I’ve worked at a few different firms, some where index annuities were very popular and others where they won’t even allow them on their platform. People who can sell them think too much of them, and those who can’t will criticize them too much. The truth, as it often is, is somewhere in the middle.

They’re not some end all, be all solution to every problem, but they’re a tool. Most folks don’t understand them, but most folks don’t understand their managed brokerage account either. The truth is, like many financial products/solutions, they’re only as good as the financial advisor who is using them.

Unfortunately, index annuities and annuities in general often attract unscrupulous reps because of their low licensing threshold.

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Posted by meansonny

ATL

Member since Sep 2012

26005 posts

Posted on 3/29/22 at 7:36 am to slackster

I dont like them because they come off as some marketing screw job (have you seen the brochures?)
They are built to have a solution to everything.
1) no downside risk
2) market"ish" growth
3) tax deferred growth
4) lifetime income stream
So they push a conversation into every corner.

But the level of pitfalls and gotcha's have left us in a thread where they are great for people who never need the money and they sure do blow the pants off the CD market (people who dont care about the money).

I have seen surrender charges 8-15 years. That isnt a financial instrument. It is a marriage where the girl is ugly as sin for 15 years and you are just gambling that the guarantee will look better than all of the hot women a decade and half to 2 decades down the road. But dont get a divorce before 15 years if it appears to be a bad marriage because we all know that divorce is a worse financial decision.

Sell them to your hearts content. FAs are my customers and i have heard horror stories about how the rates of return get eaten up with surrender charges when life happens and how withdrawal charges were never disclosed when customers try to access their own money (eating into that effective rate of return). But they sure are a lot better than CDs if you guarantee return of premium.

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