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Spicuzza

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Jeffrey Voudrie from Tennessee claims he is NOT an Insurance Agent.

 
These articles written by Insurance Agents condemning other Insurance Agents are laughable. [rofl]
 
The purpose of this thread is for me to respond to self-appointed “experts” regarding Equity Indexed Annuities (EIAs), more accurately described as Fixed Indexed Annuities.

Mr. Jeffrey Voudrie is a Life Insurance Agent from Tennessee.


 
 
The article below is typical of what Stock Brokers, Probate Attorneys, Bankers and News Media have to say about annuities in general and Indexed Annuities in particular. I will respond to each paragraph individually to point out how the author actually says nothing about the product in particular or its real world uses and benefits, but simply condemns all insurance agents.
 
Keep in mind Jeffrey Voudrie is an Insurance Agent from Tennssee. 
 
The article words are in blue and my response to each paragraph is in black and each paragraph separated by a horizontal line. Mr. Jeffery Voudrie, the aurthor of the article is a Certified Financial Planner. While the title Certified Financial Planner sounds impressive, for all intents and purposes, he is nothing more than a Life Insurance Agent from Tennessee.

Below is an actual screen shot of one of my client's projected return of 15.23%

Please keep the 15.23% in your mind while reading this clown's article.


Look Out! Millions of Americans feel unsophisticated when they discuss investment opportunities. If you are one of them, beware. A legion of commission-based brokers and insurance agents is just waiting to sell you the ‘perfect investment.’ Unfortunately, it can easily be an investment you will regret for years to come.  Not one word about contract benefits. All insurance agents earn commissions on each and every form of insurance they write. Only an insurance agent can sell an annuity. I agree with the “perfect investment” in quotes. A Fixed Indexed Annuity is in fact the “Perfect Investment” for the vast majority of Seniors over the age of 70.

 


 

I am referring to the latest product served up by the insurance industry that is designed to meet your every investing need. Equity Indexed Annuities (EIAs) are selling like hotcakes. In this Guarding Your Wealth Special Report, I will expose three things you should keep in mind when your broker or agent recommends an EIA to you.

 

I agree EIAs (Fixed Indexed Annuities) are selling like hotcakes. He keeps using the term “broker.” In common American English language usage this refers to “Stock Brokers.” A stock broker can’t sell you an annuity unless he’s also a licensed insurance agent. So let’s stop playing word games. Let me repeat myself. Only an insurance agent can sell an annuity. PERIOD. Let’s see what he exposes….

 


 

First, EIAs are purchased mainly by people who don’t understand investing and thus don’t understand that better alternatives exist. These investors are sort of like me when it comes to car repair. Because I’m not an expert on engines, I never really know if I can trust the mechanic’s advice, especially since it’s in his best interest to get me to replace as many components as possible. Luckily, I have a friend in the car industry who usually arms me with enough information to keep me from being taken for a ride.

 

The above paragraph didn’t expose anything. Car repairs and annuities have nothing to do with each other. Again, not one word about contract benefits. The only thing that seemingly was exposed is that he believes you’re stupid. He failed to mention what would be a better alternative.


 


 

 

For most people, it is the same when it comes to investing. Because of the world of investing has become so complicated, most investors seek the advice of a professional. But how can you know that what they recommend is really what you need, especially if you know they will make a bundle on the deal? Fortunately, I’m going to give you the information that will keep you from being taken for a ride and regretting your decisions. Again, not one word about contract benefits. Again, all insurance agents earn commissions on each and every form of insurance they write and only an insurance agent can sell an annuity. The inference here is that you wouldn’t buy a financial product that perfectly fit your needs, goals and desires if you knew how much the insurance agent earned.
 
The insurance companies have a problem when it comes to agent commissions on annuities. As an agent they have to compensate me about the same amount of money for the time spent that I would earn by simply selling other forms of insurance. 



 

That’s why I am so opposed to Equity Indexed Annuities. They are mainly sold to those who don’t understand the realm of investing. Seniors over age 70 are particularly vulnerable. Think about it! If EIAs were such a good investment, wouldn’t experienced investors be buying them? Experienced investors don’t buy EIAs.
 
I agree annuities are mostly sold to Seniors over the age of 70 but not because they are particularly vulnerable, or because they don’t understand the realm of investing, it’s because the product is designed to meet their needs, in particular.
 
Once again the author has not mentioned anything regarding the contract.

 


 

 

Experienced investors aren’t going to lock themselves into an investment for 7, 10 or 12 years with only limited choices. Experienced investors recognize that better alternatives exist – alternatives that give them the flexibility to select from a wide range of investment options rather than just a handful. The next two Guarding Your Wealth articles will specifically discuss these alternatives and explain why they are better.

 

Ok, he’s on to something here that you should be fully aware. ALL annuity contracts have a surrender charge schedule and yes it can range from 5, 7, 10, 12 or 15 years. What he forgot to mention was the contracts with the highest and longest surrender charge schedule pay the most interest and bonus to the client.
 
The contract I sold my 78 year old mother had a 12 year surrender charge schedule with a first year surrender charge of 12% that decreased by 1% each and every year. The annuity paid her 10.75% interest. She took her interest earnings out every month to increase her monthly income, while not diminishing her principal or risking her cash asset in the volital stock market.
 
He mentions better alternatives again but doesn’t say what they are. We have to wait for the next issue of  “Guarding Your Wealth” for these top secret better alternatives to be revealed.

