I am not able to discuss securities in this forum for compliance reasons, so the scope of things will be limited to fixed annuites.
1) In the past, there has been debate on the Internet on whether or not Everest can really guarantee various return rates. I have not researched the company's services myself, but can you explain exactly what you do, and who is your ideal target customer?
The guarantees are backed and given by large financial Insurance companies/financial organizations, not EWM. We provide financial planning for retirees and pre retirees. Our clients are probably a little bit different from most of the readers of this blog, our average client is someone who is a baby boomer and is looking to secure their retirement and reduce risk. They are seeking professional help.
2) Who is your target audience?
I believe this has been addressed with question #1
3) Why should I choose you rather than managing my own investments?
The education, designations, and experience. This is not to say you cant do it yourself, you could also fix your own vehicle, build your own home, and perhaps even perform minor surgeries on yourself. This doesnt mean you should. I suppose if you have the time, the experiences, and resources, and the formal training we could all do alot of things ourselves. I also think people chose to work with us because we are independent and able to use the best solutions for the client without a board or shareholders telling us what is best.
4) How much sales commission is EWM typically paid for selling indexed annuities?
This can vary, it depends on the carrier and the clients age. For most, we are able to earn a 1% trail for the life of the contract.
5) How do insurance companies structure and hedge indexed annuities? What is their typical annual profit margin on these products?
This is something that is better answered by an actuary of a company who manages the assets, which we are not.
6) Is a return of "up to" 7% guaranteed by capping the return at 7%? E.g., in 2013 the S&P 500 index rose >>7%, but investors in annuities capped at 7% would indeed have a return of "up to" 7%.
The return on the accumulation value is not capped at 7%. One of the vehicles we use quite often, has an uncapped index with a spread of 2%. This simply means, if the underlying index returns 10%, the client earns 8%. Unlike investing directly in the index, the gains and principal are protected from market flucutations and cant lose money.
7) Is the "up to 7%" guaranteed in the video the rollup rate, or the IRR?
Roll up rate, and today its currently 8%
8. Why on earth would anyone ever buy an equity indexed annuity when anyone with a brokerage account and 15 minutes could replicate the base contract at a fraction of the price and with far better economics (as detailed here
http://lifeinvestmentseverything.blogspot.com/2012/01/rolling-your-own.html)?I disagree for reasons in previous posts, in 2013 alone $38 billion went into these solutions, I think that speaks volumes.
9. How do you help your investors manage the counterparty risk they take to insurers when buying these products, considering that state guaranty funds are ill-equipped to deal with the failure of a major insurer?
By doing due diligence and working with market leaders, the same way one protects themselves from working with brokerage firms that could become insolvent. I touch on this in previous posts as well.
10. So, what's average?
Average? I am not sure what you are asking for? If returns, I would point you to the Wharton paper.
11. Are you fiduciaries for your clients? Or do you only have to meet the suitability standard?
Fiduciaries
12. Would you post contracts for 2 or 3 of your products so the readers here can see the details for themselves?
We cant post contracts, since they contain client information. You can not invest in an annuity yourself so you would have to work with a licensed agent. I would encourage you to call one of the major carriers such as ING, Aviva, Allianz, F&G, or even GenWorth to find out what products are available in your state. Remember, the product lineup varies by state.