Business Innovators Radio - Interview with Brian Sirota Founder of BES Financial Discussing Indexed Annuities

Episode Date: December 11, 2024

Brian is a Financial Representative with extensive knowledge and understanding of Financial Products to assist clients in planning for their retirement needs.Learn More: https://besfinancial.com/Securities and investment advisory services offered through Osaic Wealth, Inc., member FINRA/SIPC and a registered investment advisor. Insurance products may be offered through Brian E. Sirota, also Known as BES Financial which is not affiliated with Osaic Wealth.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-brian-sirota-founder-of-bes-financial-discussing-indexed-annuities

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of influential entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with Brian Cerota, who's the founder of BES Financial and we'll be talking about indexed annuities. Brian, welcome to the program. Thank you very much for having me.

Hey, so I want to talk about this topic because I know that you bring your decades of experience to helping your clients understanding options. And we know that there's never one right solution for every single person out there. Everyone's different. Everyone has different needs. And so I know that you want to just help teach and educate and guide. But before we dive into the world of annuities, tell us a little bit about yourself and your story and how did you get into the industry?

Originally from New Jersey, went to school to be an accountant, graduated in finance and accounting, and moved out to sunny Florida a little over 35 years ago, and specialized in trading, basically. I worked for the number one specialty firm on the New York Stock Exchange for a little over a year, and then I was an equity trader for a firm located here locally in Boca Raton that held institutional accounts as well as retail accounts. So you got some experience from the trenches and then you started working with clients. What made you start your own firm? Decided to take a different direction. Trading is a very involved and complex field and quite frankly, very stressful. And I was raising a young family to take a different direction in life. I was literally thinking of the word stress as you were describing that. I'm like, I can remember from the movies on screen, the traders down on the floor,

just yelling and screaming and waving. So I can only imagine that times six days a week or more would have a wear on you. So you start your firm and you start working with clients and you start noticing ways that they have questions. And obviously this is a question that comes up a lot. That's why you wanted to talk about this today. But before we get into the overview of what an indexed annuity is, let's define what is an annuity. And I think that sometimes people just don't even know what it is. So what is an annuity? So an annuity is a tax-deferred investment that can basically allow your funds to grow. Let's take, for example, there are several different types of annuities.

One of them is a variable annuity, another one is an index annuity, and another one is a fixed. And those are basically the three categories that I like to define within annuities. But today, let's talk about index annuities in general because I think it's a nice blend of all three worlds. And the index annuities allows you to have growth that is dictated on index crediting strategies. So your gains are based on how an index may perform. But the beauty of the product will be that your principal is guaranteed. So if the market were to sell off, you're not going to have any market loss. However, you are having specific participations or limitations on your upside.

and that's how they're able to navigate that product for the consumer. That's a big point that I want to dive into right there because I think a lot of people hear your background in the trading world, right? And they're like, oh, yeah, when money's in the market, it's at risk. Life has risk. We know that. But when you're talking about annuities and you say words like guaranteed and protected and safe and you can't lose money, that catches people's attention. And of course, if you give something in one area, you need to limit something in another. And one of the reasons that people can say annuities are guaranteed and protected, can't lose

money is because they're going to cap the upside. So maybe whatever the index is, maybe that goes through the roof and you're going to see, wow, the gains were really strong this year. But my gain was capped at X percent, whatever that is. But you're happy and thrilled with it still because you knew that if the bottom dropped out, you weren't going to lose a dime. So I think it helps people to wrap their head around the fact that I got this safe investment, but yet one of the downfalls is it does cap it a little bit, but the caps aren't really restrictive. They're still very generous, right? Yes, in today's market,

they're very generous. Annuities have been around since, index annuities specifically have been around since 1995, a Canadian insurance company actually created it. And the beauty of what's transitioned between then and now is that the products have gotten extremely beneficial in the client's interest versus before it was more in the insurance company's interests. And now they've become so competitive that it's really a great environment for clients to utilize those not only for growth, but also they have riders on them that allow you to have guaranteed lifetime income. And they also have ones that have features with debt benefits and other riders that are

available depending on what the client's needs are. And I think I've heard too in the industry that there's riders for even long-term care, right? There is. Some of the insurance companies will provide riders that will take the income that you have for lifetime and possibly multiply that by one and a half or two times, depending on whether it's joint life or single life income. And there's many different variations of that depending on the carrier and insurance company. Well, and depending too on the need of the client. And like we've said before, if someone is interested in annuities, find out more. But there's never one annuity that's right for every single person. And some people might not need a long-term care writer. But the thing that I find interesting in that potential option is if you bought a standalone long-term care policy, it acts similar to like your car insurance policy where if you pay your car insurance that didn't wreck your car, you never used it. But you can't get your money back. So the same thing with that standalone long-term care. If you didn't need to go into long-term care over the last year, those premiums are gone. Whereas if this is a rider on your annuity, if you need it, it's there. Let's look at the parameters there. But if you didn't need it,

