Business Innovators Radio - Interview with Financial Professional Bill Andrews Discussing Annuities

Episode Date: August 21, 2023

With over four decades of experience in the insurance, banking, and brokerage industries, Bill Andrews began his career in 1979 as a life insurance and securities professional. The financial world became his early playground and he loved it.In the 1980s he joined one of the most respected firms in the securities industry and gained valuable expertise advising and planning for many of the retirees making their way south from the northeastern seaboard.Having grown up in Miami, Florida, he had the opportunity to work with his father, his first mentor and respected private yacht captain who catered to the mega-wealthy, politicians, and corporate titans. The experiences gleaned from living and working on these floating hotels provided him with unique insights, and a rare opportunity to observe and converse with some of the world’s most successful people.Throughout his career, he received numerous awards and accolades, including being recognized as a top representative for numerous nationally ranked banking, insurance, and securities behemoths, thanks to his unwavering dedication to success and client service.Since 1995, he has been managing his own retirement planning practice. Over the past two decades, he sponsored and spoke at more than 200 financial seminars on topics such as 401k/IRA rollovers, cash management, investment tax strategies, annuity and asset allocation, investment and income planning, and Social Security planning. Additionally, he has frequently collaborated with CPAs and attorneys to provide expert guidance on tax, estate, and trust planning.Between 2002 and 2005, he partnered with a physicians’ financial advisory and practice management firm, participating in speaking engagements focused on pre-retirement and retirement planning for practicing physicians.For the past decade, he has been advising on 403b, 457, 401k/IRA rollover and pension planning in 15 San Francisco Bay Area and Silicon Valley school districts, conducting over 100 retirement and compliance seminars for all levels of educators from janitors to superintendents.So far, over the course of his career, he has advised thousands of individuals and families. These relationships and experiences translated into valuable lessons, stories, and life experiences. His clients have benefited richly from his lifetime of seasoned insights.He frequently travels for business or pleasure but usually both. As his clients retire many are relocating from the west coast closer to their children and grandchildren or simply to realize their dreams. He estimates his client base now spans 17 states. He hikes the Great Northwest forests, rivers, and the most majestic NW Pacific coast beaches. He even indulges in a little salmon fishing on the Columbia River.As he continues to adopt new technologies and grow his practice, he is driven by a passion for the industry and a commitment to being productive, balanced, and helpful thereby, meeting his own retirement goals. He looks forward to building new relationships and experiencing an abundant life filled with love and happiness.“MY STRONG BELIEF IN EDUCATION AND PLANNING HAS BEEN THE FOUNDATION OF MY CLIENT’S SUCCESS”Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-financial-professional-bill-andrews-discussing-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 with this financial professional Bill Andrews and we'll be talking about annuities. Bill, welcome to the program. Good morning, Mike. How are you doing it in? Hey, you doing really good. So I know that you have been in the business for over 40 years.

So you probably have all kinds of stories to tell about annuities. I know there's a lot of misconceptions surrounding annuities and they've changed and improved over the years. But before we get into some of those details, give us a definition. What exactly is an annuity? Well, specifically an annuity is a sum of payments guaranteed for. a certain period of time. That's typically what most people think of when they're thinking an annuity, and they call that an immediate annuity. But more specifically, what most people are using annuities for today are deferred annuities where they're placing a lump sum or a series of payments into an account and growing it

in order to generate an income at a later period in their life. So those are the two primary categories. Yeah, that's, you know, when I hear the word like guarantee and contract, that's really comforting to someone who is looking for, you know, a very little volatility, right? Absolutely, especially with all the uncertainty and volatility out there now. Yeah, I think that's a big piece that people just don't pick up on, which is you can put your money in the market, per se. But at a certain age, you need to start shifting gears and thinking, you know, I don't have enough runway before retirement for, you know, the volatility to kind of weather and recoup and stuff like that. So talk a little bit about some of the benefits of, you know, having that safe,

you know, secure returns for people to invest in annuity. Okay. Well, a lot of people ask me today, what, you know, why would you even recommend an annuity? It seems like they've been taught the only thing available to them is Wall Street, mutual funds, things of that nature. So why would anyone want an annuity? Well, it's the most versatile retirement funding vehicle out there. People are looking and achieving safety, liquidity, tax benefits, competitive rates of return. They get probate avoidance. Simplicity is a huge thing for people nowadays.

