Retirement Expert Rants: You Do You - Beware of Agent Product Steering

Hi, I am Stan The Annuity Man, America's annuity agent, licensed in all 50 states. Yes, that's including yours. And I encourage you to go to The Annuity Man for all things annuity, quotes, calculators, podcasts, etc. But the reason we're here today is not because of capitalism, even though capitalism got us here, right? So, the old enjoy Coca-Cola. I saw this. I'm like, that's cool. Enjoy capitalism. But that's not why I'm here. I'm here because I want to warn you about something, and I'm pretty upset about it because I see it happen often. And it's called agent steering, but they're steering their product of choice to you, so don't allow that to happen.

I got a call the other day; it happens all the time. I get 80 to 100 calls like this every month. "Hey, Stan. What's your best annuity?" I don't know that until you tell me exactly what you want to do, how you want to accomplish that, and what are the contractual goals. Now, if you ask that to a lot of agents out there, what's your best annuity? They'll tell you. It's the one they want to sell you, period. And that's not good.

Contractual Guarantees

Understand that annuities are commodity products. What do I mean by that? That means that not one is better than the other. I understand that's not what you hear. I understand that the industry doesn't want me to say that. But they know it's true. Now, they might have some little whistle and bell that they think sets it apart, but at the end of the day, you're buying a contract. Don't own the dream because you're going to own the contractual reality. Don't buy the back-tested, theoretical, hypothetical, hopeful agent return scenario because they never come true. Buy an annuity for the contractual guarantees. And under that premise, that means you have to shop all carriers, which is what we do at The Annuity Man. You can use our calculators yourself or have us run a customized quote for you.

Index Annuities

But do not allow an agent to steer you into their product. And let me tell you some reasons why. And I'm not putting down these products because I sell them when they're appropriate. But in the Indexed Annuity world, if you sell enough of X, brand X from carrier X, then you get to go on a trip. And oh, by the way, Indexed Annuities are not securities. They're Fixed Annuities. They're life insurance products issued and regulated at the state level. In order to sell them, you have to make a 70 or something on a life insurance test in your state to sell them. I always tell people that you can decide to become an Indexed Annuity salesman on a Monday, pass the test on a Friday, cram course, and then give the bad chicken dinner seminar the next week. That's not good.

Most of the people out there selling Index Annuities are good people, but there are a lot of scoundrels. There are a lot of people that are just selling one product. And remember, even with Index Annuities where the guarantee is principal protection, I know how they're sold, market upside with no downside and all that stuff. If that were true, the FED would only buy Index Annuities. That's just a fact. You've got to be smarter than that. As they say in Vegas, if you don't know who the rube at the table is, it's you. Don't be the rube at the table. If you're going to go to the bad chicken dinner seminar and hear about this great product, that's the best thing since sliced bread that everyone should own, swallow the food and not the pitch.

My mom lives in St. Augustine, Florida. She eats four times a week at annuity seminars. God bless you guys for feeding her because she's picky. She calls them up and says, "What's on your dessert menu?" I love that you're feeding my mom. You're feeding Stan The Annuity Man's mom. I love that. And she's got no chance of buying an annuity from not only you but me as well. I'd never sell her annuity. But I never worked with family.

Not Your Friend

But let's talk about pitching for a little bit and pitching the product of choice. If you are working with an agent, hopefully, it's not your friend. I just did a rant about your agent's not your friend. And they say, "Well, I've got the annuity." And they show you one product. Get up and walk out. End your relationship with that person. I don't care if it's your brother. I don't care if it's your sister. I don't care if it's your brother-in-law. If they're showing you one product and say the following, "I've looked at all of them and I think this one's the best one for you." Wrong answer. You shop all carriers.

Incentives

Annuity quotes are like a gallon of milk; they expire every 7 to 10 days. So, every 7 to 10 days, you've got to get re-quotes. People say, "Well, I like XYZ company." Great. That's great. But if you're looking for the highest contractual guarantee, hopefully, XYZ company finishes first, but they might not. And if they don't, you need to buy the highest contractual guarantee. If someone's saying, this is the one I need you to sell, or you're at the bad chicken dinner seminar, and they're talking about one product, they're trying to go to Bora Bora on a trip if they sell enough of it. They're trying to get some type of incentive if they sell enough of it.

By the way, in the securities industry, and I think in 2003, they got rid of all that incentive crap. There should not be incentives or trips or all these things. In some cases, you can get a car if you sell enough of it. There should not be incentives to sell annuities of any type. Why? Because you're already getting paid a commission. The commission's built-in. You never see it, but the agent is getting paid. If they say they're not getting paid, they're lying to you. That should be enough. That should be enough for an agent to say, "I'm going to buy my own trip." They should not have in the back of their mind that they sell enough of this XYZ annuity, they get to go to Spain, or they get to go to Tahiti, they get to go to Bora Bora, or they get to go to Italy. It shouldn't be like that. I've told the annuity industry about that, but I'm screaming into a hurricane. It's not going to happen. I just think that is a problem when you're talking about trying to decide on a contractual guarantee.

Showing One Product

And with 10,000 baby boomers retiring every single day, all looking for contractual guarantees, the demographic tidal waves breaking on the annuity industry, people want the truth. People want the highest contractual guarantees. And people trust your advice, meaning an agent. So, agents shouldn't be just showing one product. There shouldn't be agent steering. I've said for a long time that there should be a law, rule, or regulation, something that when you ask an agent for a quote on a specific annuity type, and it has to be contractual; it can't be pie in the sky hypothetical, theoretical, back tested, projected, hopeful agent return scenario, unicorns chasing the butterflies. It never works that way.

But when you ask an agent or advisor for a quote, that agent or advisor should show you at least five carriers. Different carriers all provide a contractual guarantee, period. Not one. Now, there are some captive agents. What captive means is they only work for XYZ company. My apologies to you. I know you're nice people. I know you do the right thing. But in a commoditized world, that doesn't work anymore. It's like having a scotch tape store, that makes no sense. Who would have a store that just sold scotch tape? Or it's like going into a restaurant, "What's on your menu?" "We have one thing." It's like going to a car dealership. "Hey, what kind of car can I buy?" "Oh, we only got one car." That's insanity. So, do not let it happen with annuities. Do not allow that person to steer you into their product of choice because "I really like this one; this is the one I looked into in research." That's just being lazy. They don't represent enough carriers. They're not looking out for your specific best interest.

Fiduciaries

And then what is that? That's being a fiduciary. Everyone says, "Well, there should be a law that all agents should be fiduciary..." No, it should be common sense. It should be immediate. It should be just what we do. It's putting the client's best interest ahead of ours. And you saying, "Well, Stan, you're just saying that." No, I'm not. No, I'm not. If I don't sell another annuity in my life, I'm fine. I'm going to retire well. My wife's going to be happy. My kids are going to be happy. But I'm out here cleaning the mess up, and with that cleaning of the mess up I am the top agent. Why? Because I'm brutally factual. Why? Because I show every single carrier on the planet. Why? Because when you ask us for a quote, I don't know who the carrier is going to be; I quote for the best contractual guarantee, and then we find out who that carrier is, and then we talk about it from a Claims-Paying Ability standpoint. It's really that simple.

Take away this from this rant. And my apologies; sometimes it just makes me mad how annuities are sold. Do not let someone steer you to their product. Do not allow them to tell you it's the best one because they looked into it. It's the best one for you. Do your own research and buy the highest contractual guarantee shopping all carriers.

And with that, I'll see you on the following Stan The Annuity Man 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.