I think I did a real bad thing

[wildcatpt]

Hi folks I trusted a financial planner now I will just have to make the best of it for nine more years. Please share your thoughts as to what allocations you would suggest for the coming year.  What I have is 4 separate fixed index annuities Allianz 365i. This year the allocations were split 50% into blended index which has Dow 35% Barclays capital US aggregate bond index 35% euro stocks 5020% Russell 2010% they say it had a return of 2.77% the other 50% was in Barclays US dynamic balance I have been having problems finding what the holdings are. I believe the Bloomberg ticker is bxlludbl.I would like to know how much of that instrument is in bonds? The rate of return call was 5.46% the choices for this year are Barclays US aggregate bond Dow Jones industrial average euro stocks 50 Russell 2000 index S&P 500 index NASDAQ 100 index Barclays US dynamic balance. My adviser also set me in a bond fund that I lost my shirt on I pulled the remaining cash out of that and starting dollar cost averaging back into Vanguard index funds. Allianz is recommending equities rather than bonds. Thank you I Appreciate your ideas.

[johnny847]

Hi folks I trusted a financial planner now I will just have to make the best of it for nine more years.

Why do you have to stay with this planner for nine more years?

[trailrated]

What are the fees involved with staying, what are the penalty fees for an early withdrawal? You did not give us a whole lot to work with. Help us help you!!!

[MDM]

Are you familiar with http://retirementrefuge.com/allianz-365i-annuity-review-fixed-index-annuity/?

If not, it would be worth your time to read it.

If you have questions about it, ask away!

[wildcatpt]

Thanks Guys I was referring to the nine years left on the contract I can find a new financial planer if necessary. The surrender charges are 10% for the first three years then they go down 1.25% each year until year10. The retirement refuge article is fairly easy to understand compared to 36 pages that came with the contract. They like Barclays US dynamic balance because of no caps. I'm still curious what is held in that instrument how much in bonds. Since I'm always guaranteed at least 0% should I go with a higher risk choices? some of the downsides to annuities I've read is how complicated they are boy howdy  and lack of liquidity. The crediting methods for the Standard & Poor's 500 is annual point-to-point with the 3.25% annual cap. The Barclays crediting method is annual point-to-point with the spread 2% annual spread for the first year 12% annual spread for all contract years. Man that's a lot of mumbo-jumbo to digest. I can take a 10% penalty free withdrawal each year on each contract if I wanted to.

[Retired To Win]

... I was referring to the nine years left on the contract I can find a new financial planer if necessary.. I can take a 10% penalty free withdrawal each year on each contract if I wanted to.

I should think that those contract terms refer to the investments you are in, not to a contract with the financial planner FOR financial planning services.  Because that would be really nuts.  You don't have a contract obligation to the financial planner, do you?  Because it's pretty obvious you should stop using him/her.  Don't you think?

[pbkmaine]

What do your investments cost per year, all in? I mean: expense ratio of funds plus mortality and expense plus wrap fees plus sales charges plus other. The biggest knock on these products is not the impossible-to-understand contracts or the surrender charges, but how expensive they are. Yes, you need another planner, and you probably should take 10% out per year.

[wildcatpt]

RTW yes the contract is with Allianz not the planner, after a couple of people point out that I should change planners it becomes more obvious. The planner has been doing this for 18 years and I thought all those awards hanging on the wall he  would be helping me make money. PBK I have no idea what the expenses are, when we signed up the financial planner told us that his fees would not come out of our money but out of allianz.There was a 6% sign on bonus that's vested at 10% a year.  We are 65 years old no debt  and the annuities are two thirds of our net worth so it does give us some incentive to live to 75 ha ha. I guess I just need to pick the best allocations and stick with it at least till year 7 or 8 we don't really need to pull any money out of this point. There is also a couple of good videos on this 365I  at the retirement refuge page thanks for that link. Can anyone tell me what in Barclays US dynamic balance how much of it is bonds. I must say there is a part of me that distrusts the market and the huge debt that were in but the biggest risk may be taking no risk .

[MDM]

The planner has been doing this for 18 years and I thought all those awards hanging on the wall he  would be helping me make money. PBK I have no idea what the expenses are, when we signed up the financial planner told us that his fees would not come out of our money but out of allianz.

Start with http://insuranceportals.blogspot.com/2013/12/industry-first-barclays-us-dynamic.html.  Regarding your planner's fees, note "Don't forget, as an Allianz Preferred producer, you can earn a bonus commission. Your bonus commission rates are based on the sale of ALL Allianz fixed annuity products in a calendar year." 
Yes, first your money goes to Allianz, then Allianz pays your planner - because Allianz will make much more on your money than you will.

Can anyone tell me what in Barclays US dynamic balance how much of it is bonds.

See this link: http://www.biltd.com/CarrierMaterial/AllianzPreferred/ASI-381.pdf.  The short answer to your question is "it changes on a daily basis."

And now the most important quote of all, from the second link:

Actual contract results would depend on crediting method chosen, and caps and spreads in place during that time period.

The actual formula used by Allianz to calculate the annual interest you will receive is very simple.  It may take a little digging on your part to find it - or you could sit down with the planner and ask him to show it to you.

Here's a simple test: if you can program the formula into Excel, then you understand.  If you can't, you don't.  And by "program", I mean something similar to the table below.  Copy and paste that into cell A1 of a blank worksheet, and start comparing what Allianz gives you vs. what the market could give you.

