Comments on: Annuities – Equity Indexed Annuities - (Part 3 of 4)

By: Casey Murdock

Casey Murdock — Tue, 29 Jul 2008 15:23:01 +0000

Let me begin my response to GHL by quoting the first sentence of this article: “There are a lot of annuity salesmen out there that are not going to like what I have to say about these types of annuities.” The very tone of bitterness, desperation and defensiveness of your irrational diatribe, GHL, is a manifestation of where you are coming from and how reliable your comments are. If you are so convinced that Equity Indexed Annuities are the best option, why didn’t you spend your energy explaining why, instead of trying to attack an alternative that you supposed (incorrectly) that I was touting? Now, while I think that the comment is not worth responding to and falls of its own weight, I know that some out there expect a response, so here goes:
First, GHL, you have no idea what products I recommend to my clients. I do recommend mutual funds at times, but rarely in the way that you are suggesting. In fact, only three times in my career have I taken an upfront commission on a mutual fund and each of those times was because it was clearly the best way for the client. Each time I meticulously explained the commission and its effect on their money and compared it to all of the other options.
Second, I have read annuity contracts many times and that is exactly why I came to the conclusions that I expressed in the article. If more insurance salesmen would analyze annuity contract to the extent that I have and seek to understand the full reproductions on their clients I think that there would be far fewer annuities sold, and a much greater portion of those sold would be truly appropriate for those clients.
Third, if you will read my article on Variable Annuities you will see that I do believe there is a place for protection against the downside of the market. I don’t believe that it is for everyone and I am very aware of the fact that the extra cost of this “insurance” is often more detrimental to the client than full market exposure would be over a long period of time. In certain situations, however, the person would be better off by having this protection. Even in these cases, though, an Equity Indexed Annuity is not the best way to get that protection.
Forth, your rant about fees and expenses is actually correct. These expenses can have a huge effect on the long term performance of your investments. I think that this would be a great topic for a future article. At the same time, it doesn’t make a lot of sense when you are comparing mutual funds to annuities. It is a rare mutual fund that has costs that are higher than an annuity. However, insurance companies are able to legally mask many of those costs.
So, GHL, you are right. I can read and think. And thanks to that ability I have spent a tremendous amount of time reading and thinking about the vast world of investment possibilities for my clients. And in that time I have come to a pretty firm conclusion that Equity Indexed Annuities are a lousy choice for most people.

By: GHL

GHL — Fri, 25 Jul 2008 20:17:07 +0000

Something stinks about this article. Your not an insider, because you don’t understand contracts or capital surplus. Your selling mutual funds under the guise a fair review of annuities. I bet you a dollar to a donut that you have never read an annuity contract from any company in your in your life. What are these mysterious fees? I might be wrong do they call them management fees, turnover charges, 12-1b fees, sales load, redemption fees? Oh I’m sorry thats the stuff you sell. Do you tell your clients they never get all of the market because you and your buddies are in the deal. Cost matters! Do your clients understand involuntary surrender charges? I’m just going along trusting old Casey and the market went down. I now am worth 20% less. Don’t worry Casey says my old clients from 2000 are almost whole now (2008). Casey, does your approach go something like this? Mr. Client heres the deal, you put up 100% of the capital and take 100% of the risk and will take our cut off the top and you can keep the rest. Dalbar said the average investor kept 3.2% of a 12% market. People should be breaking down your door to get that deal. Do an article out of your concern for the truth. Call it foregone earnings. You could explain how just 2% off the top in fees and expenses could confiscate 40% of the total return and you could add, by the way Mr. Client your not getting all of the upside of the market either. This is where your insider knowledge comes in play, you say Mr. Client your mutual fund is working so hard for you that they sold all $5,000,000,000.00
the stock they had and bought it back all in one year. We hide that fee.
Casey, don’t insult your self. I’m sure you can read and think.
By the way Tony Bahu has the bar association approved your lawyer referral service. I hope those lawyers can finally get you paid off that site.

By: Tony Bahu

Tony Bahu — Fri, 25 Jul 2008 15:30:56 +0000

You bring about great points in your article. These are the things that we talk about in our book ‘Annuities: The Shocking Truths Revealed.’ If you are not familiar with it, please go to http://www.AnnuityMD.com and check it out. I would like to talk to you more about this. If you would like, give me a call listed on the page and we will talk! Great job!!!