Met with an FA today.

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
User avatar
Lemonaid56
Posts: 142
Joined: Thu Mar 03, 2016 2:15 pm
Location: Maine

Met with an FA today.

Post by Lemonaid56 » Fri Oct 19, 2018 6:11 pm

So the DW has been listening to this person on the radio and had some questions about their methods. He is a subscriber to the Coach Pete D'arruda method. I was curious from podcasts I heard about what this "income stream" in retirement they kept mentioning but they never stated what this technique was. I wrote down the questions to ask an FA and he answered those to my satisfaction. One of the responses when I asked if he was invested the same way he honestly said, no. He is invested in rental apartments - they have quite few which would give them all the income stream they need on top of the FA biz.

I assumed he meant annuities but he states that is not what they recommend unless customer insists. They recommend something called a MYGA , multi-year guaranteed annuity (never heard of them) in 3, 5 , or 7 year levels with guaranteed 2.75,3.5, 4.0 interest respectively. Index annuities was another suggestion. They do not recommend variable annuities.

He mentioned during the conversation that they had been recommending their customers pull money out and put into a money market fund 40-60% of their money while the market is currently dropping. They would then tell the customers the right time to get back in. He got in some level over my head when I asked how they would know when the right time was. I believe he was indicating that in these times when rates were climbing we were guaranteed headed into a recession nine months later.

I felt like he was a good person and had some suggestions about our mess in life insurance.They seem to help people transition from work to retirement and getting their money in the right places to avoid taxes as much as possible. He was saying based on our portfolio we could retire now taking out 6%
until SS and my pension kick in and we can get Medic-care (which they also council people on) .So we will meet again in two weeks after they review and make suggestions on our current portfolio which I have been managing the last 30 years except for a 5 year downfall to Ameriprise.

Has anyone heard of these MYGA's? What am I missing. Taking out 6%? Heresy here I know.
Thoughts? Questions?

livesoft
Posts: 62776
Joined: Thu Mar 01, 2007 8:00 pm

Re: Met with an FA today.

Post by livesoft » Fri Oct 19, 2018 6:16 pm

Looks like a new name for an old product. Then the media and everybody disses the product, which then changes its name and carries on until the name becomes notorious and needs to change again.
Wiki This signature message sponsored by sscritic: Learn to fish.

Scrapr
Posts: 185
Joined: Sun May 09, 2010 9:19 am

Re: Met with an FA today.

Post by Scrapr » Fri Oct 19, 2018 10:07 pm

Lemonaid56 wrote:
Fri Oct 19, 2018 6:11 pm


I assumed he meant annuities but he states that is not what they recommend unless customer insists. They recommend something called a MYGA , multi-year guaranteed annuity (never heard of them) in 3, 5 , or 7 year levels with guaranteed 2.75,3.5, 4.0 interest respectively. Index annuities was another suggestion. They do not recommend variable annuities.


Has anyone heard of these MYGA's? What am I missing. Taking out 6%? Heresy here I know.
Thoughts? Questions?
so her only will sell you annuities if you insist. But with his other hand he will sell you a multi year annuity? What am i missing?

He is on the radio here in Portland, or too. I can't listen for long. I think he gets a spot in a local FAs regular show. His web site is pretty heavy annuities loaded

I think when you have a hammer in your hand everything looks like a nail. Most people get a free dinner to listen to an annuity salesman :mrgreen: :D

User avatar
baconavocado
Posts: 190
Joined: Fri Oct 13, 2017 3:03 pm

Re: Met with an FA today.

Post by baconavocado » Fri Oct 19, 2018 10:21 pm

Hmmm, complex annuities and market timing - I'd say those are two good reasons to head for the door, check that you still have your wallet, and get the heck out of there.

User avatar
Watty
Posts: 14380
Joined: Wed Oct 10, 2007 3:55 pm

Re: Met with an FA today.

Post by Watty » Fri Oct 19, 2018 11:06 pm

Lemonaid56 wrote:
Fri Oct 19, 2018 6:11 pm
What am I missing. Taking out 6%? Heresy here I know.
Not at all.

