Annuity Guys®

Annuity Rates, Features & Ratings: America's trusted annuity resource. Compare best options for hybrid, index, fixed, variable & immediate annuity quotes.


Helping You Create Great Results Your Retirement Deserves!



(217)753-1515
  • Home
  • About Us
    • About Us
    • Contact Us
    • Site Terms & Disclosure
    • Privacy Policy
  • FAQs
    • Most Frequently Asked Annuity Questions
  • All Annuity Guys Videos
  • Annuity Types
    • Best Annuity Reviews
    • Market Free™ Annuities
    • Choosing an Annuity
    • Deferred Annuities
    • Hybrid Annuity Choices
      • Hybrid Annuity Pros&Cons
      • Hybrid Income Riders
      • Hybrid Annuity Guarantees & Strategies
    • Fixed Annuity Choices
      • Fixed Annuity Performance
      • Better Fixed Annuities
      • Fixed Deferred Annuities
      • Fixed Rate Annuities
      • Fixed Annuity Alternatives
      • Fixed Annuity Pros & Cons
      • Fixed Annuity Negatives
    • Index Annuity Choices
      • Fixed Index Annuity Features
      • Fixed Index Annuity Performance
      • Better Fixed Index Annuities
      • Fixed Index Annuity Alternatives
      • Fixed Index Annuity Pros & Cons
      • Fixed Index Annuity History
      • Fixed Index Annuity Negatives
    • Immediate Annuities
      • Immediate Variable Annuity
      • Immediate Fixed Annuities
    • Variable Annuities
      • Variable Annuity Features
      • Better Variable Annuities
      • Variable Annuities Disadvantages
      • Variable Annuity Alternatives
      • Variable Annuity Negatives
      • Variable Annuity Performance
    • Pre-Issued Annuities™
      • Hybrid Annuities versus Pre-Issued Annuities ™
    • Annuity Glossary
  • Articles
    • How Do MarketFree™ Annuities Work?
    • Are Annuities Safe?
    • Living Benefits
    • FIA Performance
    • Beware of FIAs?
    • Annuities & Retirement
    • Annuities & Estate Tax
    • Rollovers & Annuities
    • Annuities & Tax
    • Charity & Annuities
    • The Lost Decade
    • Best Annuity Videos
    • Social Security Benefits
  • Calculators
    • Retirement Planning Calculator — Basic
    • Retirement Shortfall Calculator — Basic
    • Immediate Annuity Calculator & Quotes
    • Fixed Index Annuity Calculator & Fixed Annuity Calculator
    • Variable Annuity Calculator & Hybrid Annuity Calculator
  • Blog
    • Annuity Guys® Weekly Annuity Video Blogs
  • Get Annuity Guys Help
    • Request Annuity Guys’ Planning Help Today
You are here: Home / Archives for Financial Professionals

Is it Unfair to Compare Annuities to Investments

November 9, 2012 By Annuity Guys®

Is comparing annuities to investment choices a mistake? A recent Market Watch article stated that was just one of the three major errors made by both financial professionals and consumers when evaluating annuities.

Eric and Dick examine comparing annuities to investments in this weeks video review.

**Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

Three annuity mistakes to avoid

What not to do when evaluating annuities for retirement

By Andrea Coombes

If you’re comparing annuities to other investment products, you’re making a classic mistake—and it’s just one of three major errors that consumers and financial experts make when evaluating annuities, according to a panel of experts at a recent MarketWatch Retirement Adviser event in New York that focused on income strategies.

“Both immediate and deferred annuities have been shown to have a very positive role in an overall retirement-income strategy, but the deployment of these instruments is often hampered by some very fundamental misunderstandings,” said John Olsen, president of Olsen Financial Group, and author of a number of books on annuities, including “Index Annuities: A Suitable Approach.”
The panel, moderated by MarketWatch senior columnist Robert Powell, also featured Farrell Dolan, principal with Farrell Dolan Associates, and David Blanchett, head of retirement research at Morningstar Investment Management.
Mistake No. 1: Unfair comparisons

One such misunderstanding—and it’s often made by financial experts, Olsen said—is to assess the value of a variable deferred annuity as though all of its costs “are nothing but pure overhead.” That can lead consumers to view such annuities as unreasonably expensive. [Read More…]

Annuity Guys® Video Transcript:

Eric: Today we are going to talk about whether it is unfair or fair to compare annuities to investments.

Dick: Eric, I think that it’s the hardest thing in the world for all of us to stay off of comparing annuities to investments, and I think it is unrealistic to think that we would do any comparison; however, I think that’s where we get in trouble.

