Sometimes very basic questions can be hard to answer when it comes to annuities. One example – How much exposure does a specific vol-controlled index actually have to the market? Josh Mellberg joins us today to show how to use simple match to estimate relative exposure across different indices at one given point in time. The question may become more common as clients looks for ways to make up for declines in 2022.

Links mentioned in the show:

White Paper View only Link: https://www.canva.com/design/DAFb7vQeOtI/VF-N4Ox6DW9zlLJqhGFXdA/view?utm_content=DAFb7vQeOtI&utm_campaign=designshare&utm_medium=link2&utm_source=sharebutton

Risk Control Calculator: https://forms.zohopublic.com/secureinvestmentmanagement/form/RiskControlTool/formperma/bxij_AEky1gQM6kvYHzz1BtXOQAk-1XrOO2tmQ0y72I

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Episode Transcript

The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

mark:
Thank you.

paul_tyler:
Hi, this is Paul Tyler and welcome to another episode of that annuity show. Ramsay, how are you this morning?

ramsey_d_smith:
I’m good, always happy to be here.

paul_tyler:
Good. Hey, looking forward to our innovation retirement event we’ve got cooking in New York on Monday. Can’t wait for your panel.

ramsey_d_smith:
Absolutely. One of the topics we’ll be talking about today, dovetails nicely with what we’ll be talking about on Mondays. This is great.

paul_tyler:
This is great. And Mark, wonderful to have you back.

mark:
Thanks Paul, it’s great to be back. It’s been a while and I’m glad to be back on the program.

paul_tyler:
Yeah, yeah, no, and you’ll be introducing a panel as well in New York, so looking forward to it on the, what’s the role of the advisors, right, going forward? How do we help them? How do we help clients get advice? So thanks for doing that. And we’ve got a great guest, returning guest, somebody we’ve done for a long time. Mark, do you wanna do the intros? I’m Mark Lerner, and I’m a CEO of the company.

mark:
Yeah, sure, I’m perfect timing in terms of the role of the advisor in the ever-changing world in terms of the marketplace. And it’s great to have Josh on. I’ve known Josh for over 10 years. Josh, I think you started your business back in 2006. And you’ve always had an incredible passion for education and marketing. And you’ve done a phenomenal job in terms of your outreach through infomercials and advertisements. I think you’ve reached over 14 million households over the years, primarily educating on the you know, guarantees of income in retirement and not guarantees and the benefits of annuities. And now you’re taking a different look at it in terms of the various indices and crediting strategies that are out there. And obviously the ball control strategies have come into play over the last several years, a big byproduct of low interest rates. And you see a concern in the marketplace in terms of understanding that. So I know you’re working on a white paper around this and you put together a really cool tool slash app, if you will. that I think does a great job in terms of really breaking it down to the fundamentals and giving the basics behind it. So without, why don’t you tell us a little bit about when this became a concern from your perspective in terms of the need for education and how you feel this approach is best suited in terms of reaching the, not only agent but end consumer.

joshua_mellberg:
You know, Mark, it’s never been better to be in this annuity environment that we’ve been in today. For almost 15 years, rates have been very low. And annuities provide protected growth, or they can provide income for life. And these insurance companies have gotten more and more innovative because interest rates have been so low for such a long time. And they’ve been trying to figure out how to get more return for the client or for the policyholder. And that’s where they created these amazing risk controls. What’s happened in this last year as interest rates spikes short term rates and longer term rates with the innovative products, it’s just put a lot more juice for the client’s potential for them to make some money or generate more income with this innovation of the products out there today.

mark:
And have you seen a shift in terms of, I guess, utilization? I mean, I guess if you look back three or four years, there was very high concentration in folks electing the volatility control structures and the

joshua_mellberg:
Mm-hmm.

