Whose Money Is It Anyway?

To The Editor:

I read with interest the Jan. 14 article by Art MacPherson and Lisa Plotnick entitled “VA Owners Dont Annuitize, But Do Flock To SWPs.”

While I do agree that we do have a problem of selling more variable annuity clients on the merits of annuitization, Im puzzled by all the concern expressed by the authors about Systematic Withdrawal Plans being “a steady, uncontrolled drain on VA assets.”

I wish to ask the question: “Of whose assets do we speak?”

The authors seem to be looking at this through the eyes of asset retention managers, whose apparent function in life is to keep assets from being paid out in a manner of which they do not approve. While it may not be technically true, VA clients tend to view these as their own assets. Excuse me, but did the VA client not invest his money with the intent of ultimately having it paid back for his or his familys use?

Should he not have the right to withdraw the money in the manner he chooses, however foolish, consistent with the terms of the contract?

Should the industry not expect some rise and fall in assets under management due to economic cycles?

Finally, the tone of the article seems to suggest that if clients would just accept a life annuity settlement, then there would be no drain on these precious assets. Somehow, I thought any benefit stream would result in a draw down of assets. But, I guess that would be more “controlled.”

Yes, I do agree that it might be in everybodys best interest to encourage lifetime payments. However, in my own experience of working with clients, too many are not willing to give up the estate benefit for the promise of lifetime income. There is the suspicion that “the insurance company wants to keep the rest of my money if I die too soon.” Attitudes like those expressed merely fuel that suspicion.

Also, most of the clients have a degree of affluence that creates a desire to defer withdrawals to the greatest extent possible.

Milton Jones, CLU, ChFC
Fayetteville, Ark.

To The Editor:

I normally don’t respond to magazine articles that bother me. However, this time I decided to convey my point of view. While I realize your main objective was to convey certain information regarding the use of systematic withdrawal plans (in the January 14 issue), I was uncomfortable with the underlying tone and the absence of a complete perspective in this report.

In regard to the tone of the article, I grow weary of softly worded insinuations (especially in trade publications) implying that commission-based agents and advisors are (1) Technically unsophisticated, and (2) check their objectivity and professional ethics at the door when faced with the opportunity to make money from the service they provide and the products they sell. This may be the exception, but from my 16 years in the industry as an agent and vendor, it is not the rule.

The article reduced the role of the professional advisor to a “rep” or “intermediary.” It then implied that such advisors have limited knowledge of the tradeoffs of using SWPs and annuitization options. What is more, it makes the clear implication that the primary reason a financial advisor would recommend a SWP is because the advisor doesn’t want to lose control of the asset and, therefore, the opportunity to churn the account and make a few extra bucks at the client’s expense.

In reading this story one would get the impression that the client’s money actually belongs to the insurance company, and the agent should be concerned that the company’s assets are being depleted by the fact that the client is using some of his own money to generate an income. It also gave the impression that using a SWP was bad for the client. Neither is true.

While it mentioned the incredible popularity and preference for using SWPs, it failed to adequately address the financial planning considerations and flexibility that has led to their popularity. I wonder if the authors considered the fact that a client typically has an entire portfolio–and taking income from one piece of the pie (often for only a limited period) via SWP is usually only part of an overall strategy? Rarely are financial planning decisions as simple and singular as focusing on a single investment and deciding irrevocably–annuitization or SWP.

Insurance agents are the ones who generate the income that makes all other ancillary positions and publications and commentators possible. Since this is true, perhaps we know a little something about this business after all.

When I read articles like this one, it becomes clear that many people who are commenting on what we do have never done it themselves and often can’t even see what they are missing.

Mark J. Moss

National Sales Manager

Pentera Group


Reproduced from National Underwriter Life & Health/Financial Services Edition, February 4, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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