Why does my financial adviser tell me annuities are bad?
Saying “annuities are bad” is like saying “cars are bad”. It really depends on the type and how you use them. Just as there are sports cars, trucks, and minivans built for different purposes, annuities come in many forms, each with unique pros and cons. Some financial planners criticize annuities because certain types have high fees, complex features, or are sold in situations where they don’t fit a client’s goals. But when matched correctly, like picking the right car for the road ahead, annuities can be a safe and effective tool for retirement planning. If you need protection or guaranteed lifetime income, annuities may be your best option. We would be happy to provide a quote for you.
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If an annuity seems like the perfect solution to give you a steady stream of income and remove the volatility of the stock market, but your financial adviser is insisting it’s a bad idea, we need to talk. There is a definite gap between how some financial advisers view annuities and the guarantees inside an annuity contract.
In defense of the skeptical financial advisers out there, too many annuity agents sell products based on hypothetical returns that do not deliver, and are tied to surrender charges that don’t allow you to get out of a bad annuity for several years. But for the right situation, annuities can be powerful financial tools that
The negative view many financial advisers have about annuities isn’t always about the product itself. It’s often about how they’re sold, or how poorly they’re explained. Annuities are not inherently bad. In fact, for many people, they are one of the best ways to create predictable income, manage longevity risk, and enjoy peace of mind in retirement.
If you’re financially conservative and you don’t want to worry about managing investments in retirement an annuity may be a perfect fit. The key is to understand what you’re buying, choose a reputable annuity agent and insurance company, and make sure you understand the contract.