Beware the "Free Annuity Review"

Recently, Cheryl and I have been hearing advertisements on the radio for a "free annuity review" which is being stated as a “$500 Value.”  We’d like to take the opportunity to share our thoughts on the subject of Annuities and this promotional offer.

First of all, let me say that any time you sit down with a financial professional to review existing plans put in place by someone else, it should always be free. After all, that person is trying to earn your business.  Secondly, from the tone of the commercial, it's apparent that whomever will be doing the annuity review has a negative view of an annuity and concerns about the internal costs associated with then. Rightly so, as annuities were once known to be one of the more expensive products on the market. In addition, annuities ran into trouble in the late 1990s when financial advisors were indicating that clients would get an additional level of income tax deferral by having their IRA dollars in an annuity. This clearly is just a mis-statement, as your IRA already has tax deferral and therefore the tax deferral of the annuity, while benefiting someone who is not in an IRA, is not an additional benefit to an IRA holder.

However, fast forward to 2018 and the retirement environment of today’s baby boomer.  Annuities have been forced to compete in an ever increasing regulatory environment and offer investors guarantees that cannot be granted in a simple brokerage investment portfolio.  The cost of annuity products has become more competitive, and the rider benefits for which those costs are paid have become more relevant and important as pensions disappear and Social Security income isn't likely to adequately replace a person's income. Today when I look at the Dow Jones industrial average at 25,000, or the S&P 500 at 2,700; and consider that there has been a 371% increase in the S&P since its low on March 9th, 2009*, I, like many other advisors and analysts, are waiting for correction day. The benefit of an annuity may be that it takes the fear of correction day out of part of your investment portfolio. An annuity can also do something that a regular portfolio cannot do, which is provide you a guaranteed** stream of income not only for one lifetime, but possibly even for two lifetimes. If you are approaching retirement within the next 5-10 years, now is not the time to be getting rid of products which will potentially guarantee current values in your accounts for your use in retirement. If you would like a free annuity review from a CFP® professional licensed to sell annuities, life insurance, mutual funds, stocks, bonds, managed accounts, alternative investments, etc; please call our office today. We will be happy to give you an objective review.  Just because annuities may carry an unfamiliar fee structure to you, it does not mean you should ignore or abandon them.  Annuities are not evil, and they have a proper place in the retirement portfolio of many couples and individuals.  We look forward to hearing from you.


Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Advisor. Fixed insurance products and services offered by CES Insurance Agency or Artisan Financial Group.

*JP Morgan Guide to the Markets 01/31/2018

**Guarantees extend to the claims-paying ability of the issuer