I just looked at www.immediateannuities.com and a 65 year old man can buy a single premium immediate annuity that pays 6.7% without even shopping around.

The things you are missing is that of the 6% something like 3%(??) may be return of principal and it is likely not inflation adjusted.

That 6% may also just be a projection and not what you will actually receive.
Lemonaid56 wrote:
Fri Oct 19, 2018 6:11 pm
I felt like he was a good person .......
Most good salesman do come across that way or they get out of sales after a while.

I bought a car not long ago and the salesman actually seemed to be a pleasant enough guy and could picture myself being friends with him if I met him in a social situation but I still didn't trust him as far as I could throw him.

User avatar
celia
Posts: 8490
Joined: Sun Mar 09, 2008 6:32 am
Location: SoCal

Re: Met with an FA today.

Post by celia » Fri Oct 19, 2018 11:51 pm

Lemonaid56 wrote:
Fri Oct 19, 2018 6:11 pm
So the DW has been listening to this person on the radio and had some questions about their methods.
You didn't say who makes most of the financial decisions in your family, but I suggest you look for common ground with your wife, since it's likely one of you will outlive the other. If you are not yet doing so, understand what she is thinking about. Is she concerned that she will outlive you so annuities would give her a steady income stream (from what she's heard on the radio)? Does she know someone who uses this advisor? Does she understand what your family is invested in? Does she know that there are many ways to get an "income stream", not that there is anything wrong with annuities (ie, rentals, RMDs, dividends, pension, annuity, side business).

I think this is the most important part of this situation, not the annuities themselves. I hope her questions were answered and that you both continue to learn about everything financial.

MikeG62
Posts: 1178
Joined: Tue Nov 15, 2016 3:20 pm
Location: New Jersey

Re: Met with an FA today.

Post by MikeG62 » Sat Oct 20, 2018 7:50 am

Lemonaid56 wrote:
Fri Oct 19, 2018 6:11 pm

...He mentioned during the conversation that they had been recommending their customers pull money out and put into a money market fund 40-60% of their money while the market is currently dropping. They would then tell the customers the right time to get back in. He got in some level over my head when I asked how they would know when the right time was. I believe he was indicating that in these times when rates were climbing we were guaranteed headed into a recession nine months later.

Thoughts? Questions?
This statement alone would cause me to not contact this person again. Are we to believe he can predict the future or that he knows something that even investing greats like Warren Buffet admit they do not?

If it were this easy hedge funds would be doing it en-masse and killing the index returns. However, we know that is not happening.

I'd say run don't walk away.
Real Knowledge Comes Only From Experience

assyadh
Posts: 18
Joined: Tue Sep 18, 2018 12:44 pm

Re: Met with an FA today.

Post by assyadh » Sat Oct 20, 2018 7:57 am

Run away

User avatar
Kenkat
Posts: 4363
Joined: Thu Mar 01, 2007 11:18 am
Location: Cincinnati, OH

Re: Met with an FA today.

Post by Kenkat » Sat Oct 20, 2018 9:43 am

A multi-year guaranteed annuity functions very similarly to a CD. They are offered by insurance companies, so no FDIC guarantee, but can pay a somewhat higher rate than CDs in some cases since insurance companies have very long horizons and can match liabilities to capital over long periods of time. These are low risk but not no risk; many insurance companies struggled when rates fell after the 2008 Great Recession as they were unable to invest at rates high enough to cover the “guaranteed” or minimum rate on annuities issued in the 80s, 90s, etc. No one ever thought rates would get that low - until they did.

livesoft
Posts: 62776
Joined: Thu Mar 01, 2007 8:00 pm

Re: Met with an FA today.

Post by livesoft » Sat Oct 20, 2018 10:02 am

Kenkat wrote:
Sat Oct 20, 2018 9:43 am
A multi-year guaranteed annuity functions very similarly to a CD.
Except for the early withdrawal penalties which are typically much more severe.
Wiki This signature message sponsored by sscritic: Learn to fish.

User avatar
ruralavalon
Posts: 14080
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Met with an FA today.

Post by ruralavalon » Sat Oct 20, 2018 11:07 am

Complicated annuity.

Market timing.

