RetiremEntrepreneur: Mark Cortazzo

By Wed, Jul 10, 2013

In seven brief video clips, financial advisor Mark Cortazzo of MACRO Consulting Group talks about his new venture, Annuity Review, which helps investors and advisors evaluate in-force variable annuity contracts whose value they may not fully understand or appreciate.

This article is the first installment of RIJ’s new occasional feature, RetiremEntrepreneursTM, about people who profit from the Boomer aging and retirement wave in novel, creative or socially-useful ways. For more information about Annuity Review, see this week’s cover story, “Where to Get Your Old VAs Appraised.”

RIJ: Annuity Review mainly serves owners of pre-2008 variable annuity contracts with rich living benefit riders, as well as the financial advisors of those people. Exactly what service do you provide?

CORTAZZO: What we’re trying to do for the client is look at, big picture, what does their overall situation look like…

RIJ: Annuity Review intends to help these contract owners “maximize” the value of their VA contracts… Won’t that hurt the insurance companies that issued the contracts?  

CORTAZZO: I think there’s a misconception of what we’re trying to do…

RIJ: Are you saying that the people who own them and even the people who sold them in don’t know their value, and could surrender them without knowing what they’re giving up?

CORTAZZO: We’ve had wholesalers and regional directors from companies come in and we’ve asked them, How does this work and what happens in this situation. A very common answer we’ve gotten is, ‘I’m not sure, no one’s ever asked me that question…’

RIJ:  You were a big fan of variable annuities when they were underpriced and had rich benefits. What’s your feeling about today’s “de-risked” contracts? 

CORTAZZO: We have annuity contracts that, from ’02 to ’07, with lifetime income guarantees on them, net of fees, nearly quadrupled in five years because we were in high octane investments. That was wonderful. We don’t have anything that’s going to be able to do that today…

RIJ:  You’re still using VAs, how are you using the new ones differently from the old ones?

CORTAZZO: The majority of someone’s portfolio went into income guarantees before ’08…

RIJ:  So, if variable annuities have a diminished role for your clients, why own them at all?

CORTAZZO: The one value that is not quantifiable is: We have clients who owned these through ’08, and they did not get scared out of the market…

RIJ: How would you describe the type of person who should own a variable annuity with living benefits today?

CORTAZZO: At the end of the day, if you have a client, a couple who’s 65 years old, and they’re sitting in a money market account…

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