re: Pros and cons of fixed index annuities.

As a FA.... a very rare set of circumstances would make fixed rate annuites a suitable investment choice.

To protect principal you are sacrificing:

(1) Upside potential

(2) Purchasing power - even with a COLA rider... inflation is going to eat into it.

(3) Liquidity - high surrender charges

If a client was risk averse, had a sizeable retirement, and wanted to place a portion of the fixed income allocation into a fixed index annuity then it MAY be suitable. Rising rates are going to make the bond market a mess for the next few years.

That's a lot of IFs. The advisors that love to sell these things typically have a Series 6 and not a Series 7. High commississons make these a favorite.

The biggest risk perceived risk is the market when in reality it is a 30+ year retirement (you or spouse) that sees you outliving retirement savings.

In my humble opinion, focusing on high quality dividend paying companies provides inflation-protected income and asset appreciation without locking up liquidity.