mark:
bespoke indices. And again, you’re going to big buy product of the low rate environment and the impact on option budgets. And now with option budgets, you know, much higher than they were, participation rates caps on standardized indices higher. Now they’re starting to look at, you know, the full platform. This is where, I think, becomes important to really kind of understand, you know, what par rates are relative to each other in these different types of indices, and how to really best explain that in terms of the participation that you’re actually getting in that underlying credit behind the scenes.

joshua_mellberg:
Yeah, well over a decade ago it was pretty simple. You know, you get a cap of 10% or a monthly cap of 3%. And a lot of these companies, if they didn’t have a cap, maybe you get a percentage of the S&P 500 on a monthly average or annual point-to-point or so on. Now that these rates have increased, what the insurance carrier does is they take the interest rate and they take that rate by calls or they buy options on major indexes such as the S&P 500 NASDAQ or the innovative indexes that you guys make. The rates have and the risk controls, if it’s a one-year maturity date, the insurance company can get a certain amount of percentage, but if they go two years or three years out on a percentage, they can get more purchasing power or juice on the options, which allows the policy holder to get a lot more crediting rate. because for about 15 years, there’s only so much water you could squeeze out of that rock, and it’s really hard to get a client a rate that beats inflation. And so that’s where clients are looking at these more and more, because if you look at just last year, bonds were down close to 20%. S&P was down close to 20%. And inflation was almost double digits. is getting hit in three different ways. And that’s why people are trying to beat inflation safely. And that’s why these products have never been better.

ramsey_d_smith:
So one of the things that’s happened in the last, I’ll call it at this point, yeah, it’s almost 10 years since the first one of these came out and just full disclosure, this is a business that I ran in my prior life at one of the investment banks. One of the things that’s happened though is there’s been a proliferation of lots of different choices. And so how should people think about choosing, even within a single platform, there may be multiple different types that are offered. I mean, how can you help, how do you help your clients or the people that you advise to think about either allocating between those various indices or choosing one or the other?

joshua_mellberg:
Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Well, I think financial advisors and policyholders are trying to put their arms around how much is my contract going to make. How do I measure that? Well, what has to happen for them to get a good return? And obviously, the policyholder has options. They can put their money in the fixed bucket yielding 4% to 5%, depending what company you choose. They can choose an S&P 500 option that has no cap and a lot of the competitive rates out there are 50 to 70% participation rates. But then they have those innovative risk controls. And there are several hundred risk controls out there today. And how do you know which ones are good terms and how do you know which ones are not good terms? Because I remember back in 2007 when I actually had some clients in the index annuities, but they had monthly caps at the time. And I had a fairly upset client. And because I kind of said, well, you get market index upside, but you don’t have the downside. And I think that year they made five or 6% interest on their policy, but the market was up almost 20%. So there was a disconnect on what the client thought they were going to make and what the policy actually credited. And that became a pretty fast learning curve to say, well, how can I manage the client’s expectations? Because this is supposed to compete with savings vehicles. necessarily could be supposed to compete with investments. And so as these risk controls became more and more innovative, now you’re seeing participation rates at 100%, 200%, 300% or higher, and what 300% of what? And so what we did with our CFA is we kind of broke down a kind of a chart to help financial professionals understand what is your equity exposure? What is your participation rate in? of that is working for you today. And for those of you who can see the screen, I’ll share it with you. But one of the indexes that these are shared with is geared towards the VIX. The VIX is known as the Volatility, is a Volatility Control Index. It’s also known as the Fear Index. And you probably see this on CNBC You’ve heard about this in the past. But essentially, the VIX determines what the cost of an option is on the S&P 500 or US markets. The average VIX historically has been close to 16 and 1 half. And it changes. It changes depending if fear is high, if the VIX can spike, if fear is low, the VIX can drop. And you can see a little bit of the history of the VIX, but back in 2018, the VIX was the lowest 12. Just a few days ago, it hit as high as 31 recently. Why is that important? Well, if you were to purchase a call in the S&P 500 for, say, it’s a $100 call option at the price of $20, and then a month later, the VIX is at $30, and you bought that same call option, you would need almost 50% more dollars to buy the contract for if it was a VIX, it was at 30. And I share that with you because these vol controls you typically see, they’re issued in vol control fives, vol control sixes, vol control eights, vol control tens. And some of them go as high as 16 and 1 half. And why is that important? Well, if you take a look at a vol control

