Well Intended PSA

Let me start with I know ‘Big Joe’ Clark from my Ed Slott Master Elite Training.  Joe is one of the founding members of the group.  I have nothing bad to say about Joe.

That said, Joe recently published an article that I see issues in or perhaps there is a lack of understanding.  The article is titled, “What to know about equity index annuities.”

In this article Joe mentions a few issues he sees with Equity Index Annuities AKA Fixed Index Annuities, FIA, and EIA.  

Joe touches on fees, promises, risk, real return, among other issues.

I realize Joe does not know the inner workings of these products.  He seems to have a bad taste in his mouth from some of the evil annuity sales people.  There are clearly evil annuity sales people.  I caution people to throw the baby out with the bath water.

I personally don’t use Fixed Index Annuities for growth.  My main purpose for ever using a FIA is for the future income it can provide. 

Back to Joe’s article.  Joe says surrender charges are fees.  Well, if the annuity sales person Joe speaks of did not perform their job well then a surrender charge may be incurred.  When I hear fees I think of management fees for assets.  When I hear fees associated with annuities people are usually talking about Variable Annuities, which can have as high as 3-5% in fees. 

Fixed Index Annuities are different.  They aren’t easy to understand and that alone can be frustrating to some.  When I first got into this business I created a spreadsheet to model the most basic crediting strategy.  Basically, I reverse engineered the thing.

Then comes income planning – guarantees from the life insurance company through something called an income rider.  These were great, growing money at a set and guaranteed rate for future income.  I could calculate to the dime what income would be on any date in the future.

Real Return – I don’t care, this not why I ever use an index annuity.  If someone needs something more than future income, such as growth, I would opt for Joe’s asset management, not an FIA.

Finally, risk.  Risk exists everywhere, from getting out of bed to taking a shower.  I never say an annuity is free of risk.  I will state that in my opinion a fixed index annuity has substantially less risk than investing in the stock market.

Big Joe – I love you!  I learn much from you and wish I could sit in your classes as I bet I’d learn even more.


Interest Rate Risk – Index annuities are not protected

Interest Rate Risk

I’m constantly surprised to hear top advisors who are so misinformed.  I hear again and again that fixed indexed annuities (FIA) do not have interest rate risk.  I was at a training in Las Vegas the first week of December 2016 and the from the front of the room, “FIAs are risk free… they don’t have market risk and they don’t have [interest] rate risk.”

I sat there shocked to hear this misinformation being promulgated by alleged “experts.”  When you are highly trained, as I am, you can spot the fallacies in peoples’ statements or claims.

Here is an article that confirms my view of these products being subject to interest rate risk.

Read the full article

Read the full article – look for ‘The performance of fixed annuity companies is most affected by interest rates and if rates rise “it’s not a good thing, it’s a great thing,” Kvalheim said.’  This is the third paragraph from the end.

As I drove to an appointment today it is predicted that the “Fed” will raise interest rates.  This will likely be a small increase, but it will have an impact on Fixed Index Annuities.

When you purchase Fixed Index Annuity – give thought to what you want to accomplish.  Do the guarantees alone satisfy what you are buying or are you also dependant on the index credits?  If you are dependant on the index credits you need to be aware of the company’s rate history and under what conditions can the company change its crediting caps, spreads and participation rates.

Second Opinion Option

Consider our second opinion [click for details] – you can keep your current agent.  For a fee we can evaluate the annuity you are considering.  Show you what works, where it might fall short and what we might suggest instead.  NOTE: payment is required before the analysis.  The fee for this service may be returned or applied to further financial planning if you purchase an annuity through us.

Why a fixed index annuity might be a good fit

Fixed Indexed Annuity Article

For starters, annuities are not right for everyone.  Variable annuities are almost never appropriate.  With that said, this post is about Why a fixed index annuity might be a good fit.

There are many resources on the Internet.  This one is an ad on a TV station’s website.  http://www.kvoa.com/story/32402529/fixed-index-annuities-right-for-your-retirement-plan.

