Transcript:

Announcer:

This is More Knowledge, More Wealth, with your host, Gabriel Shahin. Gabriel is a certified financial planner and a registered investment advisor at Falcon Wealth Planning. This show is not intended to provide personalized investment advice through this broadcast and does not represent that the services or securities discussed, are suitable for any investor. Investors are advised not to rely on any information contained in the broadcast, in the process of making a full informed investment decision. More Knowledge, More Wealth, on AM 590 The Answer. Now here's your host, Gabriel Shahin.

Gabriel Shahin:

Good afternoon, this is Gabriel Shahin, Certified Financial Planner, your host of More Knowledge, More Wealth. That's on every weekend from 12:30 to 1:00 on Saturdays. I'm excited to share with you the knowledge you need to increase your wealth. Now, to the listener, you can always reach out to myself or one of our colleagues at Falcon Wealth Planning. Our phone number is 855-963-2526 with any personal questions you have that you want to relate this show to your specific situation.

Now, I'm Principal at Falcon Wealth Planning, a registered investment advisory firm. We are a fee-only financial planning firm that also manages money as well, but we really specialize going over all important topics of personal finance, and that goes over where you are today, how retirement looks like, talking about taxes, investments, estate planning, insurance. Folks, you name it, anything that involves a dollar sign. If you need help, if you want to make sure that we can answer some of the questions that you may have, whether it's a topic we've had in previous shows, which you can get, by the way, on podcasts or on Spotify, just look up More Knowledge, More Wealth. It's important to reach out to us because we are offering a free financial assessment where we'll give you one to two meetings, one to two hours of our time at no cost, and we have offices all across Southern California, including the Inland Empire.

Folks, give us a call. Our phone number is 855-963-2526. That's 855-96-Falcon, like the bird, or visit our website at falconwealthplanning.com. That's falconwp.com for short. Folks, I wanted to talk to you today about three main topics.

It always seems like I talk to you about three topics, but the three topics today is going over fear tactics that other commission-based advisors that are talking to you about with market volatility. Market volatility is normal, but they're trying to press you to say, "You can lose all your money," "The market's going to go to zero," "You have all these things to worry about," "You work so hard." They're making up all this stuff, and it's designed to scare you, and then that transitions to number two, which is the selling of annuities and insurance product. Whether it's an indexed universal life or a fixed indexed annuity, whatever it's called, and now, they try to talk about S&P 500 chassis on there and ways you could still make money, so I'll talk to you about how those work. It's really trying to protect you of what's out there, and it'll ask you, just talk to you about how markets work.

When I say markets, that's the stock markets, folks, and how that works because a lot of these commission-based advisors are trying to scare you so they can sell you, and these fear tactics that are out there are so ridiculous. Personally, I feel they're extremely unethical, heck, state regulation boards. There's 50 states out there, and almost every state has on the top three of the watch-out list, the beware list are annuities to say, "Be careful." They're often misrepresented of how they work. Now, misrepresented is a nice word for lying, or not telling you all the truth.

Why? Because they pay fat commissions. These commissions can range from seven, 10 to 20%. You put in $100,000 in that, that's a $200,000 payout. You put a million dollars in there, that's almost a year of salary. That's almost like top 3%, and all they need is one sucker to buy into one of these things, and they think they're getting something that's going to help them in retirement, when the reality is it's a return of principal product.

They sell you on safety, they sell you on fear, but the reality is, what is it? The idea is, is you're giving your money to an insurance company and they're just going to return it back to you. They claim that this insurance company, which, oh, by the way, the agent always says, "Oh, I don't get paid from you, I get paid from the insurance company." Are you freaking kidding me? Who cares?

I'm paying a commission to somebody, and you know what's proof of that? Ask them. You ask them what the commission is. Oh, don't worry about it. Listen, they've been trained. There's billions of dollars of training of how to sell this, excuse me for saying, junk, but you should ask, "What's the surrender fee if I cancel out of it after the first year?"

