Richard Kado on The Financial Hour with DeWitt & Dunn Financial Services Part 2

By Cathy DeWitt Dunn

Richard Kado joins Cathy in this exciting episode of The Financial Hour with DeWitt & Dunn Financial Services. Richard is the President of Genesis Financial and has been a major influence on fixed index annuity products since their inception. Richard has also worked closely with Annexus to develop innovative fixed income products such as the BalancedChoice Athene Annuity and the Nationwide New Heights Fixed Indexed Annuities. Listen in as The Financial Hour with DeWitt & Dunn Financial Services Host, Cathy DeWitt Dunn interviews fixed indexed annuity expert, Richard Kado.

Richard Kado Interview Transcript Part 2

Cathy DeWitt Dunn: Welcome back to The Financial Hour with DeWitt & Dunn Financial Services. I’m Cathy DeWitt Dunn. Thank you so much for joining us this wonderful weekend. Well, if you’re just joining me, I have a fantastic guest on my radio show and boy, you want to make sure you stay tuned this entire time. I’ve got Richard Kado, who’s the president of Genesis Financial Development Incorporation. He’s one of the architects for the fixed indexed annuities. He’s a founding member of Genesis. Richard and Genesis played a key role in the first fixed indexed annuity. That must mean I’m getting old because I remember it. And today, Richard leads Genesis’ close partnership with Annexus to provide innovative fixed income products; most recently, the BalancedChoice Athene Annuity and as well as Nationwide New Heights Fixed Indexed Annuities, which a lot of you are familiar with. Richard leads a creative international development team responsible for 15 patents issued to date. And Richard once again, it’s great to have you on my show. Thank you for being here.

Richard Kado: Well, thank you very much.

Cathy: Well, that’s quite an impressive background. Just think about it, I remember when the first fixed indexed annuity. I think that’s before I started coloring my hair, it’s been a while. But it goes back quite a ways, doesn’t it?

Richard: That was before I had gray hair as well, yeah, so time does go by but it’s been a fun ride. It’s an incredible product line that we created, now 20 years ago, in the marketplace. And the company’s been around 26 years.

Cathy: Wow. We were talking about, on the last segment, how annuities have really changed because I think one of the challenges that investors think they have – remember, think they have – is that if I put my money in an annuity, I don’t have access to it. If I pass away, I’m not going to be able to get to my money. If there is an event, the insurance company’s going to take my money. We’ve talked about so many different things already on the show, lifetime guaranteed income. There are death benefits in the annuities as well as liquidity. And now, there’s more money going back into the investors pockets versus keeping it with the insurance company. And those are the things, that’s probably the top four things, that people think of when they hear annuities, why they might not even want to look at the new products; it’s changed.

Richard: It’s changed a lot and over the years we’ve always tried to improve the products. For example, you just talked about liquidity and the ability to get money out. One of the additions that we’ve created in the products that never existed before, is actually to ensure that customers not only can get their money out, but can also get every penny of gains to date that have been accumulating in their product out when they need it, how they needed it, at the circumstances that they need it.

Free Retirement Income Plan Analysis

Cathy: That’s amazing. I can tell you that with the stock and bond and mutual fund portfolio liquidity comes at an expense and that’s also being able to lose your money. So these products have taken away that component because you’ve got principle guarantees, and now you can have interest. We’re going to get into some other things in the show today, but my favorite thing that everybody knows that I talk about, is crediting. With the annuity world, you need to understand how you can make money. But we’ve talked about all the different crediting features that are available on fixed index annuities previously, but can you give us some insight as to some of the innovations your group, in particular, have made in regard to crediting strategies and how clients have such a great opportunity for growth?

Richard: There are a lot of different crediting methods out there and as with anything else, some are good and some are not so good, but I’ll share with you my personal bias. I’m a firm believer in maintaining the upside potential in the product. That’s what consumers are truly looking for. Many products have caps; that means you participate in the index gain but only up to a certain point. Given today’s economics, I don’t believe capped products deliver on to that expectation. I’m expecting to participate fully in the upside potential of the product. So, my starting point in terms of the designs that I prefer are uncapped designs.

Beyond that, there’s another feature I want to bring into the discussion and that is how we measure the gain on the index. So first of all, we pick an index which is an equity index, something that measures the growth in the marketplace – it could be the S&P 500, it could be an international index, it could be a specialized index that has some additional advantages to it – but no matter what index we have, we measure it over a certain time period. Typically, it’s been one year. We look at the gain over one year…

Cathy: And how much did you make.

Richard: Yeah. How much did you make and then you get a portion. Remember, I said portion; you get a portion of that gain credited to your account. As we’re working on this – one of the innovations – one of the things we realized is that there’s a much better efficiency, price advantage if you wish, in going out two or three years. And so now we measure the index gain over two years or three years and are able to deliver a lot more upside potential to our customers.

Cathy: Oh, and I can just tell you if you’d look at some of the illustrations on the products that you’ve designed, some of them even allow you to lock in that gain. So you’re locking it and you don’t have to worry about it. Talk about how things have totally changed in the marketplace. So let me just repeat what you were saying, uncapped strategy.

Richard: Yes, absolutely. Uncapped strategy.

Schedule An Appointment

Cathy: So we’re gonna go through this. Just imagine all the people that are out there saying, “In the annuities, oh, you can only make 2 or 3 or 4%”. How is that remotely even possible if you have an uncapped strategy? It just doesn’t happen. So we’re going to be going to a quick break here, but if you would like to schedule an appointment with me, I’ve got offices in Dallas and Fort Worth. I would love to hear from you today. Are you looking for an uncapped strategy? But remember, your floor is zero. You cannot lose value due to market conditions in your contract. That is what an annuity does, ladies and gentlemen, it gives you lifetime guaranteed income, you have death benefits and liquidity benefits, and, of course, the real and meaningful growth of an account value. These are not your parents’ or grandma’s annuities. Things have totally…Schedule your free appointment today at 972-473-4700, or you can look me up online at annuitywatchusa.com. That’s annuitywatchusa.com, or schedule that free appointment today, 972-473-4700. You can get it done with DeWitt and Dunn, but you need to call us today. We’ll be right back.

Disclosure: Indexed annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees and features and may cap participation or returns in significant ways. Any guarantees offered are backed by the financial strength of the insurance company, not an outside entity. Investors are cautioned to carefully review an indexed annuity for its features, costs, risks, and how the variables are calculated. A fixed annuity is intended for retirement or other long-term needs. It is intended for a person who has sufficient cash or other liquid assets for living expenses and other unexpected emergencies, such as medical expenses. A fixed or indexed annuity is not a registered security or stock market investment and does not directly participate in any stock or equity investments or index.