By Stan The Annuity Man
That smell hovering over the annuity industry can be sourced to indexed annuity hucksters claiming that their favorite product is now being magically reborn as the fictitious and fraudulent “hybrid” cure all miracle strategy. The only thing hybrid is the combination of vomit and crap this misleading sales pitch creates. How’s that for an opening!
Let’s break this hybrid nonsense down once and for all so that the annuity consumer knows the truth about this horrible sales pitch.
Plants, Mattresses, and Automobiles
There’s hybrid plants. There’s hybrid automobiles from Honda and Toyota. I even saw a sign the other day for hybrid mattresses! But there is no such thing as a hybrid annuity. If an agent uses that phrase, immediately end the meeting.
If they insist that there is such a thing, then have produce the origination of the word “hybrid” to describe indexed annuities. Of course they will not be able to do this because it’s a made up word!
You can’t polish a turd, but…..
One of my favorite sayings is “you can’t polish a turd, but you can roll it in glitter.” Profound. To the point. Genius. In other words, a piece of crap is still a piece of crap…..even though you try and make it pretty or in the case of indexed annuities…..call it a hybrid.
It acts like a CD because…..
Indexed annuities were designed and introduced in 1995 to compete with CD returns. Yes, I know that the hybrid sales pitch is “market upside with no downside” or “market participation” or “reasonable rate of return”, but all of that is complete sales pitch garbage.
Indexed annuities do protect your principal because it’s a fixed annuity. However, you should expect CD type returns from those complicated one-year call option strategies. That’s just a contractual and factual reality.
Made up out of thin air, so let’s try again
Since it seems acceptable to create words out of thin air to help sell more indexed annuities, I propose we start calling them “unicorns.” Everyone loves unicorns. They are mythical, beautiful, unique, and we could give out stuffed animals as promotions. We could put each indexed annuity company’s logo on the unicorn’s forehead horn. What a great marketing idea!
You might be laughing, but “unicorn” makes way more sense than the vague “hybrid” moniker. I think you get my obvious point.
Bernie Madoff is kicking himself in prison
Bernie was a great marketer. We can all agree with that statement. However, he chose the wrong product. He chose stocks, which can go down in value. That was the colossal mistake he made.
I can only imagine how Bernie Madoff would have pitched indexed annuities. He would have been the best….but would have had stiff competition from the agent gunslingers currently running national TV and radio ads. Even though Bernie would have lied about market upside, and probably used the word ‘hybrid’……I’m assuming that it’s much easier for agent/advisor crooks to explain or excuse away the lack of growth and point to the principal protection whenever someone complains.
I have always said that if you want to leave your morals and ethics at the door for one year, you can become a millionaire selling indexed annuities in this current unregulated environment. It’s a sales ‘free for all’ where you can say, advertise, or promise any perceived or fictitious benefit to get the sale.
Sorry Bernie. You chose the wrong product, and the wrong industry. Unfortunately, others of your own ilk did and are perpetuating the ongoing hybrid fraud right now!
The annuity industry is to blame
Nothing to see here, just move along. That’s the annuity industry’s response to the fraudulent hybrid sales pitches littering the airwaves and bad chicken dinner seminars across America. Talk about the pure definition of corporate greed, the hybrid annuity scam should be studied in business schools across the country on how not to deceive the public.
I’m assuming by their lack of action is that they see no harm in misleading the public, and having the customer believe the this so call hybrid thing is a product that morphs into whatever their mind wants it to be and do. By the way, contracts don’t morph.
What is a “Hybrid Annuity Agent”?
No one has ever addressed this question, until now. A “hybrid annuity agent” is a scam artist. They know that they are misleading the buying public every time they combine the word hybrid with the word annuity. They are fully aware that there is no such thing as a hybrid annuity, but they continue to perpetuate the fraud for the high commissions at the expense of the customer.
“Hybrid Annuity Agents” are looking for rubes, marks, dreamers, the uninformed, and the financially uneducated. They are looking for people that nod their head when they hear they “hybrid” sales pitch. They want you to believe that you ‘can have your cake and eat it too’ and it ‘is too good to be true.’ I’m hoping that they are not looking for you! As they say in Vegas, if you don’t know who the patsy at the poker table is…..it’s you!
The rest of the indexed story
As the great commentator, Paul Harvey, used to say “the rest of the story”……the rest of the indexed annuity story is pretty sad right now but promising for the future.
All annuities are contracts. That certainly includes indexed annuities. With that being said, the current indexed annuity sales environment is driven by misleading sales pitches and the highest commissions available in the annuity world. It shouldn’t be this way if the carriers and regulators would enforce the rules in place, but they don’t for whatever reason. Call it greed. Call it voluntary ignorance. Regardless, their inaction has severely damaged a strategy that has the potential to really help people, but only if the customer’s product expectations are in line with contractual realities.
In the very near future, there will be indexed annuities available to the consumer that will strip out the high commissions, all of the unneeded middleman cuts, and will build those costs back into the product. Commissions, if any, will be extremely low. Surrender charges, if any, will be very short. Upside caps on the index options will be much higher, and the option choices will be much simpler and easy to understand.
Until those pro-customer indexed annuity offerings arrive, my advice as the top independent annuity agent in the country is to wait and not buy the current indexed annuity products for accumulation. You can send ‘thank you’ notes to my P.O. Box!
And by the way, these new pro-consumer indexed annuities will NEVER be improperly called “hybrids”! No polishing needed. ☺