ramsey_d_smith:
Can I ask you to actually just to clarify

joshua_mellberg:
five,

ramsey_d_smith:
one thing? When you say a vol control five, seven, 10, because not every been in our audience may understand that. What you’re saying is that’s, that is the lower the number, the more strict the vol control is, and the higher the number is, the more wide the vol control is. Is that correct? Yeah.

joshua_mellberg:
That’s a good way of saying it. I’d also look at it from this way. The lower the vol control number, the less equity exposure you have. So the lower percentage that’s working for you today. So if the market goes up by 1%, the lower amount of your dollars are in equities, and maybe more money’s in cash or bonds, if you can look at it that way. So in this white paper here, this kind of shows an example where if you had a S&P 500 risk control five, which you can actually get those indexes and buy the vault controls on the S&P 500 if you chose to. But the Vault 5 and the VIXBIN at 20 today, that tells me five goes into 20, what percentage? Five goes into 20 is 25%. So that tells me you have 25% equity exposure with the VIXBIN 20

mark:
And

joshua_mellberg:
today.

mark:
Josh, I don’t know if you’re looking to have the white paper on the screen. It’s not currently on the screen. It’s still the volcadral indices.

joshua_mellberg:
Okay, let me show the white paper here. Maybe you can see it now.

mark:
Yes.

joshua_mellberg:
Yep. So essentially, what doesn’t change is the vol 5, or the vol 6, or vol 8. What does change is the VIX. So just probably about a week ago, when the banks were crashing, the VIX was as high as 30. So if you had a vol till it control 5 at 100% participation rate, 5 goes into 30 about 17%. So that means you would have 17% equity exposure if you bought that vol till it control directly. The reason I share that with you, And Paul, is that a lot of these indexes are giving 200% participation rates. So if the VIX is at 20 like it is today and you have a vol total to control 5, which only has a 25% equity exposure, your participation rate at 200% is really 50% equity exposure. So all that means is if the S&P 500 goes up by 1%, your equity exposure for that day was half percent, 50 percent of that. Does that make sense?

mark:
It does. In a sense, it’s a way of looking at it where 100% isn’t always 100% relative to the other variable factors that go into it. I guess one analogy to look at it from a different perspective is like on an income rider. You have roll-up rates and you’ve got payout factors. Just because you might have a higher roll-up rate does not necessarily mean the income’s going to be higher. It also depends on what that payout factor is to get to that net number. So you need to look at a couple different points of reference to really understand what your opportunity is in terms of getting a credit, correct? So I’m going to go ahead and do a quick quick review of what I’m going to be doing next. I’m going to be doing a quick review of what I’m going to be doing next. So you need to look at a couple different points of reference to really understand what your opportunity is in terms of getting a credit, correct? So I’m going to go ahead and do a quick review of what I’m going to be doing next. So I’m going to go ahead and do a quick review of what I’m going to be doing next. So I’m going to go ahead and do a quick review of what I’m

joshua_mellberg:
Exactly, exactly. So if we take another example here, if you had a risk control 10 on the index that you choose and 10 goes into 20 is 50 percent, well, in that example here, if you had a 200 percent participation rate and you had a risk control 10 and the VIX is at 20 today, you would actually have 100 percent equity exposure. So if the S&P, as an example, went up by 1 percent, you would also go up by 1 percent. like it did in 2018, and you had a risk control 10 at a 200% participation rate, your index account, your index would go up by 1%, you’d go grow by 166% for that day. So what’s great about this is the higher the risk control, think of it the more equity exposure potential you have. such as risk control five or six, then you need a much higher participation rate to have the same equity exposure. So if you looked at the chart below here, if you wanna have 100% participation rate of the equity, of the S&P to 500 a day, and you have a vol five, you need a 400% participation rate on that vol five to have it, the market goes up by one, you make 1%.

