In the third part of our ongoing series on suitability and other issues affecting sales to seniors, we thought it might be best to go to the source itself: the increasing number of elder Americans who are purchasing annuity products to protect their wealth and create a life-long stream of income. The folks we met come from across the United States but share one common bond — when an advisor takes the time to carefully lay out all the facts and find an investment product that fully suits the client’s needs, you create happy, loyal customers. We also spoke to a litany of industry reps who have helped to outline a client-friendly breakdown of the annuity world (information you may take for granted but is not always clear to senior buyers). “All of this has worked out for the best” For recent retirees Becky and David Stenander, of Gainesville, Ga., transplants from Upstate New York, finding a way to preserve their savings was a very important quest.
“We had some bad experiences with the stock market in the early 2000s and lost some of our money, which was very upsetting to my husband,” Becky, 61, says. “He retired from a bearing manufacturer five years ago and ?? 1/2 well, we’re not risk takers. He’s the kind of guy who spends six months doing the research before he buys a car.”
“When I retired, I wasn’t aware of the risk I was taking with my nest egg,” David, 66, adds. The Stenanders decided to contact advisor Jay Grubb of Key Financial Partners in Atlanta upon the recommendation of their friends. Grubb suggested a fixed indexed annuity as the solution for the couple’s needs; the ever-cautious David decided to do significant research on his own, even consulting a son who works for an insurance company. In the end, it turned out to be the right product for the right people, the Stenanders are happy to say.
“Frankly, I was quite concerned about us putting all of our life’s savings into a product that we initially didn’t fully understand, but Jay assured us about the security of the product – we don’t have to worry about the stock market anymore,” Becky says. “We left the money in for the first year and – it’s done much better than we thought. I never thought we’d be the kind of people with our own financial advisor, but you really couldn’t ask for anyone nicer than Jay. We’re feeling quite a bit more comfortable with the whole purchase, as a result.” “We couldn’t even come close with other products” Sixty-seven-year-old Bill Darling of Kent, Ohio capitalized on a long-standing family relationship with advisor Bill Smith of Great Lakes Retirement Group of Sandusky, Ohio and discovered that a fixed indexed annuity was an excellent way to help transition some of Darling’s parents’ estate in tax- and risk-free fashion. Darling, a former bank vice president, admits he had always had some reluctance about annuities, but says that Smith, who had worked with Darling?? 1/2 s father John for 13 years, was able to find another appropriate fit.
“Bill kind of had to twist my arm, me being an old banker,” Darling says. “Our bank offered certificates of deposit and there was absolutely no risk. I watched Bill set up stuff for my dad and I knew we might be able to get more out of our own money.” Darling says things changed when he was asked to oversee his elderly parents’ finances.
“When my mom passed away, I was put in charge of my dad’s money, and we decided to put it into a fixed annuity. My dad liked that; it was still his money, all in his name, but he knew that we’d be able to dis-burse the money after he passed away to me and my sister. We were able to avoid probate and had our taxes deferred; we’ve even made 7 percent per year on the account.” Smith says the Darlings’ account allows them the best of both worlds: good returns, liquidity each year up to 10 percent, no fees and no worries about the funds being locked in.
“Bill gives us heck, actually – “why don’t you go out and spend some of your money,” Darling laughs. “We don’t live like hermits, but – well, I guess we ought to take a trip or something some time.” “It’s the best thing I ever had” While retiring baby boomers will face new challenges, older seniors who worked their entire lives and counted on company pensions to protect their income have discovered some flaws in that plan – and the important role that annuities can play in better serving their needs.
Ingrid Berg, now 79, of Red Cedar Point, N.Y., began working for New York Telephone when she was a teenager. She retired at 55 with 40 years of service to the company; a pension, and eventually Social Security, provided her with the basics, but could not keep up with inflation.
“I had never saved in my life and the company pension hasn’t increased since 1991, but in the last few years, things have become so expensive, such as gas bills,” Berg says.
Six years ago, Berg decided to attend a seminar put on by advisor Shaun Golden of Riverhead, N.Y.-based Golden Wealth Management; she says she struck a rapport with Golden and became interested in the benefits of a variable annuity.
“Together Ingrid and I decided to place a portion of her investment assets into a VA, with the objective of long-term growth, and also current income to supplement her lifestyle needs,” Golden says. “Ingrid started drawing a monthly income shortly after investing in the annuity; as a result, she?? 1/2 s been able to live a much more comfortable retirement lifestyle and keep a better handle on rising costs.”
“I never would have been able to pay my $300 monthly utility bills if if weren’t for the annuity income,” Berg says. “It’s paid me very well and I am absolutely tickled. I think it’s the best thing I’ve ever had; I just wish that I had more money to invest in it.”
Golden says Berg has enjoyed a 19 percent increase in her principal between 2002 and now, even after monthly income checks for almost six full years. Better yet, her monthly payments are now 39 percent larger than they were when they began in July 2002. “I don’t worry as much” Helen Dratcher, 86, of Nashville, has led a wonderfully exciting life, living in Nigeria and other far-flung destinations, and helping thousands of needy children as director of international nutritional services for Catholic Relief Services.
When it came to looking after her own needs, Dratcher – who had raised two children overseas as a single mother – sought some assistance to help extend the range of her own meager savings. “I didn’t have time to start all over again,” Dratcher says. “I was very concerned about having the money to last me as long as I needed.”
Dratcher attended a seminar put on at her church in 2001 and opted to purchase a fixed annuity which has paid off well, earning her 10.2 percent in the last year alone.
“I knew about annuities in general but I liked what he said, and he’s been able to completely allay my fears – I don’t worry as much as I did when I played the stock market,” she says. “I don’t want to sit at home and fret and fume about it. I just wish more people would think about their retirement while they’re still working – where did I think I would be in 30 years?”
Another Nashville resident, Matthew Kennedy, 87 – a Julliard-educated pianist who served many years as director of Fisk University’s celebrated Jubilee Singers – also invested in a different Midland FA that earned 7 percent in the last year.
“I am so pleased that I crossed paths with that company,” Kennedy says. “The product I purchased has paid well and there’s no risk – and I’m just glad it’s there. I’ve only had to draw from it on two occasions but I can if I wish. It’s certainly something I would advise to others.”