they've been used to accumulating money and now they maybe need to start protecting it instead of growing it. And that's happening at a time where everything is getting risky and volatile. And then you have exchangeability, income you can't outlive. But most of all, if we're to sum it all up, it's peace of mind is what people are looking for when they invest into an annuity. You know, that's huge. We mentioned the word volatility and the word volatility and peace of mind typically do not go together because they don't, right? Volatility is uncertainty and you watch the news and you look at the stock market and it dips up and goes down and all around and you're just going, let me calculate my portfolio and it dropped and it dropped. So having that peace of mind is really a huge piece.

And again, at a certain age, in advance of retirement, you've got to make that shift into preserving the wealth that you've been working so hard to build. So talk a little bit about some of the ways that annuities provides that security. Like as an example, can annuities ever lose money? Well, that's a big thing. A lot of people are out there right now looking for the safest places to put their money. People have come into a new wealth. They've sold businesses. They've, they've retired and they've got a large 401k plan. Inheritances are large nowadays. So what they're looking for is a place that they can stick their money and it's not going to, they're not going to

have to worry about losing it. So what are they thinking of? Generally, their options are, I can put it into, I can put it into the bank, get some necessary. FDIC protection or the other option they have really is just Wall Street or bonds or stocks, mutual funds, that sort of thing. They never really think that much of the life insurance industry where the annuities are born. But the life insurance industry is propped up by five basic pillars, if you will. The first one is legal reserve. It's the only industry that operates on a legal reserve system where they're required to maintain specific reserves.

The second one is state guarantee funds. Third is reinsurance, spreading of risk. So when they offer guarantees, the reinsurance industry will come in and help to spread that risk out. Then your insurance companies make extensive use of holding companies to protect their companies and their, assets and also holding companies act as a great source of capital, you know, when things might get a little tight like a point where we are right now. And then, of course, there's the risk-based capital ratio rating system. And that's how insurance companies are required to invest in their portfolios. And they're also monitored on a national level by the National Association of

insurance commissioners. So it's a very monitored and regulated industry. Every state insurance commissioner will regulate the company that that company happens to do business. That kind of makes people feel an extra layer of protection. If you say that these are stable, guaranteed, no volatility, can't lose money, and then you've got all these layers and levels of protection, that really puts the icing on the cake and the cherry on top, in my opinion. So I think that is really great to outline there, Bill. When I think about in my own situation, if I were to make a financial move like that, and then what if something changes in two, three, five years, are there some options where you can now go, oh, I need to do something different with my annuity or, you know, pull some out

or not? What are some of those flexibility so that people don't feel like I've made this decision and I'm stuck with it for a couple decades. Well, the important thing is it's a contract. So when you enter into it with the insurance company, you already know in advance what all your guarantees are and what your accessibility to funds are. You know, for instance, most of them allow you to withdraw 10% out of the account after the first year.

And there are some variations on that among the different types of contracts. So when we speak with a client about what they're looking for, how they might see themselves using or needing that money in the near future, then we'll design the portfolio including annuities if they fit for that person's needs not just now but in the future. What about taxes? And I know that we're not CPAs and we can't give tax advice, but I think that a lot of times people need to realize is an annuity a taxable product or is there some ways to think about that? Pretty much the tax benefits of an annuity are your growth is tax deferred. And also if you're using qualified money such as IRAs into this account, the money that you're putting in. in there still maintains its tax deferred status. But that's the big thing with annuities is that