paul_tyler:
Y a-

joshua_mellberg:
But if you had a vol controls 10, If the market went up by 1%, you’d only need a 200% participation rate out of all control 10.

paul_tyler:
Yeah, I like Josh how this connects the dots. I think too often people look at the products we offer and you look at, to Mark’s point, you look at roll-up rates or you look at participation rates. Volatility controls have added sort of another element and I think it’s tough to sometimes put those together. Now, you spend a lot of time, as Mark said, connecting with 14 million households. Where are their heads right now? Now, bonds went down last year as did equity. We know it’s like, I think the third time in the last hundred years where that happened.

joshua_mellberg:
I mean.

paul_tyler:
But if I open up my 401k and I saw that my account went down 20%, this is interesting, right? Simple math. Gosh, how much does my account have to grow to get back to where I was? Oh, 25%. You know, is volatility, are volatility controls now something that less is better in this environment or are they going to say please in this whole crazy marketplace take some of their risk off the table.

joshua_mellberg:
Yeah, there’s a lot of the consumer right now is scared. They took a big hit. Those people that were prudent and diversified, they took a big hit in their bond funds, and streets went up, bonds went down. The stock funds went down, and inflation’s going up. So what’s helped them keep up with inflation a little bit is their houses prices for last year. Their house prices went up. This year, housing is expected to go down. And we don’t know what the market’s going to do. It’s going to kind of stuck in the muck and very volatile. because they feel inflation or shrinkflation, things are getting much more expensive, but they don’t want to lose their money. So they’re seeing losses as inflation goes up, and they don’t know who to trust. If you look at the banks, a lot of people are pulling their money out of the banks. What’s nice to say is not one insurance company with a fixed annuity or indexed annuity has ever lost principal. That’s what, not even when insurance companies went under, no one’s ever lost it. a dime. Policy holders always got their money out. So right now people are trying to get, try to protect their assets and how do you do that and how do you fight inflation safely. And even though my go rates are really great, they’re 5%, that’s not keeping up with inflation after taxes.

mark:
So I think one really important thing in terms of the innovation behind this, and we’ve talked about this on previous shows, and I know Paul and Ramsey have talked about it too, is that people tend to kind of fall waves, right? So when the income writers first

joshua_mellberg:
Thank

mark:
came

joshua_mellberg:
you.

mark:
out, you saw huge utilization, 80%, 90% utilization, and the timing made sense because it was after 2007, 2008, 2009 when those really became and people were scared. And they’re making decisions in terms of, they’re a long-term protection based on that. And then the market started doing really well, and then you saw people dialing back in terms of the utilization of that, thinking, hey, this is great, do I need to spend the money for a rider fee when I can make more of my credit rates and do systematic withdrawals? And then you get a little shake up of the market

joshua_mellberg:
Mm-hmm.

mark:
and you start to see these trends shift. And I think, looking at that analogy on the income riders, I think the same holds true on these crediting strategies. You know, back when interest rates were low, these came out optically, you know, those par rates were much higher, and you saw people really move towards that, and now you’re seeing a move back. I think the key here is that there’s not one that’s good or bad, you know, it’s really diversification in different market environments, and it’s having a portfolio that allows really the benefit of picking and choosing different opportunities in different market environments, because it’s not like you’re making a selection today that’s really only gonna impact based on today’s market. These are long-term programs for people’s retirement. And I think the more options, the better. And obviously, what you’re doing to educate, hey, I’m not saying one’s right, one’s wrong, but here’s how you got to look at the differential to balance it out and figure out which ones make sense for which part of your portfolio. So, I’m going to go ahead and do a quick recap. I’m going to go ahead and do a quick recap. I’m going to go ahead and do a quick recap.