Eric: It’s the expectations game. So often when people come to us, they’ve been conditioned to talk about return, whether it be from a mutual fund^, savings account, whatever. Everything’s about return. What’s the return?

Dick: They spent their whole life accumulating this money so their focus has always been on that.

Eric: They are trying to figure out how can I get the biggest return rather than mitigating the risk necessarily with an annuity to get the biggest return in dollars, rather than return in rate.

Dick: What inspired us this week, reading this article by Andrea Combs that really gets into some of the things that we talk about on a regular basis; and that is why do we buy? Why do we choose annuities? There’s contractual **guarantees, there is cash flow, and that is what she really gets into, that there’s this transition that we go through that cash flow becomes king. Longevity of knowing that we’ve got money, no matter how long we live, and there is a third aspect which is maybe a little bit more parallel to investment, that is where you require secure level of growth, contractual **guarantees.

Eric: I like the idea of just saying it transfers the risk from me, as the investor or individual, to the insurance company. They are going to take care of doling out my allowance each month, hopefully, and that’s the income stream that I have confidence in. They’re insuring my future income stream, is how I look at it.

Dick: Past wisdom from the investment world has been that if we draw our portfolio down by a certain level, say 4%, 4½, 3½%, everybody’s got their own view of it, that somehow we can continue to do that and be invested. The last decade has shown us that that really can’t be relied upon.

Eric: In an era of 5% CDs, it’s easy to say, “I can pull of my 5% and never touch my principle.” If you looked today, if you can find a 5% CD . . .

Dick: It’s not there.

Eric: I could sell a few of those, if I could find a 5% CD. That world no longer exists, that safety, security aspect of getting those returns, necessarily. This is where if you need those returns that are a larger withdrawal than just pulling out your principle, and a lot of people do today, this is where annuity comes into play.

Dick: I was just going to say, again, talking about not being focused on the return. Unfortunately so many times folks, annuities are sold based on comparing them to investments, and especially the indexed annuity or the hybrid annuity where it’s stated that you’ve got upside potential to a downside risk; there is truth to that. The upside potential is pretty minimal, and the idea that it has outperformed certain investments, certain indexes, S&P 500 over certain time periods in history, it was ever intended to do that.

Eric: It’s not what they’re geared for. We’ve talked about it in the previous videos, in order for you to be happy, you look at the **guarantees. If you can be happy with what the **guarantees are offered through an annuity, then anything that you get above that . . .

Dick: It’s a pleasant surprise. It’s good news. You’ll never be surprised by an annuity by it going the wrong way. I have to qualify that a little bit. We’re talking more about fixed annuities here and not as much about variable annuity#. Because a variable annuity# is an investment, and yet, it does have some **guarantees.

Eric: It can have some **guarantees.

Dick: It can have, so there is some aspect about that that you have to say, “Maybe for some people, a variable annuity# may fit,” but again that’s a whole different discussion.

Eric: Sure. In her last point, she talks about annuitization, which is a really interesting aspect. We’ve talked a lot about hybrid annuities and the fact that you don’t have to annuitize necessarily, to get the same benefit that you would from annuitization. Her focus is on the stream that’s provided from an annuity.

Dick: For all practical purposes, we’ll just assume that her annuitization would also mean turning on income for life; a different terminology. We do find that with clients that . . . what would I call it, Eric? The depression mentality, where we can live off less so we’re going to, and yet, they’ve set this annuity up so that we can turn it on and turn on this income at a certain point of time and relax, enjoy what we have, and know we will never outlive our money. Yet we have these clients who have a tendency to hold back from that.

Eric: I think nobody wants to give up their principle. You worked hard and earned these dollars, nobody likes the idea of just . . .

Dick: Spending it.

Eric: You give it all to the insurance company and you get that allowance. That’s what really annuitization really is; it protects you on the income side. The income rider on these hybrid annuities does something very similar in a sense: Guaranteed income for life, but still allows you to get access. If anything is leftover, that can go on to your heirs. That’s, I think, the aspect about that type of annuity that’s really popular.

Dick: I think it helps people who wouldn’t normally annuitize to go ahead and take their income stream, because they know that they still have some access to the account value.

Eric: I think it’s really one of the things that we are finding really attractive right now because it does allow that flexibility. For people that are used to this return mentality that we’ve talked about, they still have that opportunity to hold on to those dollars a little bit. Not necessarily get the best return, but to get that income stream, have that safety/security.

Dick: Eric, when we talk about comparing annuities to investments, what’s the balance?

Eric: You have to look at the diversification. For me, when you’re looking at those two things, you have to look at protecting the foundation, and that’s where an annuity comes in. After that, hopefully investments can play a part in controlling for inflation and being out there.

