It appears that the spirit of divisive partisan politics has permeated the investment world of annuities vs. securities, and more specifically fixed index annuities. “Why can’t we all just get along?” It appears that many advisors fall into one of two camps—hating or loving annuities—for a variety of reasons, sometimes hiding their actual bias!
Investment broker types typically avoid or hate fixed index annuities but love promoting variable annuities# and other securities products. Insurance agents on the other hand love fixed index annuities and have little appreciation for variable annuities# or investing in securities… [continued below video]Video: Annuity Guys®, weigh the “love-hate” annuity relationship in financial circles.
**Guarantees, including optional benefits, may have restrictions, such as surrender charges, that could lower the value of the policy. They are also backed by the issuer’s capacity to pay claims. Unless otherwise noted, Dick and Eric are discussing fixed annuities in this segment.
[continued] …Brokers want to make a commission from selling you mutual fund^s or variable annuities# and then collect trail fees from their assets under management. Typically, insurance agents receive one commission for each sale of insurance, including annuities. They all want your money because that’s how they get paid, so why is there so much animosity when there aren’t really that many differences? Since they are fiercely competing for your assets, brokers and insurance agents want your money for their services or products.
It’s a fact that as the baby boomer generation retires, an increasing amount of assets are shifting from allocations to aggressive growth to safer investment options such as annuities. The task of converting retirement savings into lifetime income is difficult for retirees, and they must safeguard every dollar from possible market loss; however, many brokers are unaware of this way of thinking.
They surmise that even in the event that you lose this year, you should hopefully be able to make up for it in the following three to four years, as that is how markets should function. Most brokers are accumulation specialists. They attempt to advise you on the hottest stocks and funds to purchase, but they lack the expertise to properly build a balanced portfolio that both grows and safeguards assets and **guarantees a retirement income that you will never outlive.
Having said that, fixed index annuities are not a cure-all for all financial problems. They are excellent at producing a stable income or offering moderately safer growth, but they shouldn’t be unfairly compared to securities because they are not the same. Regretfully, the majority of consumers who are approaching retirement have been socialized to think in terms of accumulation, so they are more at ease utilizing terminology from their years of experience with “investing.” Learning to talk more about the safer return OF your money with reasonable growth—rather than the substantial returns ON your money that is left at risk—is usually necessary when switching to annuities for income, limited growth, and safety.
Too many insurance agents try to act like brokers and flaunt the 20%E2%80%9Csizzle%20%E2%80%9D%20of the 20%8% income%20rider growth%20formulas%20%E2%80%93%20even though it might not be the best annuity, it’s the easier 20%20%E2%80%9Csell%E2%80%9D%20because customers can relate to the 20%E2%80%9Cgrowth%20**guarantees%E2%80%9D Annuities thus occasionally receive a bad rap when they are misrepresented by ignorant or occasionally dishonest advisors who don’t truly get the importance of educating themselves or their clients about the appropriate use of annuities. In our humble opinion, your best advisor choice is to work with a Fiduciary Registered Investment Advisor who has extensive experience with securities and annuities and who approaches retirement planning holistically and in a balanced manner. They are definitely not the White Hat Good-Annuity Guys®, as they pretend to be!
Rather than being constrained by a local or regional area, are you willing to work with one of our retirement and annuity advisors based on their experience and expertise as a first priority? The good news is that technology has permanently removed our geographical limitations and leveled the playing field for everyone! Thanks to today’s technological advancements, we can all now confidently work with experts in any field, including personal finance! Regional or local boundaries no longer restrict our options or determine our level of success. These days, all it takes to get a great advisor is a click or phone call.
Out of the approximately two hundred licensed insurance agents that we eliminated, we are fortunate to have a small number of advisors that we genuinely believe to be the most qualified. We make these difficult decisions with the assistance of your survey responses. Our advisors ensure that you are provided with the best options available for your retirement planning because they have independent financial practices and specialize in annuities and retirement planning.
“Annuities can be sold by anyone, but only a highly skilled and knowledgeable advisor understands how to set them up for income, growth, inflation, principal return, and tax benefits.” Usually, more than one person is able to achieve each of these goals. The key to achieving your most significant retirement goals is how an advisor arranges several annuities to balance your entire portfolio. “.
Annuities are financial products that offer guaranteed income in retirement. While they can be a good option for some people, many financial planners are wary of them. Here are some of the reasons why:
High Fees
Annuities come with high fees, which can eat into your returns. These fees can include commissions, administrative fees, and mortality and expense risk charges. The fees can vary depending on the type of annuity and the insurance company, but they can be significant.
Low Returns
Annuities typically offer lower returns than other investments, such as stocks and bonds. This is because the insurance company takes on the risk of guaranteeing your income, so they need to charge a premium.
Lack of Liquidity
Annuities are illiquid, meaning that you can’t easily access your money. If you need to withdraw money from an annuity before the surrender period is over, you may have to pay a penalty.
Complexity
Annuities can be complex, and it can be difficult to understand how they work. This can make it difficult to compare different annuities and choose the right one for your needs.
Sales Tactics
Some financial planners use high-pressure sales tactics to sell annuities. This can lead people to buy annuities that are not right for them.