Not even after, within six months, within six weeks, and if they tell you it's, "Oh, you're going to lose 7%," "Oh, you're going to lose 10%," "You're going to lose 20%," oh, well, there is your commission, folks. Nine times out of 10, that's what they got paid, because the insurance companies are smart, because they would just sell it to themselves. If they get a 10% commission every single time and there's no surrender fee, I would just take my own money and do that over and over and over again. Obviously, they're smart in that, so they're recouping the commission from you, so don't believe that whole thing of, "Oh, we don't get paid a commission for this. We get paid from the insurance company to offer to you."

I mean, how unethical is that? A commission is you offer a product or service and you get paid directly compensated from what you're offering. That's a commission. Who cares who pays it to you, whether they're reaching your pocket and you pay it to the agent, whether it's insurance company or the company they work for? What a joke, and that's not even all of this.

Some of them have incentive programs where, "Hey, if you put $10 million in insurance by the end of the quarter, we'll send you on to the Super Bowl." How convenient is that? You're probably getting a lot of these free dinner seminar invitations now starting back up. Ah, this stuff just rattles me up. By the way, folks, if you're just joining us here, listen to Gabriel Shahin, Certified Financial Planner, your host to More knowledge, More Wealth, here on every weekend talking about all important topics of personal finance. Today, I just want to talk to you about the fear tactics that are out there of selling these annuities or insurance products, let alone indexed universal life insurance, which has become a hot thing. I've seen clients in this thing, "Well, we wanted protection, and I can grow my money and it's guaranteed."

It's like, "Well, back up aggressively. My goodness gracious, nothing is guaranteed," and if they're guaranteeing it, it's a glorified CD. Do you know you're investing in a glorified CD, and why are they selling it to you? To scare you. Why would you be scared of the stock market while I'm 77 years old that can't afford to lose? Maybe it's just a lack of understanding of how it works.

Who said you're going to lose? Listen, I know the stock market goes up and down. Absolutely. Look what happened in March in 2020. During the COVID crash, it lost almost 40%. Yes, I know you could lose, but you have to understand, that's one asset class that's losing.

That was the large U.S. cap that was losing. Not every index lost, and most people's portfolio isn't 100% in stock market, they have bonds as well. Doing a properly managed portfolio is extremely important, folks, because that's what's going to help you to make sure that you always have money that can sustain your lifestyle. These are items where people are trying to scare you of volatility, of, "Oh, you can't afford to lose, or you're going to lose all your money," "Oh, be careful. Could you afford a 40% drop like in COVID?"

Well, just four months later, it came back and, oh, by the way, the markets are up, what? 50 plus percent since then from where they were. Heck, we can argue they're up almost 100%. You've doubled if, of course, you bought in March of 2020, or, oh, by the way, they were selling annuities by the truckload at that time, saying, "Get out, get out, get out. Buy into an annuity," so you sell low, wow, versus buying low.

Then, you want to sell high, but that's not what they're telling you because they don't get paid. You got to understand most advisors out there get paid one to 2% to manage your money. When these people are getting, not only that one to 2% trail, we'll call it, because they get that on an annual basis, because of all the fees inside of these things, but on top of that, they get a five, 10, 20% commission for selling it to you. How does that right? How does that even sound okay, but that's the industry that we are at.

That's why it's sad. That's why this industry, financial advisors, investment, consultant, that's why all these people get such a bad rap, because they tried to scare you, and right when you sell at the low and buy with them, listen, you never ask for that annuity. They're selling it to you. They're jamming it down your throats. For those of you, and I know you may have an annuity, and you got to think to yourself, "Would you do it again?"

I'm not even going to say nine times out of 10. I might say 99 times out of 100 that they say no. You say you wouldn't do it again, so what does that tell you? It was sold to you no matter how nice they came up. They may be on the radio telling you this thing, and you call them for a free financial assessment, which, oh, by the way, we offer as well.