The ad seems to be pretty legit.  It is however an ad.  Be careful when researching annuities and the comments you receive.  Some people swear by annuities and some people swear at them!  I’m neither – I look to see what the client needs, what are their concerns, what gaps exist and how to fill or close those gaps.  When people hear this – the feel reassured.

If you could see a plan that took your concerns and gaps into account, would that help you?

This ad that I am sharing talks about four aspects of Fixed Index Annuities.  1) locking in gains, 2) Growth for income, 3) protected from retirement challenges, 4) Your money lives on.

First of all – the ad is missing tons of disclosure and disclaimer.   The ad also makes or eludes to a promise “all”. In California all ads must include the producers California Insurance License – minor, yes.

Who is making the guarantees?

Who is Horter Investment Management and why are they mentioned?

Why a fixed index annuity might be a good fit

Why do I think a Fixed Index Annuity may be a good fit?  Similar points that the ad is making.  There are guarantees to these products.  The guarantee is backed by the strength and claims paying ability of the issuing insurance company.

Compliance – huge concern in my view.  There are so many people peddling product who don’t produce an actual plan.  We pride ourselves in producing plans that show our confidence or lack of confidence in your retirement.

If you would like a plan and not a product peddler – give us a shot!  Call our office or schedule a call here:  https://calendly.com/rickloek – I look forward to speaking soon.

Our office number is 408.459.8383

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Evaluate Fixed Index Annuities

Fixed Indexed Annuities can be a great tool for your retirement.  The nagging question is if they are so good, why haven’t I heard of them before?  Great question.  How does one Evaluate Fixed Index Annuities?

First a question: When you visit a Buick dealership will they tell about the features of a Ford?  How about if you walk into an Chinese Food Restaurant, will they be featuring as their best dish an Italian Specialty?

When you meet with a Stock Broker will they be knowledgeable about life insurance products?  Will they refer you to an insurance specialist?

As you answer those questions consider that the opposite is also true – will an insurance only person refer you to an investment advisor?  NOTE: a Stock Broker and an Investment Advisor are similar, however the Investment Advisor must act as a Fiduciary.  This has not been the case with Stock Brokers – they are held to a suitability standard, until next year, 2017.

Sounds confusing?  It is!

Back to the matter at hand, Fixed Indexed Annuities.  Here is an article that covers advantages of Fixed Index Annuities.  The main concern almost everyone has is money or income.  The right Fixed Index Annuity can help address and even eliminate the concern about income for life.  In this article Income Riders are explained, including issues to consider.

Some articles falsely talk about the upside and ignore the downside.  This article seems to address a little of both.

With my background in Software Engineering, I use software to help determine what fits your needs.  Your concerns are #1.  What is the gap you have, how do we close that gap and is there a better way or is the fixed index annuity the best option?

Read the full article

Read the full article here, on Investors Business Daily.


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Annuity replacement option

Magic Johnson invests in fixed index annuity company EquiTrust

If I could help protect your money from market risk *without* buying an annuity, would you be interested in talking with me?

We have a program that helps investors protect their hard earned money without buying an annuity.  What’s the catch – that’s where the mind goes, right?

Nowhere do I say there is no risk.  There is risk, even with annuities.

Annuity replacement option

Here is the concept.  We can track on a daily basis, the high water level and current level of your account(s).  If the current level drops below a couple of predetermined thresholds we will discuss selling out of the positions.  This is not a stop-loss.  Stop-losses work on individual holdings and can accidentally sell the position on a volatile day.

If you would like to hear more about this opportunity – look to our Registered Investment Advisor site.  OnestaWealth.com

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Department of Labor rule on Fiduciary standard

iXray Annuities - fixed index annuity calculator

Amazing!  One word sums it all up for me.  I am loving the DOL (Department of Labor) and Department of Labor rule on Fiduciary standard.  The DOL has put in place a fiduciary standard for all retirement assets.  What does this mean exactly, well not exactly.

