The Marketing by-line for Phil Cannella’s Crash Proof Retirement is, “Driven By Consumer Advocacy Sustained BY Truth”, this makes for a loftily pledged mission Statement. Underfunded retirement is one of the modern society’s most challenging soci0-economic crises. Three of the main fundamentals contributing to the problem of inadequate retirement funding are, insufficient savings and poor hedging against inflation and ‘administrative costs’ erosion of the retirement nest-egg.
The prevention and mitigation of the second and third factors is what Phil Cannella puts forward as his primary motivation. The Crash Proof Retirement strategy is marketed by Phil Cannella as a custom solution to retirement financial security as developed by his First Senior Financial Group. This review looks into the authenticity of the offering and it’s close if not coincidental similarity to Fixed Index Annuities. The workings of the FIA briefly summarised, a relatively secure, low to moderate yield investment, the principle sum invested is shielded against downside index performance but the benefits of any upside performance, even if spectacular, are not passed on to the investor in any significant measure. The question addressed here being, weighed against objective review, is Phil Cannella’s Crash Proof Retirement a scam or a viable solution to preserving retirement funding and lifestyle?
- Product: www.crashproofretirement.com
- Company: First Senior Financial Group
- Founder: Phil Cannella
Phil Cannella’s company, First Senior Financial Group, is an insurance marketing organization (IMO) that is an independent marketer of insurance products from a variety of different insurance companies.
The Crash Proof Retirement product is targeted at retirees and soon to be retirees. It is marketed as a comprehensive solution to securing retirement finances and one that is immune to market losses, far different from other retirement related investment opportunities we’ve covered here, such as Alexander Green’s Single Stock Retirement Plan and Jeff Clark’s 3 Stock Retirement Blueprint.”
What is Crash Proof Retirement?
Crash Proof Retirement is a retirement funding insurance product / vehicle sourced and marketed by Phil Cannella and his team at First Senior Financial Group. Although it is not stated clearly, the product is effectively a Fixed Index Annuity (FIA) or Equity Indexed Annuity (EIA). The marketing of the product pushes the narrative that the Crash Proof Retirement is focused on the financial fortunes of the retiree to a greater degree than that of the competing products or companies. The veracity of this assertion is another aspect of this review.
Who is Phil Cannella?
Mr. Cannella states that he developed his Crash Proof Retirement system to protect retirees from “loosing their hard-earned retirement savings to fees, volatility and corruption of Wall Street”. He relates a family story about his grandfather who after working at a long career in order to contribute to the family household in suburban Philadelphia, suffered a debilitating stroke. It was this health challenge and the financial repercussions for the family that he says prompted him to commit to finding a way that would allow other retirees to avoid similar hardship.
In assisting with the payment of his grandfather’s medical bills and sustaining the family, Phil Cannella had to get a job after dropping out of college. He studied insurance in order to be licenced to sell insurance policies and in the course of his studies he developed specialised knowledge of products like Nursing Home Insurance. After obtaining his insurance sales certification, Phil apparently focused on servicing the insurance needs of retirees. He claims to have pioneered “consumer driven Long Term Care Insurance contracts” which are still in use today.
Is the Crash Proof Retirement Legit?
Phil Cannella employs intensive, some might say aggressive and flamboyant marketing to promote the Crash Proof Retirement product and the cost of this marketing has to be recovered. There is much speculation around whether all the advisors employed by First Senior Financial Group are appropriately qualified to sell the investment products marketed by their firm. These allegations are vociferously refuted by Cannella and dismissed as attempts by his competitors and Wall Street to besmirch his company’s image and reputation.
It is debatable whether the Fixed Index Annuity product that forms the basis of his retirement funding vehicle may be the best product to serve the interests of the retiree as opposed to being more profitable for the insurer. Mr. Cannella has also been at the centre of well documented attempts to manipulate facts in order to misrepresent high profile endorsement of his insurance products.
Despite the controversy that dogs Phil Cannella and some of his associates, the Crash Proof Retirement does appear to meet the requirements of a legitimate insurance product. The onus remains on the investors to carry out due diligence when deciding which retirement insurance vehicles best serves their interests.
Is Phil Cannella’s Advice Credible?
Phil Cannella has applied considerable effort to crafting the image of a champion of consumer advocacy with specific reference to improving the lot of retirees. Despite his intensely driven campaign to elevate his reputation and profile as a provider of excellent services to the retiree community, he has been dogged by well founded controversy.
A pivotal question in evaluating the Crash Proof Retirement offering has to be; is the advice offered by Phil Cannella and his associates credible? The already mentioned slogan “Driven by Consumer Advocacy Sustained by Truth” simply cannot be taken at face value. The importance of adequate and secure retirement funding plans demands close scrutiny of all role players in this realm.