It's just we're fee only. We're non-commission. We're trying to protect you of those bozos out there that are literally trying to misrepresent how an investment works. It's ridiculous. It's sad, and they just try to scare the bejesus out of you.

For what? For a fat commission, plus bonuses on the side, depending on how much they do just in case they get some other fools to go and buy into these things, and I'm sorry if you did it, but don't make the same mistake, because if you bought into one of these annuities, there are ways you can get out of them. Will it maybe cost you potentially? I don't know, but you want to be stuck in these things for the next 10 years, some of them, 20 years. If you do that, you got to think, and this is the worst part about it, is some of these people sell their annuities and buy another annuity.

Now, it's not their decision. They're sold that idea through what's called a 1035 exchange. Why? Because they get another commission, but the whole benefit of an annuity is to annuitize that income. They may say you're going to get a 7% guarantee.

That's a lie. It's a 7% guarantee is if you take a monthly income for life, which, oh, by the way, you get hit by a bus the next day, it disappears. You would have to spend extra money on a death benefit rider, and then on that guaranteed 7%, there's an income rider, but then, if you're paying that extra money, why would you then cancel it out right when you can finally take the income for life, which, oh, by the way, is virtually a return of principal? If you have a question about that, ask the IRS. They have a table that proves to you it's virtually a return of principal product.

You're going to lose with one of those things. Heck, if you really want an annuity, I would say finding a nonprofit endowment, and if you know you're going to lose ... I mean, you don't know that because the person selling it to you doesn't tell you that. They just try to scare the bejesus out of you that you're going to lose all your money and put your money in something safe, which is in essence, a glorified CD. Folks, if you need help, if you're in one of these situations, if somebody's trying to sell you as we speak, whether it's on the radio or whatever, give us a call, we'll help with that. We'll help protect you of what's out there because this is ridiculous, it's frustrating, and it's sad.

Our phone number is 855-963-2526. That's 855-96-Falcon, like the bird. We can help put a plan together for you to actually educate you of how the markets really work and what you should do with your money. Folks, we're going to go on a quick break. Please feel free to stay with us.

We'll go over a few ways and understand the concept of selling annuities and making markets long-term and what you should be doing. We'll talk after a few words. This is Gabriel Shahin, Certified Financial Planner, your host of More Knowledge, More Wealth, that's on every weekend, covering all important topics of personal finance. We're going over retirement planning, making sure you're prepared for retirement, social security and strategies, real estate, taxes, avoiding them now and the in the future, investments, reducing fees, commissions, and so on, insurance and estate planning. Folks, we are offering a free financial assessment that you could take advantage of.

We have offices all across Southern California, including the Inland Empire. Give us a call to take advantage. It's a $500 offer. Our phone number is 855-963-2526. That's 855-96-Falcon like the bird, or visit our website, falconwealthplanning.com.

That's falconwp.com for short. Enjoy the show. We look forward to serving you.

Announcer:

AM 590, The Answer.

Gabriel Shahin:

Welcome back, folks. This is Gabriel Shahin, Certified Financial Planner, your host of More Knowledge, More Wealth, here on every weekend talking about all important topics of personal finance. I lost the noise cancellation thing for those of you watching it on the webcast, the videocast, but I do want to go over with you guys the continuation of what we were just talking about, about these fear tactics and selling of annuities. Folks, I want to explain to you how these things work, because like I said, there are people on infomercials, internet, and radio, hello, and whether it's Spotify, podcasts, you name it, folks, trying to sell you, take advantage of you, of fear tactics to purchase these annuities. It's unfortunate and it's sad, but it is the reality of the situation, and so I wanted to discuss with you guys just how these annuities work, because we understand the fear tactic of things.

We get that. We understand they only get made if you purchase, so we get it, okay, and so we understand the commissions behind it. We understand even that, is it the best thing to do to sell when the markets are low and put it in? Well, some of you may say, "Well, maybe I should sell it when the markets are right." Let me explain to you these annuities, okay?