that money just is still doing what it was meant to do inside of the annuity. And it really gives you those options. I think that's a really neat feeling. Yeah, it definitely provides that peace of mind that clients should have. Let's talk a little bit more about that piece of mind because I think a lot of people explore annuities versus having a big chunk of their retirement savings in the market where it's subjected to those risk and volatility and things like that. So I think that peace of mind knowing that, okay, this money, you can never lose it. You can never lose the principle.

And sometimes you can say, look, the percentage of your rate of return is X. it's going to be guaranteed at this rate or maybe it's tied to that index. That peace of mind because you have it protected and safe, I think that it's almost like the old saying you can't, money can't buy that. But it really just is such a powerful concept because I'm sure that there's clients that are tired of watching the news and hearing the markets go up down and all around and seeing their statement come in every quarter going, wow, my retirement income just drop because of the market. So this becomes a really wonderful opportunity to explore because of that safety.

One of the things that I like to implement in my client's portfolios is being assured that they have a certain amount of income to take care of their basic needs. That way, you may not be dipping into equities at the wrong time. For example, if the market were to shift like the during the financial crisis or during the pandemic and you're going in and grabbing assets. So if your portfolio is down 25% when the equity markets and you're dipping in, for every dollar you're dipping into, you're taking significantly more and you're removing the opportunity for the recovery of that asset. So it becomes important for you to have a systematic income.

And annuities can provide that similar to maybe one of your grandparents or even one of your parents might have had a pension in today's society, not a very common situation. So we try and create a similar situation to that, utilizing the annuities because pensions were actually written on a chassis of an annuity. Social Security has a similar platform that an annuity was written under, and actually the legislation that governs them is similar to that of the annuity. And so these all become relevant factors as far as trying to create a plan. for that guaranteed income from the insurance carrier to provide that lifetime income need.

And the income will continue for the lifetime of the individual or individuals that chose to elect that income. Yeah, those are some really good points. And I know that like when we first started our conversation here, a lot of times people would say annuities, no, just right off the bat, because they have some misconceptions. Let's go back to some of those. What are some of the common misconceptions about annuities and also index annuities? Because you said index annuities started in the 90s, but I think annuities have been around even longer than that. Yeah, annuities have been allowed around hundreds of years. But in particular, index annuities were created so that it was basically crossing a road between fixed annuities, which will be basically similar to a CD, but a product of an insurance company versus a virus.

annuity, which typically takes sub-accounts, which are basically a mirror image of a mutual fund, but you have market risk. Both of those have parameters where they can provide guaranteed income, but the difference is how the markets are going to impact it or their growth is going to be impacted. Index annuity was a sleeve in between that, and that's where that market became advantageous. And when they originally came out, they were pretty complex. And people were confused on how they worked, how the interest crediting took place, the different strategies that were there and available for that interest crediting. Some of them were specifically designed for the annuity companies themselves.

So over time, these insurance companies became more in line with index crediting strategies that the marketplace would be more familiar with so that the clients are more comfortable with the investment strategies that are available for the interest crediting. It seems like over decades and decades, the financial world and the real estate world and all of these, they start enacting legislation that tends to protect the consumer because you remember the mortgage debacle back in 07,8,9, and some of the laws that came out from that is fully to protect the consumer. And that's exactly what you're saying there. It's okay.

Back in the day, maybe annuities tended to lean a little bit more to benefit the insurance company. Now it's like, how can we protect and give the best? possible product to the consumer that they can get. Right. And that's one of the jobs of the financial advisor to look at the available products in the marketplace to see which product may best suit the client because there's a lot of product in the marketplace, a lot of insurance companies. I myself almost focus on the A-rated carriers. There are many other carriers in the marketplace in general, but why not work with the cream of the crop? And so the best rated carriers are the ones that I tend to focus on. And then depending on the client's needs will guide me to the specific

product or products that might best serve them. It's very similar to I would suspect like when we go to a restaurant or we look on Amazon, we look for the highest rated most reviews products to make the decision. So why wouldn't you as an advisor pick the best rated carriers out there? So that's wonderful. You used another word that stuck out to me, which is guide. And I think it's really neat. I can just tell that you take the approach of teaching and educating your clients and guiding them to options, not forcing a square peg in a round hole, but just guiding them and saying, here's some things to consider. That's a really powerful approach. Yeah, it actually brings me to one of my signature comments that I tell my clients over the years, the only BS you're going to get

