Sheryl Moore of Look to Wink on Indexed LI and Annuities

Sheryl Moore creates waves of knowledge about indexed annuities on
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Stan:    Hi, this is Stan The Annuity Man co-founder of the Annuities.Direct site along with who is also my podcast co-host. We have Sheryl Moore an annuity expert with us.

She helps the 'blind see the paintings', as they say, in the index world. She is also a well-known speaker in the annuity world, and works with the carriers from product design to consulting. Her company called Look to Wink provides information through her Life Specs service, and has one of the most well-read reports in the industry called A Sales & Market Report on Annuities and Life Insurance.

Her website has drop downs called Annuity 101 and Life Insurance 101 where you get an oversight of these products. I personally subscribe to her Annuity Specs services which provide details on specific products. We're very happy she's joining us. We will cover a lot of topics, not just the index world, but annuities in general.

In full disclosure, Sheryl and I have butted heads in the past. When she doesn't like something I've written or said, she'll tell me. We've had some good conversations, and they haven't always been warm and fuzzy. I like that. So, with the greatest introduction ever received, I'd like to introduce Sheryl Moore from Des Moines, Iowa. Welcome, Sheryl.

Sheryl:    Thank you very much, Stan, I appreciate it. That was a wonderful introduction, I couldn't ask for better.

Stan:    Give us the background on how you landed in the ugly world of life insurance and annuities, and what is all about.

Sheryl:   Sure, it's actually a very interesting story.

I used to be the manager of a local grocery store chain here in Des Moines, Iowa. I quit working and became a stay-at-home mom. Then I was suddenly a single mom of three babies in diapers with no job after years of being a stay-at-home mom. I found myself thinking: What can I do in the city of Des Moines, Iowa, especially if my employer gets bought out or goes under?

I will need to be able to walk across the street the next day and still make an income for my kids.

Insurance was the first thing that came to mind, because Des Moines is the second largest insurance capital of the U.S. There are about 300 different insurance companies near the metro area. Some of them are Property & Casualty, but a lot of them are Life and House. I refer to Des Moines as the index annuity capital of the world.

It just made sense, so I started off in a telephone customer service role at a company that was the number one seller of index life insurance and index annuities. I worked my way up until I was third down from the CEO in charge of Product Development and Competitive Intelligence. It set the stage for becoming an expert in life insurance and annuities. The company threw a lot of money to my budget to make sure we remained number one in index life and index annuities.

I understood competitor products as well as I knew my own. Soon insurance companies were calling me and asking me questions about index life insurance products. I started thinking I should create a job consulting to insurance companies.

Then the dot-com bubble burst and I lost a lot of money in a thing called a 401K.

I did not know you could lose money in a 401K. When my employers signed me up for the 401K, I asked them some questions and they told me to just go home and read my prospectus, it should answer my questions. It didn't. The prospectus was humongous. I didn't have a lot of time to read it in between all those diaper changes.

I was dumbfounded when I lost a ton of money when the dot-com bubble burst in 2000. I complained to my boss and said, “What can I do with the money that I have left in this 401K to make sure that I don't lose any more money as a result of market changes?” He just looked at me and he said, "You should have bought an indexed annuity." I said, "Well, what's an annuity?" You see, the company I was employed by had a lot of politics involved where their RVPs weren't comped on annuity sales and so we were driven to talk about the life insurance sector.

When my boss described what an annuity was, I said, "Well, where can I buy an indexed annuity?" He said, "Are you kidding me, Sheryl? We work for the number one seller of indexed annuities in the country." Stan, I got really ticked off because the company that I was employed by shoved their employer-sponsored plan down my throat and did not even talk with me about this product that they're so good at selling. Especially because it happened to fit my risk profile so much better than our 401K! That, my friend, was the precursor to me quitting my job as a single mom of three kids and starting a company with the objective of educating people about indexed life and indexed annuities. These products are great products, and not enough people know about them.

Stan:    You are more of a fan of indexed annuities than I am, but we agree that when fully explained and people understand how they work, they do fit a lot of situations. The problem within our industry is how they're explained. The pitch is often too good to be true.

You provide solid information to the industry on Wink. People wait for Annuity Specs and Life to come out, as well as your Annuity and Life Sales Marketing Report. Give us some background on how you came up with these and how it drives the industry.

Sheryl:    I started my business 11 years ago thinking I wanted to consult with insurance companies to help them understand indexed life insurance and indexed annuities. I started a company called Moore Market Intelligence, where I could do just that. But Stan, I was a woman in a man's world. The life insurance industry is dominated by 65-year-old white men, so I had trouble from that perspective in getting insurance companies to write checks out to me. I also looked very young.

I decided to start a second company called Wink. Wink is a market research firm, and my initial product through Wink was the Annuity Specs tool. I started it because it was a tool of insurance products. I bought a sales report from a gentleman who was tracking indexed annuity sales and we beefed up the report and built it out so that we track the sales of fixed, indexed, and multi-tiered guaranteed annuities, as well as life insurance products.

We are infamous because of Wink's Sales & Market Report and have been great for me in my position at the insurance company doing competitive intelligence, and I thought I could get other insurance companies to subscribe it. Wink has product information and weights and sales information for non-variable annuities in the life insurance industry. That was our first product.

Later I rolled out Life Specs, with life insurance product and weight information for all non-variable life ie level of detail that it provides. I can tell you for example, how much XYZ Insurance Company sells of product A versus product B, including how much of product A is selling in banks versus with independent agents. We work with just about every insurance company in the life and annuity industry. One thing that's verified my credibility over the past 11 years of owning this business, is that I do not endorse any company or product. I'm the third party lady who tells it straight to everybody.

Stan:    That's right, that's right.