Grab your wallet and run.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

User avatar
cheese_breath
Posts: 8022
Joined: Wed Sep 14, 2011 7:08 pm

Re: Met with an FA today.

Post by cheese_breath » Sat Oct 20, 2018 11:10 am

Danger Will Robinson!
The surest way to know the future is when it becomes the past.

User avatar
arcticpineapplecorp.
Posts: 3354
Joined: Tue Mar 06, 2012 9:22 pm

Re: Met with an FA today.

Post by arcticpineapplecorp. » Sat Oct 20, 2018 2:18 pm

Lemonaid56 wrote:
Fri Oct 19, 2018 6:11 pm
He is a subscriber to the Coach Pete D'arruda method.
Lemonaid56 wrote:
Fri Oct 19, 2018 6:11 pm
One of the responses when I asked if he was invested the same way he honestly said, no. He is invested in rental apartments - they have quite few which would give them all the income stream they need on top of the FA biz.
doesn't eat his own cooking. This is what Coach Pete D'arruda's method is:
I spend about half my business time each week working on the show and other media
related activities.
I've also been a licensed Life insurance agent in the state of North Carolina since July 1992. My insurance firm is known as
Capital Financial & Insurance, LLC. I spend about 35% of my time in this capacity. I offer life insurance & annuities as a way to
add proper balance to my client's portfolios and income & life planning decisions.
source: https://adviserinfo.sec.gov/IAPD/Suppor ... pk=2756672
Lemonaid56 wrote:
Fri Oct 19, 2018 6:11 pm
I assumed he meant annuities but he states that is not what they recommend unless customer insists. They recommend something called a MYGA , multi-year guaranteed annuity (never heard of them) in 3, 5 , or 7 year levels with guaranteed 2.75,3.5, 4.0 interest respectively. Index annuities was another suggestion. They do not recommend variable annuities.
funny how he says he doesn't recommend annuities but recommends MYGA which stands for multi-year guaranteed annuity and index annuities, which by the way are the worst type of annuity you could buy. Of course they sell the indexed annuities as the greatest thing since sliced bread claiming to give you "the return of the market with none of the risk!". Indexed annuities give you a portion of the return of the market, but not all in exchange for a guaranteed income floor which could rise depending on great stock market returns. Regardless, most of the return goes to the insurer, not you. You could have gotten all of the return had you just invested the money yourself instead of handing it over to an insurer. And there are some of the largest surrender fees (and long periods in which surrender charges exist) if you want out. The mutliyear guaranteed annuity is a deferred annuity so you hand money over and don't get anything until you're older (usually) and need the payments more (and they've had a greater time to grow, for the insurer that is...before they have to start paying out monthly income). The income payments should naturally be higher because they may not start paying out until you're 80-85 (depending) and your life expectancy is less at that point. Here are some of the "best" MYGA and look at the surrender periods (yowza):
https://www.immediateannuities.com/deferred-annuities/
Lemonaid56 wrote:
Fri Oct 19, 2018 6:11 pm
He mentioned during the conversation that they had been recommending their customers pull money out and put into a money market fund 40-60% of their money while the market is currently dropping. They would then tell the customers the right time to get back in. He got in some level over my head when I asked how they would know when the right time was. I believe he was indicating that in these times when rates were climbing we were guaranteed headed into a recession nine months later.
classic market timing. Have him play the following game and see how he does with that:
https://www.prudential.com/cdn/tools/ou ... oolcta=OFF
And that's using past returns. How does he actually know how to time future returns? Is he a fortune teller or an advisor? Run Run Run (away that is).This wonderful article by Larry Swedroe shows that it's generally better to "Face the correction" than to get out of the market. Here's why: https://www.etf.com/sections/index-inve ... nopaging=1
Lemonaid56 wrote:
Fri Oct 19, 2018 6:11 pm
I felt like he was a good person and had some suggestions about our mess in life insurance.
Yes, he's a fine person. But he has to put food on the table for his family too. How do you suppose he does that?

You should also make sure to look up his form adv part 2. It will show you how he gets paid, how much he charges and if he had any infractions against him. start here: https://adviserinfo.sec.gov/
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

Post Reply