The Annuity Paradox
January 9, 2023 by Sheryl J. Moore
I initially thought this article, The Annuity Paradox, was pretty balanced.
I mean, Financial Planning Magazine isn’t wrong in their “parsing the mortality lottery” section. I did actually LOL on the annuity comparisons against different car models.
And I have to concede that there are some “very complex” annuities out there. (But no one mentions that there are a lot of very simple annuities too?)
However…
I hope that Lynnley Browning takes note of the fact that there are not annuities that have commissions that “can run as high as 10%.” The highest commission on a deferred annuity IS 9.00%, but the lowest commission is 0.60% and the average commission is 4.75%. I hope she also realizes that this is a one-time commission, paid by the insurance company (not the client), while the agent is expected to service the annuity for an average 7 year period. If annualized, this falls far short of the typical charge for AUM, which is paid directly by the client.
I am also a little embarrassed that she used Annuity.org as a resource for this article. They are a lead generation website, used to gain information for the purpose of selling structured settlements. They have an incentive in producing negative, inaccurate propaganda on annuities. No bueno.
I noticed a slew of inaccuracies and negative bias in this piece- from generalizing VA charges as features of annuities in general, to using Ken Fisher as a credible resource on the products, to mischaracterizations of the typical annuity purchaser.
Perhaps next time, a fact checker would be useful? -sjm