"Some of the hottest selling financial products currently being sold
are called indexed annuities. They are often promoted as a way to
potentially earn double digit returns with no downside risk and no risk
of outliving your money. The insurance reps and supposed advisors that
sell them often prey on people’s fears of stock market crashes, unstable
economies and rising taxes. Anytime someone tries to scare you into
making a decision or evoke strong emotion to compel you to do something
you should BEWARE. Additionally, if something sounds too good to be
true it usually is. Our experience with talking to those who have
purchased indexed annuities as well as some of our own research has led
us to conclude that in most cases the returns are usually lower single
digit returns comparable to a bond return. Additionally, the lack of
liquidity and flexibility in accessing funds in the annuity often proves
inconsistent with many retiree’s income needs.
For more information on this subject we have provided links to two
articles that go into greater detail about indexed annuities. The first
is a FINRA Investor Alert. FINRA is a not-for-profit organization
authorized by congress to protect America’s investors and to make sure
the industry operates fairly and honestly. The second is from Fidelity
Investments, which operates a brokerage firm managing a large family of
mutual funds and provides fund distribution and investment advice along
with retirement services, life insurance and wealth management."
FINRA Investor Alert – Equity-Indexed Annuities: A Complex Choice
Fidelity – Indexed Annuities: Look before you leap
Thanks to Networth Advisory Group for this post. Check out their website and blog: http://networthadvice.com/net-worth-blog/
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