The way it works is when they say you can guarantee not lose money, these fixed indexed annuities, whatever it may be, variable annuities, there's a couple concepts. Number one, there are two values of an annuity, folks, you may or may not know. There is one that value if what they're guaranteeing you, "Oh, you'll get a guarantee at 7% no matter what happens to the market over the next 10 years." That sounds very compelling. There's another one that says, "You will not lose money."

"I guarantee you, you won't lose money." Now, with those, it's very important to know, it's also based on the value of the S&P 500 going up or down, but they'll promise you you can't go, and lose money, but they'll limit the amount you make per month, or some of them per year, and the other side of it is it's an unlimited loss potential on a monthly basis. Now, you still hold your principal. I'm talking about the credit that they give you on a monthly basis is limited per month on what you make and unlimited on what you lose. Why is that important?

Because you can have a year like 2020, where the stock market did over almost 20% and your indexed annuity didn't get you anything. You made nothing. Why? Because it dropped 20% in a month. Well, if they cap you making only one and a half percent per month per annualized, that means if you make one and a half percent every month for 12 months, which is impossible because you lost over 20% loan in March, then you'll have 18% return, but that one month, you lost 20.

They know what they're doing, folks. They're scaring you of the fears of the market for guarantees, knowing that they're just ... Well, from what they're scaring you of, they're going to go ahead and invest on what they're not recommending for you. They're not recommending you do it, but they're doing it to get themselves, because they know most stock market averages a 10% return, so they don't want you to do it, they're doing it with your money and creating you virtually nothing. That's the sad part.

What is the guarantee on some of these variable annuities, which, oh, by the way, you can lose money regardless if they say it's a guaranteed 7% return? The catch with that is, if you have $100,000 in there, let's say the stock market loses money, at the end of the 10 years, if the stock market lost 10% like it did from 2000 to 2009, then your 100,000 still worth 90, whether it's in the stock market or not, but if you put in these annuities, your 100,000 at a 7% return, well, if you have a 7% return, there's something called the rule of 72, so you take 72 divided by rate of return is how long it takes to double your money. Not to digress, but your 100,000 is now worth 200,000 after 10 years. Now, can you just take your money and run? The answer is no, you cannot, so what do you do?

Well, what you do is you annuitize it after that. You give your money to the insurance company. Now, it's only worth 90,000, but they'll give you 200,000 credit, and depending on your age, for example, if you're in your late 50's, it might be a 4% credit. If you're in your late 60's, it might be a 5% credit. Most likely it's like 72, 73 years old is a 5%.

What does that that mean? That means if you have 200,000, you can pull 5% on an annual basis, so that's 10 grand. You get $10,000 a year for life. Now, you put that 100,000 in for 10 years and you have to let it sit there, and then after 10 years, you pull out $10,000 a year, so you have to go another 10 years. That's 100,000, so 20 years, you have to go to pull your principal out.

Think about that, and that's assuming you started at 72, so now you're 82. Now, you have to go another 10 years to pull out another 100,000 a year, so now you're 92. You doubled your money in 30 years, folks. You know what that is? That's a 2% return.

What do you think they're doing with your money for 30 years? They're investing it. That's why these things are often misrepresented. It's a return of principal product. For what?

For the false sense of security through fear tactics. By the way, folks, if you're just joining us, you're listening to Gabriel Shahin, Certified Financial Planner, your host of More Knowledge, More Wealth here on every weekend talking about important topics of personal finance. Folks, if you need help with this, if you had an annuity, if you want to know what to do because now your insurance salesman agent who, oh, by the way, probably calls themselves a financial advisor, doesn't even hold the right credentials, and by the way, our industry does not regulate what they call themselves, they can call themselves a vice president. It's funny how everybody's always a vice president. A vice president of what?

Vice president of nothing, might I add, and so they're over here selling you these things, and now they want to have you do something else with it, but remember what I said earlier. You put $100,000 in, you wait that 10 years, then you can annuitize it. What is the purpose of annuitizing it, because now you're finally at that period where you can finally do something with it? You can live off of it, so why are they having you 1031 it? Oh, by the way, the 1031, remember I said the 100,000 goes to 200?

