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 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 ...
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The Simple Money Point
Do You Know What An An Annuity Actually Does?
No loss of principle
Guaranteed income for life
As safe as a CD, but greater returns