If you live in semi-nice neighborhood, there is a 99% chance you will receive an invitation to a local restaurant to hear a sales pitch in exchange for a free meal. I refer to this as “bad chicken dinner seminar marketing.” I’ve recently upgraded that saying to “expensive steak dinner seminar,” which is a reflection of the high commissions attached to the annuity (typically a Fixed Index) being pitched.
The free steak or chicken dinner might be what gets you there, but there are really 5 major items being served to get you to buy that FIA (Fixed Index Annuity). It’s important to know the “factual ingredients” behind each one.
FEAR. Market losses or the next “market crash” is something no one wants to be a part of. If you have ever been through a true market correction, that’s a permanent scar you will always have. Agents tap into this fear with the misleading “market upside with no downside” pitch. Factual Ingredients: The truth is that FIAs are fixed annuities that are designed to deliver CD returns. Those are the historical returns. Period.
GREED. Stock market type returns while protecting your principal is a perfect combination…if it were true. It’s not. Everyone wants to have their cake and eat it too, right? In addition, agents will promise “free money” with an upfront signing bonus and guaranteed long term care coverage. The perfect product? Factual Ingredients: FIAs are enhanced CD products, and the bonus is just part of the overall contractual guarantee calculation. The LTC promise is actually a confinement care benefit that “when you get sicker, you get your money back quicker.” No big deal.
HOPE. When the sales pitch sounds too good to be true, you are hoping that it actually is. Market participation with no losses, free bonus money, and LTC coverage sounds great not knowing the details. Factual Ingredients: As they say in the south, “Hope don’t pay the bills.” FIAs are contracts. Own the contractual realities, not the hopeful non-guaranteed agent presentation.
TRUST. That agent that spewing while you are chewing wants you to fully trust what they are saying. Why wouldn’t you?…he just bought your meal! Factual Ingredients: Don’t trust anyone. Trust the contract, because that is what you are buying and that it what you are going to own.
ARROGANCE. That agent is really hoping to tap into your arrogance. The arrogance of you thinking that you have found the perfect product. That you have something your neighbor doesn’t have. That you are smarter than everyone else that doesn’t know about this FIA “too good to be true” stratgey. Factual Ingredients: Come down off of your high horse and realize that there is nothing new with FIAs. They have been around since 1995 and are fixed annuities that provide CD returns with some benefits that you can add (and pay for) to the policy.
I don’t hate Fixed Index Annuities (FIAs), but I do hate how too many of them are sold. They do have their place in some portfolios, but only when you fully understand how they contractually work. I encourage you to get my FIA Owner’s Manual. Click here to fill out your shipping information, and I will send you a copy for free. No obligation.
So I encourage you to go to as many of these seminars as possible. Free food is good. As they say in Vegas, “Don’t be the sucker at the table”….and remember to only swallow the food, not the over-hyped sales pitch.