Generally speaking a fiduciary standard is supposed to mean that the financial person you are working with is *supposed* to look out for your *best* interest.  However, when a financial person is a registered representative or stock broker or insurance agent – the standard has not applied.

What, did you read that correctly, some financial people don’t have to put your interests first?

If what you thought to be true about your money wasn’t true, when would you like to know it was not true?  Exactly, NOW!

Well, this new rule will cause many financial people to leave the industry – YEAH!  The rule will also cause many to clean up their act.  Even LPL in advance of the ruling cut the fees it charges clients… Hmm…


There are many great resources that you can get the *exact* details from, including the DOL’s own posting.  (It is 208 pages)

What do you need to do

Pay attention to how your “financial advisor” responds to this rule.  Are they upset?  Do they have new forms for you to sign?  Are they telling you to “ignore” the news and media play?  I have a buddy who’s advisor told him he would be receiving a letter – and to discard the letter.  Pay no attention to the letter.

If you would like a second opinion about your situation, a cursory review, we can help you with that.  Our standard, all in planning package can be as much as $15,000 (most are around $3,500).  This might seem like too much to some people.  However, if you were to find out that your hidden fees were $3,000-$5,000 per year per $100,000 you have in a Variable Annuity – well, let’s say our pricing is the best money you will have ever spent.

Here is the deal – Tell us that you are calling about our DOL review offer.  We will able to reduce our fee to $3,500 for the review process.  Our full-blown financial plan is based on the amount of work, which is different than reviewing your current situation, products and investments.

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Fixed Indexed Annuities were strong in 2015

Fixed Indexed Annuity were strong in 2015.

Jim Poolman is interviewed by Peggy Bresnick in this article on LifeHealthPro.com

Mr. Poolman is associated with an industry group that has a mission to educate the general public about the benefits of Fixed Indexed Annuities or FIAs.

In this Q&A session between Ms. Bresnick and Mr. Poolman we learn that the FIA industry has seen growth in 2015 and likely will do the same in 2016.  This is attributed to the baby boomers being conservative and that benefits of FIAs relieve stress and worry.  One feature that helps reduce the stress and worry of baby boomers is lifetime income.  With many of the FIAs available today you can add an income rider**.

An income rider typically allows for a guaranteed roll-up or interest rate on money intended solely for future income.  Essentially, at some point in the future you can tell the insurance company you want to start lifetime income.  The company will calculate your income benefit and start sending you regular income.  Somewhat like a pension, but not a pension.  Depending on the features available the income may continue to a spouse.  With so many income riders on the market, one must be careful to confirm the features work for their situation.

Looking to 2016

Mr. Poolman says that the organization he works for will continue to educate the media, regulators and of course the consumer.  There is misinformation about Fixed Index Annuities that needs to be cleared up.  There is also over use of these products.  There is a line in here somewhere that demonstrates a mix of protecting the consumer and providing benefits. That same line can lead an advisor*** astray by putting too much money into annuity products.


** Income riders come in a wide variety of features and fees.  Some are free, some cost money.  Please realize free simply means a lack of transparency on how you are paying for the feature.

*** advisor is general in nature.  To sell an annuity the advisor has an insurance license.


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Fed Rate Increase good for Fixed Index Annuities

Fixed Index Annuities received good news this week.  The fed raised interest rates by .25%.  The increase might seem tiny at first.  When you begin to understand the underlying structure of fixed index annuities you will realize how important interest rates are.  Fed Rate Increase good for fixed index annuities – would you like to learn about the inner workings of fixed index annuities?

There are two types of annuitiesFixed Indexed Annuity Article

There are variable annuities and fixed annuities.

Fixed Annuities

Fixed annuities guarantee your investment, the actual premium you use to purchase the contract.

Variable Annuities

Variable annuities do not protect the actual principal or premium. Variable annuities have sub-accounts that are in reality mutual funds.  These products also have additional fees that are often hidden inside of the contract. If you own a variable annuity we can help you understand the inner workings.  Some people want to escape from variable annuities, we may be  able to help you do that.