That's not the case. You're only 1031ing 90,000 because that's the value of the annuity at that time. It's sad, folks. I see this all the time, and if you need help with this, if this is something that you want to make sure and get a second opinion on, or if you still want to make sure if it's a good fit, and then even if you ... I said something on the lines of a charitable gift annuity, might make sense for you, whether it's through your religious organization or through your alma mater, your favorite football team, whatever it may be, it has to be a nonprofit, give us a call.

We can help with this. If we non-commission-based, we're not selling annuities. You got to think of that. Why is it one of the highest paid commission products out there? Because they are terrible for a majority of people, but yet, a lot of people have them, especially at your local bank, whether it's Bank of America, J.P. Morgan, Wells Fargo, you name it.

I mean, these are trusted banks, but they have investment divisions that try to sell you these things. Give us a call. We can help. We can help identify what makes sense for you. Our phone number is 855-963-2526.

That's 855-96-Falcon like the bird, or visit our website at falconwealthplanning.com. That's falconwp.com for short. We can help put a personal assessment for you that lets you know what you should do, especially from those who do not get paid commissions. There's no products we offer. Let us be the good guys out there and tell you what you should do, because it's sad when sometimes people meet a true fiduciary.

100% of the time other people say they're a fiduciary, which means they're legally obligated, legally liable to do what's in your best interest, and then they don't trust them because they've been burnt so many times, but before you get burnt again, especially from somebody trying to sell you fear of the markets, trying to sell an annuity to you or an insurance product, whatever it may be, have us help. Have us be the person who saves you, or if you have money in there, what you can do with it. Maybe it makes sense to keep it because you have it for so long. Maybe it makes sense to get out of it. Maybe the indexing credit's not there, so why are you paying all the fees in there and it's invested already in the stock market?

Maybe you should roll it out, so you're not paying the mortality expense costs, the administration costs, the high fund costs, the rider costs. Why are you paying these costs if you're not using them anymore, if they've expired? Give us a call, we can help. Our phone number is 855-963-2526. That's 855-96-Falcon, like the bird.

Folks, understanding market's long-term. When you're comparing somebody that's trying to sell you fear tactics and selling annuities, some of these companies could be like MetLife, Lincoln, Transamerica, New York Life, whatever the case is, insurance company, the ones with the big buildings, by the way, because they make all the money, these are Fortune 500 companies. A lot of these companies are traded on the stock exchange, and why does stock market historically is the number one asset class? Is because of capitalism. These companies are designed to make money.

They are, whether you agree with it or not, whether they're selling alcohol or cigarettes, which that's why these environmental funds and ways of socially investing have become very popular, or banks, or the Amazons and Googles and Microsofts of the world. If we believe that our largest 500 companies who employ roughly 20% percent of all of us are in business to make money, there's 500 of them in just large 500 U.S. companies called S&P 500, not including mid-cap or small-cap, which are another 3,000. If we believe that they're in business to make money, which means you're working to make money, if you believe you're working because you get paid, because you make money, and your company's in business because their goal is to make money, that's why the stock markets are consistently the number one investment choice, because it's capitalism. If you believe that, we know it's going to be up and down, but if you're properly diversified, you can reduce that volatility. Folks, keep that in mind when somebody's trying to scare you of the markets because their goal is not to educate you, it's to take advantage of you.

If you need help with that, give us a call. Our phone number is 855-963-2526. That's 855-96-Falcon, like the bird. Folks, that was a fast, fast show. I want you to enjoy your weekend.

As we close out, you can always reach out to myself or any one of our colleagues here at Falcon Wealth Planning. Our phone number again is 855-963-2526. That's 855-96-Falcon, like the bird. Call us. We'll have a personal confidential conversation to help relate this show to your situation.

We want to thank you for listening. We want you to enjoy your afternoon. We want you to have a great week, and God bless.