Ray Lucia, Gm Wb, Roger Ibbotson discussed on The Ray Lucia Show
Welcome back, folks. It is the Ray Lucia show along with a California girl Lynn row. Listen. They're talking about you here. Your hair a little blonder grow it out a little bit. And say for sure. Welcome back, folks. It's the Ray Lucia show. All right. So before the break. Yes, I brought up the fact that I've been taking a little bit of heat and emails because we talk so much about planning and one of the things in the plan. I mean, you can't Al can you not talk about annuity ising income, if your topic is a secure retirement income that will last as long as you. It would be malpractice for someone like Glenn Rowe to not discuss all of the above. But before I get to that. I cut you off. And you kept talking all the way through the break. I was trying to find the emails on my phone. So I wasn't listening. Right. So Ray I remember years ago you used to say to all the planners in the room. If you can't do it with your age and a yellow pad. You're not a financial planner if you have to rely on the extravagant computer programs and a back office to tell you what to say and do and and recommend then you're not doing your own homework, and that gets back to a planner that actually sits down and does the plan talks to you about what your goals are talks to you about what your resources are put those things together, and you can see them put it together in front of you. If you want if they're good at what they do. And there needs to be a strategy. It needs to be an accumulation strategy. A decelerating strategy issue approach retirement or a distribution strategy. But you ease into those strategies. This Ray was saying you don't just wholesale move everything and invested and when you ask. People may times what the strategy is. They just kind of give you the fish is right. Yeah. True. The thing that I've been taking the heat on the most is our discussion on annuities. And so I thought, but I would pull out from the archives. How far back this goes? And it goes back even further than two thousand and seven, but the landmark study that I read on the air probably back in two thousand and seven that change the minds of a lot of advisers. The more sophisticated ones was one done by Ibbotson associates for nationwide. Full disclosure. I used to be a spokesperson for nationwide financial many years ago. Not too was it before the that was shortly after this. But it wasn't because of this study was because we had similar strategies nonetheless Ibbotson, which is a merge. With morning star now. So this is a credible organization. All right. You cannot argue with the Roger Ibbotson and what he has done and MorningStar. Okay. They're just some of the finest research firms around this one focused on variable annuities with guaranteed minimum withdrawal benefits. The reason. I picked this one out amongst probably a hundred is because I don't talk about variable annuities almost at all because not because they're bad because they're expensive. Now, there's a reason they're expensive that we don't need to get into. But whenever you're talking about something that is expensive. Everybody's mind goes to some other area. Like, this guy's trying to rip me off or whatever. And I don't sell this stuff anymore. But they were talking about a variable annuity with a GM WB, guaranteed mini. Withdrawal benefit, incidentally, anybody that bought one of these things back in like two thousand and eight or nine especially early two thousand nine are absolutely loving life better than the fixed index nudity is better than anything. Because the market's gone up by like fifteen percent a year. And even if the fees were four percent, you got an eleven percent return, and you guaranteed remember back in the olden days. You could get I think it was at sixty or sixty five a six percent withdrawal benefit, husband and wife. Imagine that you got eleven percent per year for the last ten years. I'm not saying you would have okay. But if you did the money would have more than doubled. So you put in one hundred thousand bucks, you probably have two hundred two hundred and fifty thousand in some account and the insurance company says we'll let you take a withdrawal of six percent. Fifty percent more than the four percent rule. Now, those we were taking even more heat back, then because there wasn't nearly as much researchers today, but I understand that that deal turned out to be really good. In fact, it was so good that seven eight years ago the insurance companies that offered that deal stopped not only did they stop. Remember? They wanted you to contact your clients and say will pay them to buy it out to buy it out. We'll give them an unbelievable return. If we don't have the actuarial risk. Doing all this why? Because interest rates went down so low they couldn't meet their obligations. Now that doesn't mean they couldn't meet them it because insurance companies have reserved for all that it just meant that their performance. We're going to be pretty sucky for the next several years, and and the individual that locked the insurance company into a six percent distribution rate when they can only earn two or three on their money gamed the system legally. So allow me if I may because nothing speaks louder than the academic research itself. Skip to something that I mean, this is long. I don't wanna get too detailed. I've only got a couple of minutes here. We've developed a hypothesis that the GM WB will help improve the overall retirement income levels without increasing income risk levels. We employed the income risk or income semi deviation, which is defined as the standard deviation on negative income changes over the last period for a series of simulation analyses across three scenarios a diversified asset allocation with a GM WB diversified traditional non annuity portfolio such as mutual funds and three a combination of the VA and GM WB products and non annuity products in a portfolio context. Ext? When we come back. I'll give you the results of that study, which was followed by if I were making a guess fifty more that supported basically, the same type of information white papers big time studies by big time companies, and I will give you just.