It is very sad that clients are not fully informed by someone they put their trust in. You should have been made aware of the specific “moving parts” of the MasterDex5 prior to placing money there. This is probably NOT the biggest mistake of your life however, regardless of what those who push other products imply. And, it probably will “work out” for you.

Since your contract has it’s own specific features, you should contact Allianz directly and get answers in writing to your questions such as what you must do to ‘realize the benefits’.

Having said this, in general, some EIA’s offer an “Income Rider”. This is an optional addition to the annuity that provides a potential ‘worst case’ accumulation. For example, it may be that at maturity you will have choices on how you would like to receive your distribution. If you want a lump sum the amount available might be what has accumulated from indexed growth. Or it is possible that a greater value may have resulted by compunding at a minimum guaranteed rate - such as 7.5%. In some cases if the guaranteed account value is greater than the indexed value you must take income to get it vs. a lump sum withdrawl.

Frequently this income is paid to you at approx. 5% of the balance per year.

Again don’t panic, call Allianz and get answers in writing.

Best wishes.

Language, language. Where did you see a number on this site for an attorney? Perhaps it is a Google ad with the phone number, we don’t advertise attorneys.

Hey, it is not our fault you could not pick a good investment for your clients, that sounds like a due diligence problem on your part. Are we just pushing VA’s? I think not. What we do is strictly in the VA space, kind of like how you only deal with insurance, so we only deal with VA’s. We actually point out the problems with VA’s all the time.

Perhaps the dead file will get bigger when your customers learn that the EIA they bought will not be out of surrender for another decade or that they HAVE to annuitize to realize the benefits of the contract or that the crediting method sucked, and they do…come on Steve, monthly averaging? Do you think that works for clients? Let me guess you tell them it reduces volatility when, in fact, it only reduces the rate of return. As far as customers choosing when to and how to receive their income, you are damn right they should be able to. Let’s face it Steve, you could not pick a winning mutual fund, but you want your customers to trust you to decide on how to structure their income, are you kidding? If you have a problem with what is written here feel free to not comeback, its really that simple.

First of all I’m not going to be patronized; I have been insurance licensed for 25 years and hold a myriad of securities licenses, including Series 7, 22, 62, 24,6, 63….what I do have is a ‘dead’ file (actually its a large plastic bin) of all the files of people that dislike me that I have dealt with because of poor performance of an investment, and that file is full of mutual fund clients, stock clients, unit trust clients, variable annuity clients…..I don’t have anyone in that file that has hated me for an EIA….I work ‘top down’ with EIAS and think that anyone that is unwilling to examine annuitization should not buy any type of annuity-and therein lies the problem; people are buying these and finding out they are sticky, when they should have bought some other defective investment, i.e. a stock, a mutual fund, a zero coupon, variable annuity, etc…I know we live in a touchy feely society now and the slightest discomfort brought on any investor may result in a lawsuit. Also, you imply that a class action suit somehow means something really terrible..facts are that class action law suits have a startling affect of enriching attorneys at the expense of those allegedly harmed….in the case of Allianz there had been over the years an ultra low level of complaints and other issues such as seminar selling did indeed later become an issue…hey, want to know the real scandal??? How about everyone and his brother buying term insurance and not investing the difference as A L Williams preached years ago….instead of buying that ol’ evil whole life…and then that evil UL with all its wild projections…seems like about 2 per cent of all terms policies ever have a claim paid…as they lapse or are cancelled as people get older…my 99 year old Grandmother has a paid up whole life policy as I write to you tonight! You guys are so smart!

We never said all EIA’s are garbage, just most of the popular ones. All products have a place, but EIA’s are an easy sell with so many moving parts that they rarely work out, otherwise Allianz would not have settled its lawsuit with the states.

Steve,

$10 million in EIA’s? Are you serious? For an 85 year old that is a little strange unless it represents a small portion of his net worth. While payout is the ultimate goal of annuities it also only represents 2% of the total market and the way the money accumulates is key. Certainly you would have to agree the monthly averaging greatly reduces the return of these products, it says so right in the sales material. Certainly forced annuitization is not a good thing, right? Shouldn’t the consumer CHOOSE how to start and structure the payout, not just have 3 or 4 options? In your world I am sure you can justify that EIA’s are suitable for most people, but in the real world annuities, in general, are only good for a portion of ones investment portfolio and they should be chosen carefully.

There is a methodology to how you invest within them and how you balance the contribution amount. I tend to start off with over 80% in fixed for the first few years and then have people move into indexes as their accumulation value increases, while considering what the 12 month outlook is for the varying indexes. I work very closely with my clients on these (at least a month before anniversary dates) and explain everything. It’s the one’s who sell and drop off the policy that are giving this tool a bad rap.
I have some clients who use bonus annuities as their “bond portion” of their portfolio. With the guarantees offered through the annuity, they can then be a little more aggreesive with in their equity investments. In thier opinion and mine, it gives a little more security that watching bonds (or funds), fluctuate in a volatile market. In comparison, properly structured FIA’s have outperfoemed many investment grade bond funds over the past few years.

When dealing with seniors, I think that main spot for an indexed annuity is as an estate planning tool or for supplemental income past age 75. It has to be structured correctly in the total portfolio mix.

I have serious problems with seminar selling and have been called in to look at situations where people have been almost ready to sign away their savings. What people will do for a chicken dinner!

For the most part, I think that indexed annuities are often played as an alternative to C.D.’s. In that manner, how much different are certain annuity salespeople than financial advisors at banks that lock in people to low interest C.D.’s?
In both cases, when employee bonuses come around, they are based on volume. I have seen some bank advisors do serious injustices to their clients as well.