 


 

The second point to keep in mind is that those who recommend them may not have your best interests at heart. The advisors recommending EIAs are either insurance agents who don’t have access to better alternatives or brokers who have access to other alternatives but choose the investment that pays the highest commission. The only reason that EIAs require that you keep your money in them for 7, 10, 12 years or longer is because it takes the insurance company that long to earn back the commission they paid the broker or agent to sell it to you.

 

An attorney would say, “Objection, your honor, asked and answered." This paragraph claims to be his second point but is nothing more than a regurgitation of previous paragraphs. The part about the company needing to hold your money for 7, 10, 12 years to earn back the commission they paid the agent is laughable. Insurance companies earn about 2% per year on the premium dollars you invested. If you surrender the policy early it will be primarily your interest earnings you will forfeit. The company will make their 2% each and every year, regardless of how long you keep the contract.

Agent commissions are paid by the company,  NOT  the client. However, for an early surrender I would agree the company effectively keeps the interest earnings of the contract to offset the acquisition costs. 

 


 

If the ‘professional’ you are talking to gets paid on commission, a tremendous conflict of interest arises when they recommend an EIA. They will make more in one hour by getting you to buy an EIA then you will make in 3 to 4 years at the minimum 3% rate. When an agent or broker has a choice between recommending a product in which they make 1%-2% commission and one in which they could make a 10% commission, which do you think they will recommend?

 

Here we go again, nothing about the Fixed Indexed Annuity contract per se’ only about agent commissions. Interesting twist though throwing the mathematical red herring of the guaranteed minimum 3% interest rate.

The long term summary, 50 year average, is 9.17% for Indexed Annuities with the probability of  0% interest credits 3 out of 10 years for an average rate of return of 6.4% per year.
 
There aren't many Seniors who wouldn't be happy with an average 6.4% per year.  As time permits I will post an actual typical client statement with a 7.73% rate of return. Please understand "actual" first year interest credits were 14.73% because the contract paid an upfront first year premium bonus of 7%.
 
Yes, of course there are "strings" attached for the up front bonus.


But for an IRA, these contracts are a PERFECT FIT for Seniors age 70 and above.


 

 

 




 

 

 

Third, when hidden motivations and conflicts of interests are removed, EIAs are rarely recommended. Many financial advisors, myself included, get paid solely on management fees as opposed to commissions. If EIAs were such a wonderful investment, wouldn’t it make sense that they would also be widely used by advisors paid by management fees? They aren’t.

 

Here we go again, nothing about the contract per se’ only about agent commissions.

I’m glad this guy only gets paid “management fees" as opposed to "commissions.”
 
This is what my lawyer friends would call a distinction without a difference. 
 
These so called “management fees” range about 2% to 3% on a million dollar account and a sharp broker can consistently earn you about 9% per year. Of course once you subtract off the “management fees” you only netted 6% to 7% while risking your principal in the market.
 
One more thing, you pay these “management fees” each and every year. On a million dollar account that’s $20,000 to $30,000 per year each and every year. Over a 10 year period this self appointed so-called expert stands to earn $200,000 to $300,000 in "management fees." But at least you're not paying him a commission.
 
Additionally, so called "fee based" advisors are nothing more than Stock Brokers who charges you a fee and also will earn a commission on the products they recommend. In Florida it's a third degree felony for someone to offer insurance advice to the public without being a Licensed Insurance Agent. Click here to research if in fact the advisor you're dealing with is in fact a Licensed Insurance Agent.


 

 

 

Quite frankly, in my friendly opinion, if you are talking to an advisor that recommends you purchase an Equity Indexed Annuity then you should find another advisor. You need to work with someone who has your best interests at heart. You should work with someone who gets paid based on how well they manage your money, not on how adept they are at selling you.

 

Here we go again with yet another blanket condemnation of Equity Indexed Annuities as if there isn’t any thing good about them, yet he admits in paragraph two and I agree they are selling like hotcakes.

 


 

So look out! Explore all of your options and remember—it’s YOUR money!

 

I agree.

Once you do explore all your options you will find an Equity Indexed Annuity, more accurately described as a Fixed Indexed Annuity, allows Seniors over the age of 70 to participate in “some” of the gains of the market without the risk of losing principal.
 
The absolute worst thing that happens is a return of 0% interest with a flat or down market but with all principal safe and sound. 
 
Link to actual article.

Spicuzza

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The "Perfect" Investment.

Yes indeed, Mr. Philip Client has a 1st year projected Rate of Return of 15.23% on his FIXED Indexed Annuity.

Final interest won't be calculated until the End of Business on June 14th 2007.
 
When the final numbers are calculated I'll repost.
 

Spicuzza

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The final numbers are in.
 
Mr. Philip Client received first year FIXED Indexed Annuity interest credit of 16.55%
 
This is on top of the 7% premium bonus that was paid at policy issue.
 
Mr. Philip Client's total first year interest earnings were 24.71% and NOT one penny of his IRA was at RISK or EVER subject to direct downside market declines. The worst thing that would have EVER happened in a flat or down market would have been 0% interest with ALL of his principal....

SAFE & SOUND!

I'll post the actual company statement when I receive it in a few days. 
 

Spicuzza

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Below is Mr. Philip Client's ACTUAL statement from the Insurance Company.
 

Spicuzza

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Bumping to top of board because I feel like it. [comp]
Brandydy

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View some great study techniques for exams that will help you to overcome that period with ease.
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Gary D. Spicuzza,
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The Trust Group
2435 U.S. Hwy. 19
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Holiday, FL 34691

Office: 727-945-8599