Retirement Expert Rants: The Annuity Industry Needs to Focus on Guarantees

Hi, my name is Stan The Annuity Man, America's annuity agent, licensed in all 50 states, and I'm here today to rant a little bit. I do this occasionally when things hit me the wrong way. What we're going to talk about, and this is a rant that I wish the annuity industry itself would go to all the CEOs and all the Grand Poobahs that create the products, etc. But what kills me about the annuity industry is annuities are contracts. Annuities are issued by life insurance companies, and they primarily solve for four things: principal protection, income for life, legacy, and long-term care. That's the PILL acronym that I always use. They're contractual. You should own them for the contractual guarantees. On the side of my hat is will do. Why is it will do? Because you own an annuity for what it will do, not what it might do, and the will do is the contractual guarantees. But under that premise of will do not might do, the annuity industry, for some reason, focuses solely on the might do. The hypothetical, theoretical, backtested, projected, hopeful, pie in the sky, unicorns chasing the butterfly return scenarios that the agent will pitch to get the sale. Now, the fortunate part of the annuity world is that most annuities are contractually guaranteed.

Annuity Types

Single Premium Immediate Annuities, Qualified Longevity Annuity Contracts, Deferred Income Annuities, and Multi-Year Guarantee Annuities. Those are contractual. There's no wiggle room, there's no pie in the sky, there's no backtested, you're going to get what the contract tells you. Now, there are some other types that have attachments to the markets, or some indexes, like an Index Annuity, which have an attachment to a call index. And those are sold for hypotheticals and theoreticals. Now, the unfortunate part with the annuity industry is they're missing the biggest marketing opportunity of all time. It will be studied in business schools for decades to come. And you're saying, wait a minute, Stan, what are you even talking about? What I'm talking about is when annuities were first put on the planet in Roman times as a gift, a pension gift, a lifetime income stream gift for the dutiful Roman soldiers and their families, they got what's called an annua, payment, annual payment, which is the root word of today's word, annuity. Those were pensions.

Got Guarantees?

Everybody in the country already owns the best inflation annuity on the planet. They might not know it. It's called Social Security. Pensions are annuities. Annuities are the only

product on the planet and in the financial world that provides a lifetime income guarantee. Lifetime income equals annuities. Annuities equal lifetime income. Why isn't that the ad? Or we could do the Got Milk ad, Got Guarantees. Annuities have a monopoly, a monopoly on lifetime income. That should be the only thing we talk about. Yes, there are other products that do other things, but that should be the only thing we discuss. Why would that make sense? We're all scratching our heads, saying, "Well, I wonder if Social Security is even going to be there. Or are they going to means test it, or are they going to change the rules? Will I even get it? Will they even increase it anymore?" If that's the case and you have a monopoly on lifetime income, wouldn't you promote lifetime income to the masses?

Right now, annuity equals hate. Hate equals annuity. There are people running out saying, I hate all annuities. There are advisors saying, oh, you should never buy an annuity because the annuity company will keep the money. That's complete and utter garbage. That's only one out of 35 ways you can structure a lifetime income stream. But there are people out there that go, I'd never buy an annuity, Stan, because the annuity company keeps the money. That's so misinformed and uneducated that I can't see straight. So, for whatever reason, the annuity industry has made this decision: let's compete with stocks, let's compete with ETFs, let's compete with mutual funds, let's compete with all those things that we can't compete with, but let's compete with them.

There's No ROI Until You Die

That'd be like me saying, you know what, I'm going to train for the Olympics in the hundred- yard dash or the high hurdles. That's stupid. That's not what I do. What does the annuity industry do? We do lifetime income. What does the annuity industry do? They transfer risk. You're transferring the risk for the annuity company to pay you for the rest of your life. I always tell people there's no return on investment. There's no ROI until you die. Why? Because you've transferred the risk. You could live to 150, people are, what if I lived to 160? They're going to pay. What if there's a medical breakthrough with your lifetime income stream, are they going to pay? Yes, it's a contract. Why, as an industry, are we not promoting that? Do you want me to tell you who it is? The number one agent in the country. America's annuity agent.

Common Sense

I'm promoting that: lifetime income, The Annuity Man, lifetime income. I can get that for you. I can shop all carriers for you, period. Now, this could all be solved by the annuity industry in two ways. They could either make the cogent decision to say, you know what? Stan The Annuity Man's right, we should only talk about lifetime income. Or they could take the commissions, which, by the way, all annuity commissions are hidden. It's built into the product. You don't see it. Comes out of the reserves. But if they made the commissions low and the same on every product, problem solved, problem solved because agents wouldn't be steering you or pushing you to their product of choice that pays 7 or 9% or 6% commission. They would point you to the product that makes the most sense because they will get paid the same anyway.

Wait a minute, that made too much sense even to implement. Of course, it does. It's common sense. But the annuity industry needs to get off of market growth. I know that it's the sexy sell. I know that they get invited to those cocktail parties on Wall Street. I know that they want to be with the big boys, the Gordon Gekkos, the hedge funds, and the private equity people. Trust me, they're laughing at you industry. You're not them. You don't want to be them. You have a monopoly on a product. You have a monopoly on lifetime income that you should promote because, by the way, the people that I talk to most of them need additional income. Most of them need income down the road if inflation hits. Most of them want contractual guarantees. Most want to set their partner up with a lifetime income stream so that when they die, that income stream continues uninterrupted and unchanged.

I'm assuming that's you. Even if you're Gordon Gekko, even if you're the baddest dude on the planet when it comes to markets or you're a female trader, the baddest dudette on the market, I guarantee your spouse could care less. Male or female, I guarantee you. There's one of you who could care less about the volatility index and all kinds of PE ratios, and I guarantee all they care about is either going to see their family or their grandkids. That's my wife. She could give a rip about the stock market. So, what am I telling the annuity industry to do? Embrace the monopoly that you have. I can't believe I'm saying this. You have a monopoly. It's lifetime income. Take it, embrace it, and promote it. Tell the masses that if you want lifetime income, you can get it through annuities. If you want lifetime income, you can customize the contract so that it works exactly like you want it with annuities.

Tell them that, run the ads, or I'll just continue to run the ads. The problem is, I don't have the money that you guys have. But if you let me keep doing this, I will because you're not taking advantage of the opportunity. And as a consumer out there, remember that lifetime income equals annuities. Annuities equal lifetime income. It's the only product on the planet that can contractually guarantee you a lifetime income stream that you can never outlive. And with that, I encourage you to go to The Annuity Man and schedule a call with us. It will be brutally factual. It'll be the best conversation you'll ever have about annuities. And if you choose to work with us, we'll be the best advisors on the planet. We won't be your friends, but we'll be your factual expert when it comes to annuities. Thank you for joining me today, and I'll see you on the following Stan The Annuity Man YouTube blog.

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.