Are you okay with missing the downside? Think about it. I'm Stan The Annuity Man.