In this episode of the Secure Your Retirement Podcast, Radon and Murs discuss whether you can truly be a fiduciary and still talk about annuities and walk through exactly when an annuity earns a place in a retirement plan versus when it doesn’t.

Listen in to learn about the three-bucket strategy for organizing retirement money, why an income safety bucket targets a specific historical return range instead of chasing the market, how sequence of returns risk can quietly damage a retirement plan, and the honest, no-spin answer to the fee concerns you’ve probably come across online.

In this episode, find out:

• Why being a fiduciary doesn’t rule out recommending an annuity, and why fit matters more than the product category itself
• The three layers of retirement spending (essential needs, wants, and wishes) and how covering the first two changes your relationship with market volatility
• How the three-bucket strategy, cash, growth, and income safety, is designed to prevent the emotional roller coaster of panic selling during a downturn
• Where the high annuity fee reputation actually comes from, and why it’s mostly confined to one specific category
• Why sequence of returns risk changes the entire calculation once you’re retired and withdrawing income, not just saving

Tweetable Quotes:

“We’re not trying to sell the concept, we’re saying we like the concept.” — Radon Stancil

“This strategy is really there for predictability and reliability in your retirement income.” — Murs Tariq

Resources:

If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit POMWealth.net/podcast.

Here’s the full transcript:

So, Murs, we were having a conversation about… this idea around being a fiduciary and annuity. 

It’s almost like conflicting words. Somebody thinks you can’t be a fiduciary and ever talk about an 

annuity. And we know that in our practice, we use the annuities when they are the right fit. 

But I guess just before we get into the major conversation, why do you think that people kind of 

wonder, can you actually be a fiduciary and still talk about an annuity? What’s the conflict there? 

yeah, so I you know that that term of fiduciary is thrown around a lot in our industry today and I 

think for good reason um for anyone listening that that term what fiduciary what it really means is 

that our job is to put your interest you are being the client ahead of our own and any time you’re 

involving something like a commissionable product, like a life insurance policy or an annuity or 

something else, there’s always a concern of, hey, is this being sold for me because I need it or is 

it being sold because the advisor wants to generate a commission? And so that’s where I think it 

can get to a place where everyone’s always wondering. And always, I tell people this all the time, 

Radon is that there’s… know, there’s good and bad investments everywhere. And it’s really about 

the positioning and making sure it makes sense. So, you could pick, you know, think about like penny 

stocks or just think about, you know, any type of stock out there. There are stocks that have done 

really well. There are stocks that have been done terribly. If you go back to 2008 and you think about all 

the REITs, those real estate investment trusts that people went into. 

for whatever reason. And then we had the housing issue and a lot of people regretted ever getting 

into those. Sometimes you just don’t know what’s going to happen with an investment. So, I think 

there’s pros and cons to everything out there. And a big part of what we try to do is make sure 

that the positioning of them is correct. And then not also making sure that we don’t go all in on 

really any particular type of investment strategy. So that speaks to diversification as a whole. 

But I think there’s been a lot over the years or connotations or, you know, 

my mom had this and it wasn’t great for her. How could you ever recommend this to me? That type of 

conversation. I don’t know. What else do you hear? Well, I think that what I want to make sure we 

talk about, because I just think we ought to give the backstory of why we ever talked about an 

annuity, why we think it’s still a thing that as a fiduciary, I feel like it’s the right thing to 

do. And so, here’s the background. We talk about, first of all, 

the idea that when people get close to retirement or in retirement specifically, they’ve got to be 

able to navigate. We talk about it from a few different perspectives. Sequence of returns, 

they’ve got to navigate market declines. And what we really talk about is what’s different is for 

decades people work and they get an income in. And so, they either have a company they own or they 

have a job. They got all this money coming in. And so, they pay the bills. Well, then all of a 

sudden you’re going to get to retirement. When you get to retirement, you don’t have that income 

coming in. You’re going to have social security. You’re possibly going to have a pension. But we 

break income into three categories. We’re going to have our essential needs. That’s what we’ve got 

to have every single month. I need to pay the light bill. I have to buy food. I’ve got to put gas 

in the car. Those are things I have to do. And then I’ve got my wants. My wants are I want to go 

on vacation. I want a new car. I want to go out to dinner. Whatever your wants are. 

