Calling all lowly, hacksawed, retail FA's

Anybody have any favorite fund families or life insurance/annuity products?

I’m starting to realize that it’s incredibly difficult to know all of them, so we might as well pick a couple that we know well and can explain to our clients.

Personally, I like American Funds on the mutual fund side. Just got pitched the Lincoln I4Life annuity and the Jackson Elite Access. They both seem like good products.

(mods–please don’t move this to the “investments” section. That’s a fate worse than death.)

This request belongs in the Feedback forum.

what are fixed annuities paying these days?

back in 2001 when i was interning for a BSD he was pushing 8% annutities and ppl were upset its too low

Depends on what you’re looking for. There really isn’t a “best” fund family since everyone is so niche these days. American Funds still tries to be all things to all people because they still have a ton of advisors doing A Share business that need to hit breakpoints. If you want to do A Shares, then American Funds isn’t a horrible choice.

If you’re using a Rep as Advisor or Rep as PM platform, you should be using several different fund families since you’ll be looking for the best in each asset category.

Also, you’ll never see your American Funds wholesaler. He/she might stop by if your branch is big enough, but don’t count on them to ever support you in any way. And, just because I know someone will jump all over me for this, wholesaler support is very important to your business. Without it you’d be at a serious disadvantage when it comes to client seminars and events.

My advice, find the 3-5 wholesalers you like to work with the most and figure out how to build your asset allocation models around them (not exclusively, but be sure they get the majority of your business). A five-star fund today is likely to suck next year so it’s better in the long-run to work with people you like instead of chasing product.

be fee-based. ETFs. easier.

You worked at Ameriprise, no? Get some Riversource Funds, VULs, and RAV products to slang to your clients.

Meh, I completely understand (and don’t disagree) going passive in the domestic large cap space - particularly in the large blend and large growth boxes - but indexing some categories is tricky. Fixed income should absolutely not be indexed (it’s actually impossible. You can own the S&P 500. Try owning the Barclays Agg. Absolutely impossible.) Active managers also have a good track record of adding value, net of fees, in the mid/small cap spaces and in the non-US spaces, especially EM.

@Matt - That’s the goal, to have everyone in fee-based accounts and use iShares ETFs or index funds. (Still waiting on Sweep’s analysis of ETF’s vs. funds.) But there’s still going to be some transactional business that’s not eligible (or worth it) for advisory business.

@Sweep - as always, good advice. Like I told Matt, this is more for the transactional stuff, not the advisory. I have some good ideas for funds on the advisory side, like the aforementioned (albeit in another thread) Dodge and Cox funds. But since they don’t pay advisors, I’d be shooting myself in the foot to put a non-fee based client in them.

Another solution - and I can’t believe I’m going to say this - is using your home office’s model portfolios. If the minimums are low enough, throw the accounts you don’t want to spend time on in those models. You won’t have to worry about rebalancing or really anything.

^Why do you hate home office models so much?

(Not that I’m disagreeing. In fact, I’m of the same opinion. Just want to hear your take.)

Kind of ironic since my job is to get our funds in those models. My problems with them aren’t really about performance, though nearly every model at every firm I cover has underperformed these last few years. I don’t think they’re good for advisors. The biggest reason is they aren’t portable. Advisors are jumping ship to new firms or becoming RIAs quite frequently these days, and when they do, if they have most of their clients in HO models, it can be a difficult conversation with your clients. Why should they follow you if Morgan Stanley was managing their money?

Also, I’ve met enough advisors to make some generalizations. Those that use the HO models extensively are just weird. Why go into financial advising if you don’t want anything to do with investments? Unfortunately, with the DOL cracking down on everyone next year, HO models are likely to benefit as advisors won’t want to get slapped with being a fiduciary. They’d rather off-load their investment business than risk getting sued.

(To take it one step further, another likely beneficiary of the DOL stuff will be the consultants. Just like advisors don’t want to be fiduciaries, neither will a broker-dealer. So, they’ll pay someone like Mercer or Wilshire to take on the responsibility/risk.)

I’d never really thought about the portability part.

But I agree with you on “why they should move if MS is managing their money.” Moreover, I think most HO models are artificially complicated. I met a client the other day with six different muni bond funds, which seems like at least three too many. In this client’s case, I think it was six too many, because she wasn’t in a high enough tax bracket to warrant muni bonds.

And to answer your question, “Why go into financial advising if you don’t want anything to do with investments?” In my experience, most of these guys don’t really know a lot about investments. They just know how to sell.

I don’t know much about this subject, but putting aside structural issues - when I use the COMP function on my Bloomberg, the Vanguard Total Bond Index (ticker: BND) tracks the Barclays US Agg Total Return index very closely.

Why do you say it’s impossible to own the Agg (or at least replicate its returns with reasonable tracking error) through an ETF?

I think he means that it’s impossible to own the actual bonds in that index. The AGG ETF, for instance, statistically replicates the index returns using subsitute bonds. (I’ve actually met the guy who does this.)

Anyway, I don’t know if this means you shouldn’t try to index fix income assets. An index is just a broad measure of how the asset class is performing. There has to be some sort of measure. If there is some ETF that operates on the same principle, that is still useful.

More importantly, IIRC, SPIVA says that actively managing bonds is more likely to outperform than actively managing stocks. Since cut-and-paste still isn’t working, I’ll have to switch browser or let you guys do your own homework.

How does selling annuities fit into your overall service offering for your clientele? (Investments, financial planning, cash flow, tax planning / tax return prep and filing, and estate planning).

^dont worry he wont answer

^It’s 'cause I’m not sure that I understand the question. That’s kinda like “How does drinking water fit into your every day diet?”

I think the question is, why should someone have annuities in their portfolio (as opposed to fixed income or other instruments)?

No offense, because I think you’re one of the smartest guys in the room, but that’s a nonsensical question. That’s like asking “Should I have a Roth IRA or an S&P 500 fund?” One is an investment, the other is a vehicle.