Safe Investments and Annuities — Another View

Many people are seeking safe investments and only safe investments. That’s understandable given the events since 2000 and how unprepared many people were for them. The interest in safe money certainly is helping annuity salespeople.

Here’s an alternative view. Keep in mind that I regularly advise people use annuities in their retirement portfolios. But I don’t recommend only annuities. And I recommend certain types of annuities in certain situations. There’s no one-size-fits-all investment. Beware of the financial professional who is selling a product instead of advice and recommendations. The linked piece gives you the other side of the discussion.

I think the whole idea of using fear-mongering as an annuity sales tactic is reprehensible, which is what I’m guessing this guy is doing.  The pitch often goes something like this:

Fed up with the volatility in the stock market?  Tired of the guys on Wall Street making all of the money?  Invest for peace of mind and protect your principal.  Call us.

So what’s wrong with this?  Far too often the annuity or insurance product being sold carries high ongoing expenses, onerous surrender fees, and returns that often don’t look all that great when you “peel back the onion” and take a hard look at the underlying product.  This pitch is common for Equity Index Annuities, a product that prompted even FINRA to post a warning page on its site.