And then we’ve got a third layer. We call it wishes. do not have to be planned for. They have to be 

100% done. They’re basically saying, I wish I could have another home at the beach or in the 

mountains, or I wish I could take a very elaborate vacation and bring the family with me. 

But if I don’t get to do those types of things, I’m still going to have a pretty good retirement. 

And so, what we talk about is that we can get rid of this idea of an emotional roller coaster. 

Because think about it, if the market’s going up and the market’s going down, at what point do most 

people go, get me out? It’s not when the market’s doing fantastic things. They say, get me out when the 

market’s going down. So how do we structure things so that when the market is not doing well, 

we don’t have to get emotional and get out? Well, we talk about how we do this is it is a three 

-bucket strategy. We say you should have some money in cash. We say you should have some money in 

the markets that’s going to go out and get those big rates of return. And then we say you should 

have an income safety bucket. And we say we paint the picture. If I’ve got an income safety bucket 

and that income safety bucket, along with, say, my Social Security and if I’m fortunate enough to 

have a pension, is taking care of 100% of my essential needs and maybe even a good chunk of my 

wants. If the market is not doing well in my growth bucket and I’m going through a market cycle, 

but all my income is coming in to do everything I want essentially as well as my wants, am I that 

stressed and am I going to say, get me out of the market? No, you’re going to hang in there. You’re 

going to be fine and you’re not even going to be that stressed. And so, we talk about, well, 

if that’s the case, we understand the growth bucket. I’m going to be in a diversified portfolio. I 

want to be tax efficient if it’s not. IRA. I want it to grow. I still want it to have risk controls 

to it. And I want all those things. But then we got this income safety bucket. And when we talk 

about that, a good rate of return, we think it ought to be achieving a 5% to 8% rate of return on 

average over a 10-year period. We say that it should not be in the stock market. It can’t have 

stock market volatility. It needs to be separated from that. And it needs to be predictable. to give 

me that income stream. So, people always say, well, what could you put over there? I’m going to tell 

you that list is limited. I can put things in there like a CD. I could put things like a money 

market. I can put some extra cash in there, but they’re not going to give me as good consistent 

returns as if I were to use an annuity. And so, I think the next big question that always comes up 

in my conversations, what I’m having with people is they go, okay. I’ve heard negative things about 

annuities. I’ve heard you shouldn’t be annuity. Why would I be in an annuity if I’m older? 

What are the returns? I’ve heard of high fees. I’ve heard all those things about annuities that make 

them negative potentially. Or if I Google them and Ken Fisher says, hey, don’t get annuities. I 

hate annuities. And he’s just basically selling money management. Well, why would I ever do an 

annuity? And so, I’m curious from your side, Murs, because if you take our conversation to right 

there. How do you answer that to somebody that, hey, you know what, let’s talk about this and let’s 

educate you? And I think, by the way, before you answer this, we both agree 100%. 

If the client doesn’t like the concept, that’s okay. We’re not trying to sell the concept. We’re 

saying we like the concept. If the client doesn’t like the concept, that’s okay. And we’ll go on 

and we’ll do other stuff. But the reality is that we think this is a really good option. So, I’m curious, 

how do you explain it to the client? Hey, here’s how we think about it. Here’s what they look like. 

Here’s how it feels. Yeah. Yeah. I think it all kind of starts with understanding when we get to 

building out the financial plan. So part of our process is when someone. becomes a client. They 

have a conversation with Taylor on our team, and she’s building out that financial plan. 

I tell everyone that we don’t even get to a place to make a recommendation. First of all, if 

someone just met you and made recommendations on how you should be handling your investment for the 

rest of your life after a 30-minute conversation with you, I think that in itself should cause 

some worry. 

So, there’s a defined process that we have of getting to know each other over a handful of meetings. 