joshua_mellberg:
Mark, this is why more than ever it makes sense for advisors to become fiduciaries and understand what indexes are the best ones to choose from. And I think that’s critical knowing how to pick which indexes are across the board. I’ll kind of walk you through a cool calculator we made, if you can see the screen. Basically how do you know which? number is right for you. Different companies are going to have different numbers. They can have a five or six or an eight or a 10. They go as high as 16 and a half. But if you put in the risk control number, 90% of the risk control vols are fives. You can just typically, it says vol five right next to it or on the index you choose. And then you can look up what the VIX is. You can by clicking this link, it’s 21.6 today. So I’ll just type in 21.6. And then what is the participation rate you’re getting? So some of these companies are paying 200, 300% participation rate. I’ll just put 200% in there. And what this shows is it shows what your approximate equity exposure today or participation rate on a vol five with the VIX being at 21. Well, today it would be at 23.15, but because you’re gonna 200% participation rate, your equity exposure is closer 3. But if you wanted 100% equity exposure, you would need to have a 431% participation rate. So if the S&P went up by 1%, you would also gain 1% for today. And so I share that with you because this kind of compares what you would need if you had a risk control 10, what would your estimated equity exposure be, or participation rate, which would be 46%. 100% equity exposure on a risk control then, what would you need? And if you had a risk control 16 and 1 half, and there’s a couple carriers that have higher risk controls like 10 or 16 and 1 half, then you would have 76% equity exposure on a risk control 16 and 1 half. But if you had 200% participation rate, it would be much higher than that. It’d be closer to 150% participation rate. So this just kind of points out that when choose indexes and vol controls, make sure you have if you have a low risk control, make sure it has a very high participation rate, or it’s okay to have a much lower participation rate if you have a higher vol control. The reason this is important, Mark and Paul, is I don’t think financial advisors and consumers really understand how much the money is growing today or what’s going to make over the year. How do you calculate that? It’s easy to calculate if you have a 50% participation

ramsey_d_smith:
Mm.

joshua_mellberg:
rate on the S&P 500, you make 10, that’s easy. But it’s not easy to see behind the scenes if the market goes way up how much of that gain did you make when the market rips.

mark:
Yeah, and obviously I think there’s other factors too in terms of like the volatility itself and how quickly that moves, what type of… you know, either a crediting period or a longer duration. And that’s why it’s important to obviously, number one, have the choices, right? And then number two, to be able

joshua_mellberg:
Thank you.

mark:
to monitor

joshua_mellberg:
Thank you.

mark:
it, you know, as you go looking at each term when it comes up for maturity and saying, okay, well, let’s maybe adjust based on where we either think the market’s going or experiences that we’ve had based on, you know, the allocations that were made prior to. So, I think that’s a good point. I think that’s a good point. I think that’s a good point.

paul_tyler:
So I’m curious, if Ramsay’s presenting this to me, Josh, when does he optimize for higher exposure and when does he optimize for lower? What’s, you know, if I’m the client, what would dictate going up or down? So, I’m curious, if Ramsay’s presenting this to me, Josh, when does he optimize for higher exposure and when does he optimize for lower? What’s, you know, if I’m the client, what would dictate going up or down?

joshua_mellberg:
Well, I think most advisors and most clients just say, oh, wow, I get 300% of the gains of that index. And they’re like, that’s pretty good. How is that possible? That’s what they think. It sounds too good to be true. And a 300% participation rate or 400% participation rate is not too good to be true because the vol control is very low. It’s in a way, it’s marking things up to mark things down, call the sale. So how do you know how much money is working for you in the market in a way? That’s kind of how I try to simplify it. It’s really simple. You can see the fixed bucket at 4% or 5%, or you can see the S&P 500 at 50% participation rate. You can measure that. But how do you measure how much money is really going up for you? And I think you have to look at what the VIX is at for the day or for the average for the year. And you got to look at your participation rate with the vol number. You have to have all three calculations to be able to say, do I have a shot of making 20% if the market really goes up? high ball toe to control, like a 16 and a half, you really do have a good shot of making double digits. But if you have a very low ball control and the VIX is high average for the year, then I think there’s going to be disappointment when the market rips by 20% and client statements come in at 5 and 6. But here again, if you look back in 2018, there was times where the VIX was only around 12, and this risk control 5s did really, well. So I just think we’re gonna have elevated volatility ever since the pandemic and it’s gonna be like that for the next couple years with all the things going on with inflation.

