Annuity Essentials

In its most basic form, annuities are insurance that provides an income stream either for a fixed period of time or for the rest of your life. Sounds pretty straightforward, right?

The trouble is that annuities are often sold and not bought. Consumers are pushed into ill-fitting products because that's what the broker is selling that month. When shopping for an annuity it is essential to be an educated consumer.

The Fiduciary Rule

The financial industry was put on notice in 2015 that the landscape was going to change. A major overhaul was proposed by President Obama on Feb. 23, 2015: "Today, I'm calling on the Department of Labor to update the rules and requirements that retirement advisors put the best interests of their clients above their own financial interests. It's a very simple principle: You want to give financial advice, you've got to put your client's interests first."

The DOL’s definition of fiduciary demands that retirement advisors act in the best interests of their clients and put their clients' interests above their own. It leaves no room for advisors to conceal any potential conflict of interest and states that all fees and commissions for retirement plans and retirement planning advice must be clearly disclosed in dollar form to clients. Without this rule in place, we're back to the "wild, wild west" in the annuity world, which can lead some salespeople to make unsuitable recommendations and use high-pressure sales tactics. 

The number of letters the DOL received that opposed a delay to enact the new Fiduciary rulings.

The Department of Labor (DOL) fiduciary rule, was originally scheduled to be phased in from April 10, 2017, to Jan. 1, 2018.

It never came to be ...

Family Dynasty Advisors offers annuities with no commissions!

The Simple Money Point

With all that said, an annuity can sometimes have a place in a retirement plan. But the definitive answer comes down to your particular circumstance. To figure out if you need one, we recommend reaching out to discuss your personal goals. Mike Caffey, our Certified CPWA® follows the fiduciary standard - making recommendations that are always in your best interest, not our own.

Do You Know What An An Annuity Actually Does?

Most potential clients we encounter do not understand what annuities are, and those who believe they know what an annuity is are typically still confused. The public misunderstands due to the media's perpetual distribution of inaccurate information and marketing initiatives. Marketing of annuities comes in several different forms that vary by type of annuity.
  • No loss of principle

  • Guaranteed income for life

  • As safe as a CD, but greater returns

Be Smart With Annuities

One must ensure that an annuity is not only attractive and suitable but meets their goals, objectives, and risk profile. It's essential to consider the most critical element of an annuity: the right to receive a lifetime stream of income. Annuitizing your annuity holdings can make them a more valuable tool in your retirement planning.

Here are 6 things you need to know about annuities:

Bottom Line

Annuities can offer flexibility in how you save for and receive money in retirement. It all comes down to understanding that there are several different types of annuity products designed to address a specific need or life stage. And remember, the best way to explore how they might complement your investment strategy is to work with your trusted financial consultant.