And then we built out a financial plan. And then after that plan is built, our advisors have the 

ability to see how that plan is operating. And then we have an investment strategy meeting. And the 

first thing we do there is understand what that client’s risk appetite is. Once we have that 

coupled with the financial plan, then we can actually get to a place of making recommendations. But 

I think in the world of annuities, you know, there’s three. I think majors, if you wanted to say 

that would be the driving factor of why I would want one, one that you just kind of covered, 

which is really just for safe growth, that 5% to 8%. It’s going to make a decent rate of return, 

principal protected, cannot be lost. It’s really going to cover my withdrawal needs as I need to pull 

cash flow. The other one could be guaranteed income. And that’s kind of saying, 

let me park some money in a place, let it sit for a handful of years, and then I’m going to flip a 

switch, and it’s going to pay me or me and my spouse out for a guaranteed dollar amount for the 

rest of our lives. And then this third one is a little bit nuanced, and we actually talked about it 

here previously on an episode, is around long-term care. So, covering that long-term care coverage 

gap that a lot of people are concerned about. The only way to know which one is going to be right 

for someone is, first of all, having a plan built to understand where their gaps are. And then we 

start to talk about the pros and cons, just like a stock or a mutual fund or an ETF or a private 

investment or real estate investment. There are pros and cons and tradeoffs to everything. And it’s 

more of this battle of what are we comfortable with? You know what you said about. annuities having 

high fees. Yeah, you could Google that all day and you would see that annuities do have high fees 

in certain categories of annuities. And that’s usually in the variable annuity space, which is, 

you know, for us, it’s a rarity that we use that, especially given some of the other much cooler 

strategies around tax management. Today, the variable annuity is a very uncommon thing for us to 

use. But that’s where you’ve got high fees inside of it. You got mutual fund fees over there. 

And what we’ve seen in our research is that you could easily find an annuity that’s costing 

internally in that say three to five percent a year without you even realizing it so if we take 

that one off the table and we say what are we truly solving for is it income or is it just safe 

growth which is really the majority of what we see 

the fee conversation starts to go away because there really aren’t many fees there, if any at all. 

So you take that off the conversation. Then you say, well, let’s just educate you on how this works 

compared to what your other options are. And in the world of safety, there’s not a lot out there. 

In the world of safety, you have insurance companies that provide annuities. Insurance companies 

know how to guarantee your assets, whereas the stock market, you can’t do that. Outside of that, 

you got the CDs, the money markets that, you know, a couple years ago, as we sit here in 26, a 

couple years ago, those rates were pretty attractive. But I think everyone that I talk to today 

says those rates are not going to be, they’re not attractive anymore, right? The 5% CD that you could 

get a couple years ago is now three and a half or three, and it’s only going to continue to go back 

to what we knew it to be. And then you could say, well, what if I go buy treasuries? 

They’re backed by the government. That is true. They’re still protected. However, that rate of 

return is still about the same. And I know everyone today is so concerned with inflation and how do 

I keep up with inflation. And so far, the CD, the money market, the bond world is really not doing 

the best job of keeping up with inflation as well as protecting your money at the same time. 

So, you know, I think it all comes back to first establishing a baseline of how is a plan 

operating? 

for what tools do I need to put in place to make sure that this plan operates in an efficient way, 

but also, in a way that I can have predictable downside exposure. So going back to the growth and 

the safety concept of how we operate, if we have enough in that safety bucket, which in this case 

ends up being the annuity, if we have enough there that can cover my monthly cash flow needs, 

whether that’s $2,000 or $3,000 or $5,000 a month, then I can allow that growth bucket, the 

stock market money and private investment money to really have long-term growth. And we’re 

kind of buying at the ability to… to ride out some tougher times that are inherently going to 

happen in the stock market. So, from my perspective, it’s not you meet someone and you say, 

hey, you need to use this product. To us, it’s you meet someone, you get to know them, you 

understand their goals, you build out their plan, you understand their risk tolerance, and then 

maybe we’re at a point where we can make a decent recommendation around their investments. Yeah, I 

think just for a second, what I’d like to talk about is the outcome of all this. 