Sheryl:    I don't care who you represent or what you're selling. Every product is a good product as long as it's priced and sold appropriately. There's no such thing as a bad product, but there is such a thing as an unsuitable sale. That comes back to your point, Stan.

Stan:    It's a really strong point, and that's a good way to put it. In full disclosure, I subscribe. When you ask for the best-indexed annuity or give us a parameter for an income rider, we're using Wink as a resource. Jimmy, I know you're just leaning in like I'm twirling a jump rope. Go ahead and jump in.

Jimmy:    Sheryl, welcome. I'm excited about the opportunity to talk to you. I come from the security side of the world for the last 30 plus years as a registered investment advisor.

Do you think there is a disconnection between the consumer and the indexed annuity marketplace?

You make it sound so easy on your site, but there's this disconnect sometimes when you talk to the consumer.

Sheryl:    I have had a strong moral compass the nearly 20 years that I've been in the insurance industry, so that really does help me. Based off of all my interactions in this industry, Jimmy, I’d speculate the disconnect falls between the agent’s perception of the indexed annuity, and what the consumer is looking for in a retirement savings product.

What I mean by that is that those within the industry tend to focus too much on the potential for returns with indexed annuities, or the highest amount that can be earned on this product. Consumers are saying, “I don't want to lose money”. They're a lot like me; I'm more concerned about the return of my money than the return on my money.

Consumers buy indexed annuities because of the guarantees that are in them, and the ability to outpace traditional fixed money instruments, such as certificates of deposit and fixed annuities. Market-like returns are not something that indexed annuities purchasers should be looking for and yet we do see a lot of spinning of indexed annuity products in the marketing of those products focused on the potential return. That's where I think the disconnect lies.

Stan:    I continue to see on TV and hear on radio ads that make milk curdle. The fact that they're getting away with some of these promotions is just overwhelming. It's actually given a black eye to the indexed annuity industry.

What's your take on what's going on in the last 4-5 years regarding the promotion of indexed annuities?

Sheryl:     I'm very frustrated with what I see advertised and promoted about indexed annuities. Only a couple of those products have double-digit commissions, but these tend to be the ones that we see marketed and advertised a lot.

I'm now widely known throughout the industry because for four and a half years I responded to and corrected every single negative and inaccurate article in the indexed annuity market, and it took up more than 80% of my time. Sometimes I've found eight articles in a day that were published with inaccurate stats in them.

This process helped me to forge relationships with 53 different news media outlets. Every time the Wall Street Journal is going to publish an article on life insurance or annuities, they do their fact-checking with me before they go to press with it. I have similar type relationships with over 50 other news media outlets.

I'm frustrated that there are a couple of bad apples in the barrel spoiling it for everybody by promoting these products in a way that's inappropriate.

Nobody should ever say that you can get market-like returns with an indexed insurance product; that's absolutely ludicrous. The products do have limited potential.

Stan:    Repeat that again! Repeat that again, because that's what people need to hear. Say that again.

Sheryl:    Absolutely. Nobody should be promoting indexed insurance products to have market-like returns! They are limited in their potential. If it doesn't have a cap, it has a participation rate or it has a spread rate; or even a forced asset allocation model. Folks, there's just no way that you can purchase an indexed annuity that's going to give the unlimited potential for gain. That's not how the products are priced, and it's not how they work.

Unfortunately, I see a lot of promotion that talks about the unlimited potential for gain with these products lately. Currently, it’s a low-interest rate environment, so insurance agents who have been selling these products for 10 years say, "Gosh I remember when I could sell indexed annuities with 9% cap. Now the caps are less than 4%. I can't market something like that."

I really think that the sales people are psyching themselves out. Don't think about what an annuity looks like today versus an annuity pulled 10 years ago. What you need to be considering is how the indexed annuity looks today versus certificates of deposit or fixed annuities of today. That's what your prospect should be considering when they're looking at an indexed annuity.

Jimmy:    Stan and I did a webinar and talked about indexed annuities and their contractual guarantees. It's that guarantee of a deferred income stream, with the income rider is at 5% or 6%; that should be the focus on these products. I agree with Stan, your Annuity 101 piece was phenomenal, and because I have an insurance background I thought the Insurance 101 article was even better. People misunderstand the indexed UL products that are out there as well.

When does this product fit a consumer? In your intro, you talked about yourself and why an indexed annuity fit you. In layman's terms, explain what about indexed annuities fit you and why and how you think this product fits consumers?

Sheryl:    When I was first finding out about indexed annuities I was talking to my friends, relatives, and colleagues who were actively saving money for retirement saying, "If I told you about a product that would be guaranteed to never lose money as a result of the market, the S&P 500 specifically, and you would be able to earn interest that was maybe 1-2% greater than what you could earn on a certificate of deposit or a fixed annuity, would that be something that interests you?" Without exception, every single person I asked that question said, "Yes! What is that? Tell me more about it. That sounds like something I would like to buy to help me to accumulate retirement income."

It was just so frustrating that I did not find any literature in newspapers, on the internet, or anywhere in the public domain that talked about indexed annuities and how they work. I'm really happy to hear you say that you like the Annuities 101 section of the Look To Wink website, because that's content that I wrote myself. I'm a writer historically, and I was editor of a newspaper for a long time. It's really important to communicate these products in a very simplistic way because consumers aren't used to working with complicated insurance products.

An indexed annuity is less complicated than a variable annuity any day of the week, but they're still complex financial instruments. I would say that as a whole the insurance industry does a really crummy job of communicating these products in a simple way so that consumers know what they're getting into.

Stan:    I totally agree with that. A continuation of this conversation would information about the possible industry changes due to the Department of Labor's Fiduciary Ruling, as well as some red flags to watch for in the indexed world.