mark:
Ram’s here on mute.

ramsey_d_smith:
You got me now?

mark:
Yep.

ramsey_d_smith:
Sorry about that. It’s saying,

joshua_mellberg:
Yep, we can hear you.

ramsey_d_smith:
look, there’s a lot of really good and important science behind these volatility controlled indices. And to your point, Josh, essentially what dealers and asset managers do with these is they translate what would have been a participation rate or what

joshua_mellberg:
Thank

ramsey_d_smith:
would

joshua_mellberg:
you.

ramsey_d_smith:
have been a cap, they translated that into an asset allocation policy between a risky asset, i.e. equities, asset bonds, right? And for a, a, a, a, a vol control five, the relationship is going to be a lot more bonds, relatively speaking than stocks and for a risk control 16, it’s going to be the other way around. And so, you know, when it ends up being presented to the end consumer and they’re told they get, you know, a multiple percentage, like 300% of the, of all control index, we’re really what’s happening is to your point, that can be done because the index underlying index is less risky because less of the index is assets are allocated into the risky asset. So I think that having a tool that helps both advisors and their clients understand directionally what these things mean I think is super important. Because the underlying engineering, if you will, is really like it’s fairly complicated. But I think if people have that top line from a 1,000 foot understanding of what it means to have low vol, expensive, exposure versus high ball exposure, I think is important. And that gets people a long way to where they need to go to make a good decision.

mark:
Thank you.

joshua_mellberg:
Yeah, Ramsey, you hit the nail on the head. A lot of agents are looking at the illustrations and they’re backtesting. And they’re backtesting the hypotheticals and they’re backtesting on when volatilita is much lower. And so I guess the question would be is if you had a 25% participation rate on the S&P 500, would you go to a client and ask them if you’re going to average 8% per year and tell them they’re going to average 8% per year? I think the answer would be, most advisors would be no, you’re not going to average 8% with a 25% participation rate. And I think that a lot of the agents are looking at just the backtesting in a bull market when the market went straight up and when volatility was very low. And that’s not really fair to say what’s going to happen forecasting, what’s going to happen in the future, because volatility is much higher, rates are a lot higher, and the lower vol controls can do very well, but you have to have a 300% or 400% participation rate to really. compared to a volatile control 16 and a half or so.

paul_tyler:
So.

mark:
So it’s interesting. We have a really interesting dynamic on this podcast here today because Josh, you’re looking at from the standpoint of helping educate agents, advisors, consumers in terms of how these all play together. And Ramsey, you’ve developed one of the very first, if not the first ones of these strategies. So I guess a question from your perspective is Josh talks about the education behind it in terms of how they interplay with each other has the way these unfolded worked out the way that you anticipated initially when you designed. And then secondly is the behavior patterns along the lines of what you thought might happen in terms of the way that they’ve drawn attraction.

ramsey_d_smith:
Wow, so there’s a lot in that question. So first and foremost, one was this idea that in a low rate environment, you did wanna give people different ways to make money. For us, one of the most important things was to be able to take institutionally available investment strategies. So strategies that were only available institutions that we had developed at my prior firm and actually being to deliver them in an FIA and using that in a vol control context as something to provide another way to get exposure, like diversified exposure beyond just the S&P. So there was that piece of it for sure. I think to say beyond that what’s been amazing to me is how many of the indices there are now. So the first index was in 2012. Trader Vic with an insurance company whose name I won’t mention. And it was probably about three or four years until a lot of other ones started to come out and then it just took off. So now I think the interesting challenge is to give consumers and advisors some simpler decoder rings, if you will, to figure out how to make some decisions. Because the reality is, if you line up industries next to each other. As somebody who’s in the business, sometimes industries, indices all feel very different to me. One versus the other. But there are some big commonalities that I think people should focus on. So for example, sort of, the control levels and again the par rates they translate into I think are very important for people to understand. So they see it as a choice. It’s not magic, it’s just math, right? It’s really, it’s math. And so you want to give advisors and customers some Some good rules of thumb to help them with the math But having to get sort of deep into the science and I think that I think that tools that help you view that are you know are valuable

