I was lured in for a free dinner for annuity sales presentation. It was interesting. If you haven’t been to one I thought you might find it intriguing.
The presentation was to 18 couples, upper middle class income 5 to 10 years out from retirement, the targeted market was deferred annuities. It was in a conference room of an upscale restaurant. Orders were taken first with choice of chicken, beef or fish. A 75 minute presentation immediately followed.
It was designed to disarm, place the audience at ease, build some trust and even a little bit of alliance. No questions were taken during the power point presentation. No meaningful questions were taken after the power point, the salesman quickly vanished afterwards.
Retirement income was identified as “green” income, safe income such as social security, pension and rental income. All other income was risky “red” income. His goal was to convert this dangerous income to safe income.
Repeatedly he offered guidance in maximizing income from the ‘complex’ social security system. It was necessary to set up a free consultation with him to get this guidance. A number of variables were presented to illustrate how errors could be made in determining when to draw SS benefits. This was a large portion of the presentation.
Throughout the presentation he illustrated the volatile nature of the stock market, emphasizing the 2008 crash and how retirees were hurt where as a safe 3% steady return would be far better. I recognized the slide that he used to illustrate this point from my research on annuity sales, apparently they all use the same slide. The 3% safe return was not identified as an annuity.
A 4% SWR was discussed and quickly dispensed as risky, old school 1980's thought now replaced by a new rule of 1.5 to 2% SWR. He alluded to his management of mutual funds on client's behalf. He briefly discussed retail customer costs vice institutional costs. Without stating it he was leading the audience to the conclusion that it is cheaper to invest with him and pay oversight fees and get institutional rates vice invest directly at retail. I doubt the actual math would prove this to be a fact. No mention was made of his management costs.
On the very last slide he introduced the word annuity. He ended the presentation with a blessing for the meal which he read from a script, in fact most of the presentation was from a script.