Subsequent to the 2001 market crash, Phil Cannella saw the opportunity to pitch a product that he would promote as a means to grow a retiree’s nest-egg while protecting the principal amount from market crashes. He used Fixed Index Annuities as the financial investment product to deliver the desired results. He makes the interesting assertion that he was not aware that his success in selling these FIA plans would “blossom to be his dream come true as his life’s goals took shape as Crash Proof Retirement”. This kind of questionable marketing based assertion, based on faux humility, does little to enhance the bona fides of the marketer making the claim. It is in fact in direct contrast to his stated ambition to create an insurance model that would preserve and protect the financial resources of the retiree. He also does not state openly that Fixed Index Annuities are the chosen insurance product, instead there is a subtle implication that the Crash Proof Retirement features are a custom developed or unique offering, this is patently untrue.
A positive and possibly credibility enhancing aspect of the Crash Proof Retirement offering is the approach taken to the remuneration of the advisers. The sales staff are salaried rather than sales commission compensated or incentivised. Phil says this compensation model is adopted so that the advisors design retiree income solutions that are the best for the client rather than engaging in selling products that pay the highest commissions. A counter to this apparently principled approach is that the workings of the compensation model are more beneficial to the employer, in this case, First Senior Financial Group.
Fixed Index Annuity products are more profitable to the policy provider and less beneficial to the investor than some other more suitable products. Treasury bonds would in all likelihood cater more effectively to the requirements of the retiree. They provide a return to the investor that is on average significantly better than that of the Fixed Index Annuity. The complete liquidity of the treasury bond means that there are no surrender charges. The other and most significant benefit is that the treasury bond is totally risk-free. Past bankruptcies of insurers, have, proven that despite measures taken by regulators, investors can suffer substantial losses when an annuity fails to meet its ‘guaranteed’ financial obligations.
A self-proclaimed “consumer advocate and developer of a risk-proof way to protect retirement savings”, Phil Cannella has re-focused his efforts on raising the media profile of his insurance products. Dismissing what he termed as the mainstream media’s ignoring of his Crash Proof Retirement offerings, as bias and the furtherance of vested interests (he asserts that the mainstream media are all owned by corporations that thrive off stock market investors), he ventured into his own media platforms. In 2008 he established a weekly radio show called, you guessed it, the Crash Proof Retirement Show. He also holds free events called Crash Proof Retirement Events at restaurants around the country.
The stated purpose of the radio show and the free restaurant events was to expose the “the truth about the financial industry” and educate consumers about retirement planning. The education of consumers may well be a genuine cause, but the marketing of his insurance products is most certainly the primary objective. The intensive marketing of the Crash Proof Retirement products is constantly promoted as educational material and events. He has since established his own media company and he is now the CEO of Retirement Media, Inc. He has stepped down from Crash Proof Retirement leaving the running to his partner Joann Small.
The spectre of controversy does, however, appear to characterise Phil Cannella’s marketing endeavours. He notably attempted to ‘creatively edit’ a video interview with former SEC Inspector General H. David Kotz. His attempt to portray Kotz, a representative of the SEC, as endorsing the Crash Proof Retirement offering, met with strong objections from the SEC and the issuing of a terse disclaimer relating to the video interview content. This has not been his only flirtation with falsely claimed endorsements. In 2015 a press release from Crash Proof Retirement falsely claimed that no lesser person than President Barak Obama had, in a Yahoo Finance article, endorsed Phil Cannella and Crash Proof Retirement. It turned out that President Obama had merely made an anti-Wall Street speech at AARP HQ, a press release from Crash Proof Retirement sought to falsely exploit this event.
The marketing of the Crash Proof Retirement solution makes a great show of testimonials from ‘satisfied’ clients. Many of the testimonials take the form of videos posted on the Crash Proof Retirement website, there are also more than three hundred video testimonials posted on YouTube. Some or most of these testimonials may well be authentic but as is the case with many heavily marketed financial products, there appears to be no effort made to present independent or verified positive testimonials.
What is The Cost And Are There Early Withdrawal Penalties?
The proposition that there is no upfront cost incurred with the Crash Proof Retirement product, though true, is not reflective of the complete picture. The skewed distribution of the gains made by the relevant index in favour of the insurer, could be viewed as deferred costs that are spread over the term of the investment. The question of a refund policy is also not applicable, but early withdrawal of funds by the investor does attract significant penalty charges.