out of me is my initials. Brian Sorota. That's good. Awesome. It makes me think of this too, just like there's never one solution for every single person, no one should put every dime of their retirement savings in one stock or in the market as a whole or in annuity. So we know that we need to have a good balance. What do you approach your clients with in guiding them and some of the strategies to decide whether to include annuities at all in their portfolio or the balance? So should they have 80% of their money in something or the other? But we don't need to get into specifically. of that, but just how do you guide your clients to decide if annuities are even part of their portfolio or what that mix should be? Yeah, one of the first things that we do is we look at their

financial goals and that's the primary concern in any decision-making process. And then we try to tailor-make their financial plan. One of the things that I look at is their particular unique situation because there is no one product or one great solution for any one. one individual. It should be looking at everybody as basically looking at them specifically and their set of circumstances and the timeline that we're looking at to accomplish those goals. Yeah. And it's almost growing up, I remember those books, Creatio and Adventure. And like you get to page two and it said, would you like the character to go up the hill or in the cave? And so it's every time you read through it, it's a new result. Same with you. Every time you sit down with a client,

everyone has a different background, different goals, different needs, different amounts of money and different risk tolerances, all of those things. And so when you can ask the right questions and guide them in the right way, then it just becomes apparent that, okay, we need to consider this angle or this direction. And I think it's really neat to hear you just really give that great overview about annuities, how over time they now have gotten much more and more beneficial to the consumer. It could be a wonderful thing to consider for a portfolio mainly because of that peace of mind. And I just think that's such a gift that you're able to give clients to go, look, you sleep well at night.

You don't need to worry because this amount of money we have in this product is going to be safe and protected. Yeah, it's a great avenue to look at your entire portfolio to make those decisions because annuities aren't right for everyone, right? It's a matter of how much income you're going to have through your retirement. Are you going to be able to meet those needs? that are going to arise through retirement because you have, as we get older, our health changes,

so increase in costs there, inflation, which we've all recently experienced, those change your cost through retirement. If we have positioned the individual to be able to maintain their lifestyle needs through the retirement, growth becomes the next component. The first primary objective is, hey, do I have enough money to get through retirement?

secondary would be growth. Yeah. Yeah, because at some point, you go, you know what, I might not need access to the cash flow out of my money just yet because I'm still in my working years, but at some point, you're going to need to turn on that cash flow. So all of those decisions come in time and stages, and that's why potentially, I would suspect, you would say, you know what, once we get this plan into place, we need to meet annually, at least, and just make sure the plan is still working the way we want to see if there's any changes so that annual review becomes really important. Yeah, and not only the review for emotional components of it, but yes, also the financial aspect of it, but also because over time, like I mentioned, health changes, risk changes,

objectives change, you might have lost a spouse or you might have incurred some health issues that might have incurred additional expenditures. So any of those situations can change the path or direction that we're investing or how much income we're going to be needing to extracting from the portfolio. And that's why a review is so important moving forward. Yeah. It might not mean that the plan was wrong back when you set it up. It might just mean that external things like your health needs changed or inflation tweaked or taxes change, all of these factors. So it's just, this is the right plan for right now. We came to that agreement. When we get back together in six to 12 months, let's just make sure we're on track and thumbs up. We move forward

or maybe we need to make a small adjustment. So I think that just makes total sense in financial as well as many areas of our life. So it's almost like you become a life coach, financial coach of sorts and just guiding people along the process. Sure. And even when during retirement, you may come into inheriting monies. So you're income needs may shift at that point. Yeah. Yeah, good point. Brian, it's been really educational to learn your perspectives on how people should consider annuities. So if someone is interested in learning more and maybe reaching out and connecting with you, what's the best way they can do that? They can call my office at 954-36619, or they can reach out through my website, which is

BES Financial.com. Excellent. Brian, thank you so much for coming. on it's been a real pleasure talking with you. Thank you, Mike. The views expressed are not necessarily the opinion of the interview guest and should not be construed directly or indirectly as an offer to buy or sell any securities or services mentioned herein. Investing is subject to risks, including loss of principal invested. Past performance is not a guarantee of future results. No strategy can assure a profit nor protect against loss. Please note that individual situations can vary. therefore the information should only be relied upon when coordinated with individual professional advice. Securities and Investment Advisory Services offered through Osayek Wealth, Inc. member of FINRA and SIPC,

Osaceaic Wealth is separately owned in other entities and or marketing names, products or services referenced here are independent of Osceic Wealth. You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more about the resources mentioned on today's show or listen to past episodes, visit www. www. influential entrepreneurs radio.

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