If you have additional questions, please give us a call.  Mention you read about annuities on our iXray Annuities website.

Our phone number is 408-459-8383 or email me rick dot loek aht calrima.com <<trying to keep the bots from scraping my email>>

Read more about the impact of rate changes on fixed annuities

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Variable Annuities Suck

Yes, I said that out-loud and in print! Variable Annuities Suck!  Ken Fisher says, “should not be legal as they currently exist,”  I tend to agree with Mr. Fisher on this.  When people ask me about the Department of Labor (DOL) fiduciary standard that is being suggested I say, “I welcome it.  In doing so, in my opinion, variable annuities will be removed from the market!”  I get an odd look from people.  “Why is that?”, they say.  Because I have not seen one that lives into the fiduciary standard.  If the standard in very simple terms means that you will only and always do what is in your client’s very best interest – variable annuities fail this test.

How can ALL VA’s fail?

Picking a bad annuity is like burning money
If you don’t know what you are getting you could be burning money

How can an entire class of annuities fail the fiduciary test?  Simple, if there is another product that better fits a clients needs, then it *must* be used.


When a variable annuity and a fixed index annuity (FIA) start at the same time and sit for the same period of time (say 10 years) I have yet to see a variable annuity that beats the best FIA.

When talking about all VA’s I’m excluding liquid VA’s on the Registered Investment Platform.  They won’t win many races, but they fill on void.  That void is reduced fee products to store investment assets that simply aren’t needed for income or that want to avoid taxation during your lifetime as well as can be moved in and out of assets (sub-accounts).

I hope to not offend anyone who owns a variable annuity, only those who blindly sell them.  I get it, you were trained to believe they are good.  Time for new training.

If you own a variable annuity and want support in exiting the annuity, call us.  We’ll in vest a little time in you if you’ll in vest a little time too.  Our office number is 408-459-8383.  Ask for Rick and say you want to stress test your variable annuity.


This article attempts to remove the sting (or stink) Ken Fisher is leaving.  I quote, ‘Tarnishing all annuities over some bad sales practices is “ridiculous,”‘ Milevsky says.  Well, how are bad sales practices ever good?  I realize I am throwing the baby out with the bath water.  I have never had a client in the office who was sold a variable annuity who could tell me exactly how it worked, what fees they pay and how the “insurance agent” who sold it to the was paid and likely continues to be paid.  NEVER!

Fixed Indexed Annuity Article – USA Today

This fixed indexed annuity article is opening the door and some eyes.  However, there seems, from my perspective, much that was left on the editing room floor.

This makes my point, from the article: “But even though FIAs provide buyers with upside potential, these products are not securities, says Stan Haithcock, an adviser in Ponte Verde Beach, Fla., and the author of The Annuity Stanifesto. FIAs are an insurance product. “The unregulated sales pitch that is too often used is ‘market upside with no downside.’ Only half of that is true,” he says. “There is no downside, because it is a fixed annuity.””

Consider there is downside, I’ve seen it.  The reality is if an insurance agent makes a bad suggestion, the client can lose money.  There is risk, always.Fixed Indexed Annuity Article

Next, How the market index options are purchased and how the company “limits” the return is not how I understand how the products work.  While at a recent training from one of the largest producers of FIAs we learned that the minimal fixed rate interest (fixed account) is either where the contract owner allocates money or they choose the indexing method (or both).

The money that is not placed into the fixed account is not using that guaranteed money.  That guaranteed money is then used to purchase options on the index.  The way the options are purchased puts the burden to fulfill on the index credits on the option provider.  Any implied limits are not done by the carrier but by the system that provides the options & credits.

There are only 100 pennies in a dollar – how you use the pennies, now that’s where you have do your homework.  We’d support you in providing a second opinion, either for a fee or to potentially earn you business.

Read the full USA Today article – don’t believe it is all rosy there is more to learn before you purchase one of these products.

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