How Crash Proof Retirement Works
The Cash Proof Retirement is an insurance plan / investment strategy that is marketed to retirees and people approaching retirement. Fixed Index Annuities appear to be at the centre of the system offered by Phil Cannella. The controversial and on many occasions, spectacularly wrong market and political analyst, Dick Morris, in his TV commercial endorsement of the system, glibly states, “The market goes up, you go up, the market goes down, you stay even. This one liner may be basically true but it represents a gross over simplification of the workings of Fixed Index Annuities as employed by the Crash Proof Retirement system.
The guarantee of the principle sum invested makes Fixed Index Annuities a secure and popular but conservative investment proposition. In as much as these investment strategies are a safe option for the pensioner, they also represent a very lucrative opportunity for companies like First Senior Financial Group who sell these investment vehicles. The earnings due to the pensioner / investor are capped at usually around 3 or 4%,although there are exceptions. The insurance company can lower the earnings cap thereby limiting the pensioner’s gains. If the linked index surges the amount paid to the pensioner may not be reflective of the increased gains which are absorbed by the insurer as additional profit. So if the index soared to 15% or higher, it is unlikely that the pensioner would be paid a yield higher than the quoted 3 to 5%.
If the linked index should perform badly, even though the principle amount is guaranteed, the pensioner would incur substantial penalties should they withdraw the funds from the poorly performing index before the term (holding period) is up.
For a pensioner who is adequately funded and has no need to grow their nest-egg or the pensioner who is just looking for wealth preservation, this may well be a suitable financial instrument. Material offering a detailed illustration of the workings of Fixed Index Annuities or Equity Indexed Annuities is available to the consumer prepared to do some research.
The Crash Proof Retirement strategy is a conservative means to protect the principle amount of the investment coupled with small earnings, the investment vehicle utilised is the safe Fixed Index Annuity. As outlined above, if the index performs well the pensioner will accrue small gains, typically between 3 and 5%. These gains can offset or beat the effects of inflation and if the index performs poorly the pensioner is insulated from any losses. The caution must be added that merely maintaining the original value of the principle sum invested will not counter the effects of inflation over the term of the investment.
What you get
- You get protection of your principle investment coupled with a relatively small growth if the linked index performs well. The growth can be reduced to zero if the index under-performs. In short the Crash Proof Retirement product offers protection of the retiree’s principle investment along with potentially small gains which may be an effective hedge against the erosion of inflation. The principle sum is guaranteed not to be negatively affected even if the investment performs poorly.
- Financial MRI: The analysts on the Crash Proof team conduct an assessment of your current investment portfolio
- Performance Reviews: Crash Proof clients can request an annual review of the performance of their retirement strategy and have it modified if necessary.
- Tailor Fit Plan: The Crash Proof system is personalised to the individual retiree’s needs.
The Crash Proof Retirement which utilizes Fixed Index Annuities can only deliver limited gains for investors. Testimonials from clients claim gains of between 3 and 5%. Claims of double digit yields for retirees are made by the First Senior Financial Group, but as stated elsewhere in this review, there is no independent verification of these claims. The limited returns are offset by the guarantee of the principle amount invested.
Pros v Cons
- The fixed index annuities guarantee reasonable protection of the principal amount invested by the retiree. If the gains accrued by the investor exceed the rate of inflation, then this is an effective way to keep ahead of the rising cost of living.
- There is an upper limit on what the retiree can earn. If the retiree’s funds are placed in a fund or funds that perform exceedingly well, be it the S&P 500 or any other index, it is unlikely that the retiree will benefit to a greater margin than the conservative rate quoted when purchasing the product. If the fund achieves a large or record performance, little if any of the bonus performance is passed on to the investor. The bulk, if not all of the increased gains are retained by the policy provider.
- Truth In Advertising reveals that the primary product utilised by Crash Proof Retirement are Fixed Index Annuities.
- It must be born in mind that insurance companies can and do fail. If the financial instrument is not government backed or guaranteed, the retiree does risk incurring a loss of their principle sum invested.
Summary and Conclusion
Marketing what are effectively re-branded Fixed Index Annuities which are essentially more beneficial to the insurer than the insured / retiree is ethically questionable but somewhat typical of many service providers in the insurance sector. Phil Cannella spends considerable resources promoting himself as something of a relentless campaigner for the interests of the retiree but he and his company are scarcely different to rest of the insurance selling pack. The basic concept of the Crash Proof Retirement product is legal and probably not the worst strategy for a retiree who is financially well resourced. A retiree or pre-retiree needing to grow their nest-egg to any significant extent would do well to explore other options.
An old annuity joke goes as follows’, Salesperson: “have you heard of the investment that has a guaranteed 8% return?” Investor: “No, I haven’t, but that sounds great. How do I get that?” Salesperson: “Oh, the guaranteed return isn’t for you, it’s for me!”