A	Index at year end	1500
B	Index 1 year ago	1300
C	Asset Fee Rate	0.002
D	Participation rate	0.4
E	Spread	0.02
	Actual Index increase	=(C1/C2-1)
	Interest rate you receive, ((A/B -1) - E) * D - C	=((C1-C2)/C2-C5)*C4-C3

Yes, if the number 1 goal is "don't see my account balance decrease at any time," this or any other indexed annuity will do that for you.  And it's possible that the market could drop for a few years in a row - but also consider your own comment, "the biggest risk may be taking no risk."

[wildcatpt]

Thanks MDM that will give me some homework later today it's 70 degrees outside so got to be out there.

[wildcatpt]

Looks like a gain of 4.12 % which isn't that bad in my humble opinion. I'm learning more about how this works but I have a long way to go. Since they only track the different indexes and my accounts are not directly invested in them I'm thinking I will go with the Barclays US dynamic balance which switches between the S&P and bonds it looks like they do it on a daily basis thanks for that link MDM  . From what I've read bonds are not expected to do too well this year. Last year I was 50%  blended Index which had 35% bonds and it returned 2.77% 50% Barclays US dynamic balance which returned 5.46%. They have a S&P standard index and also a S&P select index the selected index has a 1% allocation charge so I think I will go with the standard S&P 500 index 50 % percent.I have the ability to change the allocations once a year. Thanks for your help folks

[kjackson]

Hi Wildcat,
Very curious why you think you did a bad thing?
I read how you compared the annuity to an index fund but they are not the same at all. Apples / oranges. If you wanted an index fund and the potential downside that comes with that then the annuity was the wrong investment. If you wanted a low risk investment with no risk of losing your principle and the benefit of a future income stream that you cannot out live then you picked the right investment.
Very curious on this?

[arebelspy]

I have no idea what the expenses are, when we signed up the financial planner told us that his fees would not come out of our money but out of allianz.

Oh, so you don't pay him, but Allianz does... Did you ask where Allianz gets that money to pay him?  (Hint: it's from you!)

Most of the time, you're better off eating the cancellation fee now than riding out the contract, but run the numbers for your own situation. 

Sorry to hear you got duped.  =/

[iamlindoro]

Hi Wildcat,
Very curious why you think you did a bad thing?
I read how you compared the annuity to an index fund but they are not the same at all. Apples / oranges. If you wanted an index fund and the potential downside that comes with that then the annuity was the wrong investment. If you wanted a low risk investment with no risk of losing your principle and the benefit of a future income stream that you cannot out live then you picked the right investment.
Very curious on this?

[Sam34]

I saw this topic while browsing online for completely unrelated information. I'm sure I'll be back to visit other threads, but I thought I would pop on here with another line of thinking.

An option that I didn't see mentioned was the ability to leverage the annuity. Wouldn't recommend taking leverage to invest in an index fund unless you have a long enough horizon and sufficient reserve to support that move during the times of negative arbitrage, but this is another rescue strategy for under performing dollars.

Typically banks will lend 90-100% LTV of the surrender value of the annuity because it is a very secure form of collateral. It's like loaning against a CD for them.

Annuities are taxed LIFO, so if under 59.5, you will likely pay a penalty in addition to ordinary income tax on the GAINS.  The silver lining is that the "gains" of the asset portion of the annuity are typically very small. The Income Account values (the portion that guarantees a certain income for life depending on when you start the income stream) will usually be much higher, but since they can't be withdrawn as a lump sum, they can neither used as collateral nor count towards the tax bill during a taxable event(surrender or loan).   

Hope this helps anyone who stumbles on this in the future.

-Sam

[Mary K]

Why do you think you did a bad thing?  The idea of putting money in a fixed index annuity is not to match gains from Vanguard index fund, but for safety, so that when 2008 happens again, when everything went down, even Warren Buffet lost money, you in your retirement years don't have to worry that you are losing money and still have to withdraw money for RMD.  I remember when the tech bubble burst - watching my asset vanishing in 2001, 2002, going into 2003 - I was freaking out.  Thank goodness I was still working then.  So it's for your peace of mind with a decent death benefit for your beneficiaries.  That's not a bad thing.

I just have 2 questions: why did you buy 4 separate fixed index annuities Allianz 365i, why buy 4 of the same thing?  Did you buy these in the same year? 

[arebelspy]

lol.

iamlindoro posts that beauty three posts up, and it's immediately followed by another one post member, then ANOTHER one post member.

Annuity scams sure do attract the shills.

[MDM]

Why do you think you did a bad thing?  The idea of putting money in a fixed index annuity is not to match gains from Vanguard index fund, but for safety, so that when 2008 happens again, when everything went down, even Warren Buffet lost money, you in your retirement years don't have to worry that you are losing money and still have to withdraw money for RMD.  I remember when the tech bubble burst - watching my asset vanishing in 2001, 2002, going into 2003 - I was freaking out.  Thank goodness I was still working then.  So it's for your peace of mind with a decent death benefit for your beneficiaries.  That's not a bad thing.

I just have 2 questions: why did you buy 4 separate fixed index annuities Allianz 365i, why buy 4 of the same thing?  Did you buy these in the same year?

See reply #13.

[TomTX]

RTW yes the contract is with Allianz not the planner, after a couple of people point out that I should change planners it becomes more obvious. The planner has been doing this for 18 years and I thought all those awards hanging on the wall he  would be helping me make money.

Oh, the plaques are for making money for Allianz not for making money for individual investors who trusted him

He fucked you over, hard. With no lube. And apparently he has STDs, because you're stuck with the infection unless you pay for some painful treatment.