Conflicts of Interest
Some financial planners may have a conflict of interest when selling annuities. This is because they may earn a commission on the sale of the annuity, even if it is not in the best interest of the client.
Alternatives
There are often better alternatives to annuities, such as investing in a diversified portfolio of stocks and bonds. This can provide you with the potential for higher returns and more flexibility.
Here is a table that summarizes the pros and cons of annuities:
| Pros | Cons |
|---|---|
| Guaranteed income in retirement | High fees |
| Can protect your principal | Low returns |
| Can provide tax advantages | Lack of liquidity |
| Can be a good option for people who are risk-averse | Can be complex |
What Do Financial Planners Say About Annuities?
Here are some quotes from financial planners about annuities:
- “Annuities are like anything else with personal finance, where they can have a place to be used appropriately. But unfortunately, a lot of times, they are used inappropriately.” – Brian Walsh, SoFi
- “You’re paying a financial advisor their fees on the annuities, and you’re also paying an actuary fee for them to do basically those time value of money calculations and life expectancy calculations. You have there at least three to four layers of fees that are involved with annuities.” – John Bovard, Incline Wealth
- “I equate them almost to like a checking account at a bank. You’re not going to get this crazy rate of return.” – Jovan Johnson, Piece of Wealth Planning
Annuities can be a good option for some people, but they are not right for everyone. It is important to weigh the pros and cons carefully before you decide to buy an annuity. If you are considering buying an annuity, it is important to talk to a financial planner who can help you understand your options and choose the right annuity for your needs.
Frequently Asked Questions
What is an annuity?
An annuity is a financial product that offers guaranteed income in retirement.
What are the different types of annuities?
There are several different types of annuities, including fixed annuities, indexed annuities, and variable annuities.
What are the fees associated with annuities?
Annuities come with high fees, which can eat into your returns. These fees can include commissions, administrative fees, and mortality and expense risk charges.
What are the risks associated with annuities?
The main risk associated with annuities is that they may not provide a high enough return to keep up with inflation. Additionally, annuities can be illiquid, meaning that you can’t easily access your money.
Are annuities a good investment?
Annuities can be a good investment for some people, but they are not right for everyone. It is important to weigh the pros and cons carefully before you decide to buy an annuity.
How can I find a financial planner who can help me with annuities?
You can find a financial planner who can help you with annuities by asking for recommendations from friends or family, or by searching online.
Using OutCome Based Planning™ for Your Retirement
When thinking about annuities, we employ and advocate a “Holistic – Outcome Based PlanningTM process.” “By first identifying the least amount of your investments or savings (if any) that should be considered for annuities, this approach has the effect of balancing your overall portfolio so you can meet your retirement objectives.” With the help of Outcome Based PlanningTM, you can easily determine your best income and growth opportunities by analyzing and modeling multiple outcomes.
Compared to other approaches that try to sell or persuade you of the “so-called one best solution,” this method will mathematically demonstrate the successful possibilities by comparing multiple outcomes, but it will require a significant investment of time, effort, and analysis. Instead of just choosing the most persuasive advisor or salesperson, clients frequently tell us that this process helps them objectively identify a better retirement plan by removing some of the emotion and confusion.”
You can be sure that, when you ask for assistance, you will be working with a knowledgeable Annuity Guys Retirement Planner who is licensed in both securities and insurance independently. As a fiduciary financial planner, they have access to the vast majority of annuity companies and can assist you in selecting the best annuities through a holistic, outcome-based planning approach. We view the excellent advice we provide to users of our website as a direct reflection of our dedication to providing all clients with retirement financial planning that meets the highest standards of excellence.
We removed roughly two hundred local advisors based on survey responses from our website visitors, and we currently only suggest a small number of highly qualified Annuity Guys Fiduciary Advisors. Numerous local advisors keep asking us to list them as a pre-screened advisor. However, happy website visitors are the only ones who will drive our reputation and future business. So, regrettably, since we modified our business strategy four years ago, we have had to tell the great majority of local advisors no. At that point, we gave up on trying to please everyone with local advisors and focused instead on helping people who are at ease utilizing the internet and current technology to the fullest by partnering with a carefully chosen group of screened, skilled, and informed Annuity Guys Fiduciary Planners.
Rather than being constrained by a local or regional area, are you willing to work with one of our retirement and annuity advisors based on their experience and expertise as a first priority? The good news is that technology has permanently removed our geographical limitations and leveled the playing field for everyone! Thanks to today’s technological advancements, we can all now confidently work with experts in any field, including personal finance! Regional or local boundaries no longer restrict our options or determine our level of success. These days, all it takes to get a great advisor is a click or phone call.
Out of the approximately two hundred licensed insurance agents that we eliminated, we are fortunate to have a small number of advisors that we genuinely believe to be the most qualified. We make these difficult decisions with the assistance of your survey responses. Our advisors ensure that you are provided with the best options available for your retirement planning because they have independent financial practices and specialize in annuities and retirement planning.
“Annuities can be sold by anyone, but only a highly skilled and knowledgeable advisor understands how to set them up for income, growth, inflation, principal return, and tax benefits.” Usually, more than one person is able to achieve each of these goals. The key to achieving your most significant retirement goals is how an advisor arranges several annuities to balance your entire portfolio. “.