is the tax deferability. Now, at some point, most of my clients today are eyeing the idea that they're going to be drawing a guaranteed income out of these accounts and then in the future when they may need to supplement their pensions or Social Security or whatnot. So when that happens, you can start taking an income that could be partially or fully, depending on whether it's a Roth, has the raw feature on it or not, but they're able to take that money out on a partially tax favored basis because if they use non-qualified money,

which is just basically money you've already paid taxes on before they invested, they're able to take that portion out in their monthly or annual payments tax-free. so they can set themselves up for a tax-free income. And they also, there's other things available like Q-Lax, which are a feature where you're, once you hit 72, 73, you're allowed to defer, avoid required minimum distributions and defer your income on that portion to later in life. And then, of course, you've got Roth conversions. You can move IRA money and pay taxes on it currently if you think taxes are going to be higher in the future, which a lot of people are thinking nowadays.

So that money, you pay the taxes on today, put it into a Roth conversion, and now that money will never be taxable to anybody once you get down the road. Lots of flexibility. Yeah. You know, maybe I read this somewhere, but let's go a little bit deeper and clarify. this. Like I mentioned earlier in the conversation, annuities have been around forever and they've been, you know, misunderstood for a lot of years. But then lately in the last 10 years or so, they've gotten a lot better and more beneficial. But something tells me that there's some ways that you can access annuity funds for things you need like long-term care plans, something like that.

Is that a feature and a benefit in some annuities these days? Actually, I'm going to say in most annuities, that feature is just becoming more common and you're not even charging rider fees or anything like that. It's just trying to make common sense accessibility to a client's money in the event of a hardship, such as nursing homes or even death. know and debt, you know, any fees or penalties or whatever that might exist on these contracts. And I'm not saying not every contract has fees or penalties. There are some out there that have none of those.

Again, these are things we are going to look at for each client. Yeah, that's neat to hear that it's kind of like commonplace now because I know, you know, some, and everybody is different. Every situation is different. but I heard the example once where if you have a, you know, like a automobile policy and you're paying all your premiums throughout the year and you didn't have an accident. So you didn't need to make a claim. So can you go back to your policy holder and say, please give me my premiums back? Of course not.

Well, the same way with a long-term care policy as an example. If you don't need the long-term care, you've lost out on the premiums. But if a long-term care feature is part of an annuity and you didn't use the long-term care. long-term care feature, well, your money still is in your annuity. So you still have that as a benefit. So I like, I'm glad to hear that it's now a common feature and there's no writer fees and additions. And I know that there's all kinds of variations of annuities. And that's what we've kind of touched on here today. And everybody's situation is different. Should every single person take every dime they have and put it in an annuity? Of course not. But it's, it's, these days a lot of benefit. And it takes

into consideration what is your specific need. So what are some kind of concluding and wrap up thoughts on how people should view and potentially consider annuities? Well, if you're looking for safety and or income guarantees, I think the first thing you have to do is put the annuity on your list of things to investigate because it's the only vehicle out there that's going to guarantee against longevity. living too long, in other words. You don't find that on Wall Street.

They can't guarantee that anything is going to protect them or give them an income for the rest of their life. Safety, they have, well, the guarantee against safety return of principle. Or, excuse me. So it's just, well, it's the safety and the income guarantees is what you're looking at. Yeah, and I think that, like I said, it's not a cookie cutter template solution for every single person. You sit down with them and you assess what that client needs and you present these options to consider. So I think that's a big piece that people just don't realize is when they hear about a product, like an annuity as a product, but it's just a piece of the plan of the retirement wealth building plan. When they hear of a product, they feel like, you know, let me just assess and see if this fits into my piece.

plan. So I think that just lays it out so clearly, Bill. Thank you so much for coming on. What's the best way that someone that's interested in learning a little bit more about annuities can reach out and connect with you? I think best. They just call my cell phone. I like talking to people. Phone number is 760-803-4833. Excellent. Well, Bill, thank you so much for coming on today. It's been a real pleasure talking with you. That. Thanks a lot, Mike.

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