paul_tyler:
Yeah,

ramsey_d_smith:
Did I

paul_tyler:
I

ramsey_d_smith:
answer your group your question?

mark:
Yeah, no, very much so. Appreciate

ramsey_d_smith:
All right,

mark:
it.

ramsey_d_smith:
cool.

paul_tyler:
Yeah, Josh, I think bottom line what your tool does is allow advisors to have better conversations with clients and better inform them and set expectations that have a higher likelihood of showing up on a statement. And I don’t think we can

joshua_mellberg:
Thank

paul_tyler:
overestimate

joshua_mellberg:
you.

paul_tyler:
this. Mark, we get calls all the time from clients who’ve forgotten that they put money into a two-year strategy and they say, well, why don’t I see a zero return a year one. Well, let me remind

joshua_mellberg:
Mm-hmm.

paul_tyler:
you what a two-year, how a two-year strategy works. I don’t think we can underestimate the need to make these conversations as clear as possible in the beginning. So, Josh, tell us what’s next. We’ll certainly share your, we’ll share a link to your white paper, Mark. I think that’ll pass muster. I think what’s next this year? This is gonna become a valuable tool for advisors to use.

joshua_mellberg:
Yeah, if you download the white paper, it’ll kind of give an example of the history of the VIX. It will show what kind of rates you need to be equal to 100% equity exposure. And there’s a calculator link in it that you can plug in. There’s going to be so many great innovative indexes and participation rates that come out. And it’s great. And in competition, the consumer wins. The advisor wins. So I think the important thing is to, there’s a basic rule. It’s the thumb is if the risk control is let it go, it has a very high participation rate. And then the higher risk control number, like a 10 or 16 and a half, you can actually have more equity exposure and more gains for the client at a much lower participation rate because you just have more money working for you in the market. So I think that advisors and agents are gonna start doing their due diligence more than just who’s the manager behind the index. They’re gonna start looking at what is the risk control number and what does that mean and real returns for the forecasting

paul_tyler:
Yeah,

joshua_mellberg:
in the future.

paul_tyler:
well thank you. And Ramsey, any final thoughts or questions here?

ramsey_d_smith:
No, I just want to reiterate what I said. I think rules of thumb are very important in finance because finance is, finance generally speaking, whether at an institutional level or at a personal level is a natural tension between a great deal of precision on one side and on the other side, some really important rules of thumb. And in fact, my experience is that much of the finance will really relies on rules of thumb from day to day. So many of them are very, important. That’s probably for another podcast to go into some of those, but I think it’s valuable.

paul_tyler:
That’s great, Mark, you want to close for us.

mark:
Yeah, you know, I agree with Ramsey’s comments about kind of setting a baseline rules of thumb. And you know, what’s interesting is, you know, the product lines have changed so much over the years. And the one constant that we continuously hear out there is there’s complexity in these products and there’s a need for education. And I think that that’s not going to go away. And I think the more that we can set understandings out there and reach the masses through, you know, pathways that that Josh does very well. I think the more education, the better. So I think this is a great way to kind of help, you know, bring that pathway to not having them be so, you know, complex and misunderstood. So I think this is great. I think this is great.

paul_tyler:
Excellent. All right. Hey Josh, thanks for coming back and catching us up on what you’re doing. Mark Ramsey, thanks. And thanks to our listeners. Give us feedback. Send us comments. And otherwise, tune in next week for another episode of That Anoddy Show. Thanks.