Stop Hating Annuities—They Love You Back
For years, the financial world has made headlines by criticizing annuities. This, of course, drives consumers toward alternative products that are not annuities.
Why do Ford dealers criticize Toyotas? Because they don’t sell them. Why do competitors often criticize another company’s product? Usually because they are selling a competing brand. That’s just business.
As a consumer of financial products, it’s important to be cautious when a company dismisses a product they don’t offer. It seems obvious, yet it happens all the time.
It’s also strange to dislike a financial product that remains incredibly popular with the public. Everyone wants a lifetime of guaranteed income—and that’s exactly what an annuity provides.
Understanding Annuities: Retirement Income for Life
Annuities are not investments, so comparing them to stocks, mutual funds, or ETFs is like comparing apples to oranges. Every investment disclaimer states the same thing: You may experience a loss. Investing carries risk.
You will never see the word guarantees in the same sentence as mutual funds, stocks, ETFs, or other managed accounts. But with annuities, guarantees are fundamental.
The right client portfolio varies. Some investors may have an all-stock portfolio, while more conservative, risk-averse clients may rely on cash and annuities.
Why Do Investment Managers Really Hate Annuities?
The answer is simple: annuities reduce their income. If your portfolio manager charges a 1% annual fee, they earn $10,000 per year on a $1,000,000 portfolio.
However, if half of your portfolio is allocated to an annuity that provides guaranteed retirement income for life, the manager only earns 1% on the remaining $500,000—cutting their income in half.
Modern Lifetime Guaranteed Annuities: The Facts
- No Annual Fees – Modern annuities do not have ongoing management fees.
- Refundable at Death – If you don’t receive every penny you contributed, the remaining amount is refunded to your beneficiaries.
- Lifetime Income Protection – If you live to 110 or beyond, the insurance company must continue making monthly payments, providing retirement income for life.
How to Get the Best Annuity Plan for You
To remove income risk from your Smart Financial Longevity Plan, you need to work with a comprehensive financial advisory firm that is licensed to manage both investments and annuities. Otherwise, you may be missing out on the financial security that annuities offer.
When structured properly, annuities can provide the financial love you need—a guaranteed, stable income for life.