The retirement game is fixed

If it’s Tuesday, people who know Steve DeJohn don’t have to ask him what’s on the calendar. That’s because Tuesday is seminar day for DeJohn, president and CEO of Premier Investment Group in Rolling Hills, Ill., just outside Chicago. Every Tuesday he’s in front of seniors, finding out what worries them and letting them know he can help. His seminars are the backbone of his practice, and they drove his $15 million in sales last year – $10 million in annuities and $5 million in life insurance.

“I’m constantly in front of people,” he says.

DeJohn got his start in the industry in 1992, selling life insurance for Prudential, where he finished No. 1 in his first year. A few corporate gigs later, DeJohn found himself changing gears and diapers at the same time. He opened the doors to his own business in 2001, just when he was beginning his family; he and his wife, Kristen, have two boys, Zach, 5, and Luke, 3.

He’s learned a lot in his 14 years in the industry. For instance, television commercials do get people to call. Unfortunately, DeJohn says he “got more calls from buddies at a bar at midnight” than from prospects. Also, “the camera does make you look 10 or 15 pounds heavier.” He also knows that as long as seniors need help he’s going to provide it, on a level they can understand and in a forum that’s comfortable for all.

Senior Market Advisor: What got you into the senior market?
Steve DeJohn: I read something in the Life Sales Journal and there was a quote from a friend of mine I used to play softball with. He was doing seminars. I called him up and I went and watched him do a seminar and the room was packed. He had some appointments, and I went to his office and he never sold anybody. His office was in a commercial-industrial area. It was a one-story building and his background was small-group health insurance. These people would come in his office, and the conference room had cardboard tables and a chalkboard. It just didn’t look right or smell right.

So, I read a testimonial about somebody doing seminars, and I got tired of the compliance and the corporate office ways that I had gone through. I just took a leap of faith. Somebody sent me a package. It was Game Plan Financial. It talked about commissions and seminars and how it all works. Thirty days later, I had people in a room. I got up there and started talking.

SMA: What are seniors most concerned with today? What do you find that bothers them or worries them?
SD: I think what worries them the most is losing money. A lot of people are still in the market and they shouldn’t be. You should be adhering to the rule of 100. Take 100 years old, and if you are 75, subtract and you should have no more than 25 percent of your money in the marketplace. I think it is less than that. So that’s one thing … simply having sleep-at-night contracts. Safety of principal is No. 1. No. 2 is the expenses and the fees they are paying. A lot of them are not educated as to what they are actually paying on their statements. That is something they need to be aware of. Three is the long term nursing care issues. Ninety-three percent of people don’t have long term care. They don’t have it because they are in denial – it’s not going to happen to me; or it costs too much; or I’m not healthy or my spouse isn’t and we were denied. One was approved and one wasn’t. So we threw our hands up in the air and we didn’t do it.

SMA: How do you help them address those concerns?
SD: I help them by introducing them to Medicaid-friendly annuities. If you are married, there is something called the non-institutionalized unlimited provision in the Medicaid laws. So, if the husband gets a stroke and he’s paralyzed on one side and you can’t feed him or bathe him and dress him, then he’s got to go somewhere and you need help. These Medicaid-friendly annuities have the ability to turn on or annuitize an annuity and pay the spouse, the non-institutionalized spouse, an unlimited income provision. Depending on the amount of money they have in assets, whether it is qualified or non-qualified, that’s the way they can protect it. So I gravitate toward the companies that offer that.

I want to teach you how to maximize your income while you are alive, put your money into an investment that you cannot outlive, and the only investment in the world that you cannot outlive is an annuity. As long as you are breathing, even if your money runs out with the insurance company, I can still get you a check every month.

SMA: Fixed annuities dominate your sales. What makes them so attractive?
SD: When you hear me talk about it at my seminars, this is an investment that has airbags. It’s on autopilot for you. The market goes up, you are going to get a certain participation of the market. Depending on the product, you could get 100 percent of it. But if the market goes down, some of my clients say “Zero is my hero.” I ask the audience, “How many people left a zero on their statement in 2000, ’01 and ’02?” They all raise their hands. I tell the audience that my crystal ball is as good as yours or your broker’s. I have no clue whether the market is going to go up or down in the next week, month or year, but I can tell you this: “If it does go up and your assets are with the savings vehicles that I recommend, we’re going to get a major portion of it. But if it goes down, you won’t lose any and you can’t lose last year’s gains.” I actually go into more detail about the bonus annuities and how those can pay for your surrender charges if you want to get out or how you can recoup some of your market losses from the previous year.

SMA: You tell them that when the market goes up, they are going to get most of it. Is there a perception perpetuated by some advisors that seniors get all of that upside?
SD: Yes.

SMA: Is it an ethical breach not to say clients are only going to get so much when the market is up?
SD: Absolutely. There are unethical advisors out there. I think that’s the problem you are having with the NASD and the SEC screaming and saying they want these things regulated. I don’t think that will ever happen. NAFA came out with that great letter in December 2005 addressing all of the sensationalism in the newspapers about fixed index annuities. Brokers were saying, “Hey, it’s just like a stock or a mutual fund. It goes up, you get what it gets, and if it goes down, you don’t lose anything.” You’ve got to be careful of the semantics you use.

SMA: Do you have any examples?
SD: People are saying things like “stock market-like return.” Well, it’s not a stock market-like return. You can’t say that. What you are saying is that you are linking your money to the performance of a mature index. There are only a few levers insurance companies can pull, and you have to tell the audience there are things called participation rates, which is how much you get. There are things called the crediting methodologies: monthly averaging, monthly point-to-point, annual point-to-point, biannual point-to-points. Describe the different crediting methods, because that’s what you have to tell them. There are crediting methods, and some of them are inherently better than others. Some of them will outperform the others. There is no silver bullet.