The Hidden Truth Behind Annuity Sales & Distribution (From an Insider)
Annuity Straight Talk is growing and changing as we have attempted to do in various ways for the past few years. As we grow it is my intention to bring other advisors into the business with a focus on only those people who have a substantial amount of experience in the industry. Nate Lee has been a wholesaler for annuities and other financial products for over 20 years so he has had an inside look at a lot of the stuff I talk about. He joined me on the podcast this week to talk about something important that really affects the type of advice you receive.
Some advisors limit themselves to certain products simply because of familiarity but there are a lot of guys who are forced into limited selection. The way we access the distribution network for most products can mean that we are heavily influenced by a third party. I learned this the hard way a long time ago so I have done extra work to maintain my independence. If someone is going to sell you on a long term commitment then it’s nice to know where their motivation comes from.
Nate and I have talked about this a lot since we met about two years ago. Now he’s going out on his own to do some work at AST along with some individual pursuits. We knew right away that we share the same vision for retirement planning and he knows the products inside and out. He made the list below so we could explain to all subscribers how this business works. I didn’t want to recreate the wheel so I’m leaving what he wrote mostly intact. We talked about this in greater detail in the podcast and it’s a really important lesson for anyone trying to navigate this business as a consumer.
The entire cast of characters in the financial services industry has a connection to this and we covered each one. Let us know if you have more specific questions about any of the points mentioned.
Fiduciary – we make money when you make money. What they don’t tell you is that they make money when you lose money too. The idea of being a fiduciary is great, while most people in this business are trustworthy the reality is that a lot of them don’t really know what they are doing.
CFP – just because you passed the exam it doesn’t mean you are good at helping people or truly understand how products and investments work. Some of the worst people I worked with were what I would call the “Academic Advisor or Academic Agent”. They had every designation in the industry with lots of letters behind their name but couldn’t understand the basics of an annuity.
Portfolio/Investment Managers – many of them are using third parties to manage their assets. In some cases this is fantastic, there are some really good money managers out there but many use generic models based on risk tolerance or retirement date/age investments.
Broker Dealers, RIA’s, Independent Agents:
I’ve covered multiple channels and multiple products, in the end it’s about leveraging your hard earned money in retirement so that you can enjoy that time and not worry about the markets and running out of money. From all of the people I’ve worked with, most understand this but many are out to make a quick dollar and don’t really work to find the “best” solutions for their clients. Unfortunately most get comfortable and continue to use the same companies and products because it’s easier than learning about new ones.
IMO’s & FMO’s – this is an interesting topic right now. I worked for one of the only direct companies in the industry. I’ve seen the games these large organizations play to handcuff their agents and advisors.
Competitive Intel – using software like Annuity Rate Watch or Annuity Genius is a great way to begin looking at products to compare their competitiveness as well as their features/benefits for clients. Unfortunately most of these organizations block Midland if they provide the software – now is that being a fiduciary?
Becoming Captives – the larger organizations are now requiring their people to write all of their business through them, including their managed money. These people are told what to sell, often times the products that pay them the most money based on deals they have negotiated with the carriers which is crazy to me.
Beware of products that are “Easy to Sell” – these usually have large bonuses on the front end or have attractive features and benefits that make them easy to explain to clients and ultimately to get you to invest in but they almost always will cost something in return. I’m not talking about money, yes some products have fees for riders and even strategy charges but I’m talking about the basics of an annuity. Now I’m not an actuary but it doesn’t take a rocket scientist to figure out that there are only so many ways that you can break down a dollar when it’s invested. For example – out of every $1 that a client gives the insurance company let’s say that 95 cents is set aside in the general account to cover these policies. The remaining 5 cents is used to pay commissions to agents and advisors, pay index/strategy partners, some internal costs and then it’s a mortality table. If you are doing the math at home you realize quickly that the insurance company isn’t rolling in the money out the gates, they make money over time which is why these products have surrender periods and charges If they are liquidated before the surrender period is over.
This is a lot more powerful coming from Nate because he worked with hundreds of advisors over the years. He really knows the type of people you will be talking to and how they operate. Having a true insider share his experience only reinforces what we are doing here and will make us stronger going forward. I’m not sure I have a single client who hasn’t run into some of the stuff we talked about. It’s different here and I hope you realize that. Our goal is simply to give you the best solution possible and we are coming up with more ways to verify that.
Take a minute to leave a comment and welcome Nate to the business. His perspective is a valuable addition and will only improve what we offer. If you have any detailed questions about the information above then it might give us an opportunity to do this again. New people bring new ideas and it’s all for your benefit. If you’d like to talk to either of us then get on the calendar a pick a time.
Have a great weekend…
Bryan – with substantial contributions from Nate Lee
Watch Episode 177: The Hidden Truth Behind Annuity Sales
Last Updated on May 9, 2025 by Bryan Anderson