And I tell people all the time that are not clients, I say, if you would have came in our office in 

2008, 2015, 2020 during the pandemic, 2022 during the inflation hike, 

when the markets were heavy volatility, government shutdowns, 

we have a war going right now. We’ve had other conflicts. We’ve had all those scenarios. 

And I said that the one thing you won’t have is you will not walk in our office and see if you want to 

call it panic. You’re not going to see a scenario where clients are calling up and saying, 

hey, what the heck? My accounts are down really bad right now and I don’t know what I’m doing. 

Because everybody understands the three bucket strategies. And then they understand the purpose of 

the annuity. I wonder where some of the arguments used to be in the past. is that you would have 

people, and I’ll use him because he’s so public about it. So, I already said his name once. I’ll say 

it again. Ken Fisher, Fisher Investments, they come out and they run a lot of social media ads and 

they say, “Why I hate annuities. And their concept is, hey, if you give us your money, 

we will invest it and we will make you more money than if you were in annuity. Now, 

if we were to argue that and say over the next 10 to 15 years, is that an accurate statement? 

I would say yes, it’s an accurate statement. But here’s the problem with that one is that they’re 

talking to, I don’t know who they’re talking to, but I’m going to assume they’re talking to people 

that are not in retirement because if you’re in retirement, the problem is if I happen to be in a 

down period where I’m down 30%, 40%, 50%, I’ve now lost access to 30%, 40%, 

50% of my money and I need income off of it. So, we are not arguing that the annuity is going to 

outperform the market. That’s not the argument. There are some sales guys in the annuity world that 

will tell you that you can do better in annuities than you can in the market. That’s not true, not 

long term. But what I can also say that I think is true is that when you have downturns in the 

market, if I’ve got money that is not down, then I’m way better off if I’m in retirement because… 

You’ve talked about it a lot, sequence of returns. If I have to take money out when the market’s 

down, it’s a very devastating thing and it will take my retirement plan out. So, if I have a piece 

of the money that can’t be down, I secure my retirement plan. 

So I think it’s a little bit of this scenario where. More and more advisors are coming around to 

the idea that it makes sense to have a piece of the pie, a piece of the buckets in something that 

is going to give me guaranteed or at least contractual safety money, and that I don’t have to worry 

about this idea of volatility, it solves a lot of issues. I will ask you this just as we 

close. 

I’ve been doing this business for 25 years. We’ve been together for 15 years.  

Let me ask you this. Have you had anybody in 15 years come up to you and go, I think this was a 

mistake? Yeah, no, I haven’t. I haven’t. And, you know, when I got into this business with you, 

Radon, 15 years ago, I was kind of fresher out of college and worked at a bank a little bit. 

But then I was very much a stock market person. And I said, why would anyone ever? I put money into 

an annuity, right? And we were utilizing them at the time. I didn’t fully understand it. But today, 

as I’ve learned our client more and more, and I’ve seen the success that comes with it, 

and it’s exactly what you said, this is, you know, this type of strategy is not there to earn you 

30% a year like that cool stock, that Nvidia stock or whatever it is that it can do for you. 

This strategy is really there for predictability and reliability in your retirement income. And 

today, you know, I’m a big believer of it as a potential tool for solving that issue that a lot of 

people have of where am I going to get my money from? And I’ve seen it enough. The success is 

enough with it. And I’ve seen how well some of these annuities can perform. But, yeah, still, at 

the end of the day, like you said, if it doesn’t gel with the person that we’re explaining it to 

and we educate them on how it works and it doesn’t gel, then there’s alternatives out there. 

There’s always alternatives. But, you know, right now, I think this is one of the better. places if 

we’re trying to secure a portion of our asset to provide us an income for the rest of our life yeah 

well hey if you’re listening uh to our podcast and you’re thinking hey i wouldn’t mind being able 

to at least see how this would fit into my plan. We encourage you to go to our website, which is 

pomwealth.net. And when you go there, there’s going to be a button that says schedule a call. You 

can schedule a call. We’ll go through it. It’s no obligation to have that conversation. And we 

can talk to you about our process to help you think through your specific retirement plan. 

So, we encourage you to check that out. Thank you very much for listening. We hope you have a 

great week.