Dick: Maybe a healthy way to compare annuities to investments would be in your own portfolio, in terms of what proportion of your portfolio do you want in security and safety for that income foundation or death benefit-type foundation as compared to what portion are you willing to put at risk?

Eric: Exactly. It’s to protect the foundation. How do you want to protect it? Are you comfortable protecting it in the headwinds that we have going on, or would you rather protect it with a rock-solid foundation?

Dick: I agree. Thank you, folks.

Eric: Thanks for tuning in today.

Filed Under: Annuity Commentary, Annuity Guys Video, Annuity Income, Annuity Returns, Annuity Safety, Hybrid Annuities, Retirement Tagged With: annuities, Annuities For Retirement, Annuity, Annuity Mistakes, Compare Annuities, Deferred Annuities, Evaluate Annuities, Financial Professionals, Investment, Investment Choices, Life Annuity, retirement

 

Empowering Annuity Reference Book

 
DOWN-LOAD NOW - FREE!
  • Annuity Guys Reference Book - 250 pages of Annuity Facts

  • "The New Retirement"
    Annuity Reference Book 
    Free Instant Download
  • Confidential - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.

 

  • Choosing a Hybrid Annuity

    Choosing a Hybrid Annuity

    Why are so many folks choosing hybrid annuities for their retirement?Let’s summarize the four key elements most retirees are looking for that make …Read More »
  • What are Hybrid Annuities?

    What are Hybrid Annuities?

    Hybrid annuities, also referred to as hybrid income annuities, are essentially a type of annuity contract that allows the account …Read More »
  • Smooth Market Volatility with Fixed Index Annuities

    Smooth Market Volatility with Fixed Index Annuities

    We all have heard the saying “what goes up, must come down” However, when it comes to your retirement portfolio …Read More »

Revealing Fun Video: Fiduciary Advisors Vs. Annuity Salesmen
MUST KNOW FACTS 90% of
ANNUITY ADVISORS AVOID TELLING!
  • *FIDUCIARY RETIREMENT REVIEWS
    Second Opinions Improve Retirements
     
    "For Your Retirement's Success"
     Choose a *Fiduciary Advisor who gives you Full Disclosure of Cost & Selection.
     
    Material Fact 1:
      About 90% of advisors ARE NOT REQUIRED by law to do what is best for their clients!
     
    Material Fact 2:
     Fiduciary Advisors ARE REQUIRED by law to do what's best for their clients! 
     
      Hence, clients of a fiduciary can know that their advisor chose the highest legal standard required by law to work strictly for their highest good.
     
     We estimate Fiduciaries are less than 10% of total U.S. financial service providers. Fiduciaries are held to the highest client legal standard of financial planning and investment advice.
     
     The other 90% are sales oriented advisors, brokers, bank reps, registered reps. & insurance agents, selling products on a much lower suitability legal standard, not necessarily what's best for their client!
     
       Fiduciaries also must disclose conflicts of interest that could potentially bias their advice, such as; selling products that pay them higher commissions having higher fees or costs, and their lack of investment product access limiting their client's opportunities, to name a few.
     
    Choosing your advisor can have
    "The Largest Single Impact on
    Your Retirement's Success or Failure"


  • Never Place an IRA in an Annuity? Wrong!

    Never Place an IRA in an Annuity? Wrong!

    One question that seems to come up on a regular basis is “should I use my IRA/401k dollars to purchase …Read More »
  • Can Annuities Create Your Highest Retirement Income?

    Can Annuities Create Your Highest Retirement Income?

    Which of these two statements about retirement income do you find more appealing?My retirement income is contractually **guaranteed to meet …Read More »
  • Can Annuities Eliminate or Reduce Retirement Failure?

    Can Annuities Eliminate or Reduce Retirement Failure?

    The biggest challenge to a successful retirement is living too long and running out of money – regardless of how …Read More »
  • Will a Collapsed Dollar Harm Annuities?

    Will a Collapsed Dollar Harm Annuities?

    Jack in CA asks; If the dollar goes into a nose-dive,  how safe will it be to own an immediate, fixed or …Read More »
  • What’s Your Best Retirement Income Strategy?

    What’s Your Best Retirement Income Strategy?

    Retirement encompasses many joys, fears, and unknowns. One of the biggest fears according to our field observations is running out …Read More »
  • Tax Free Annuities – Limited Supply!

    Tax Free Annuities – Limited Supply!

    Tax Free annuities are entirely possible with some planning and knowledge about Roth conversions.One of the biggest negatives continually re-hashed …Read More »
  • Choosing an Immediate Annuity

    Choosing an Immediate Annuity

    In the golden era of career based retirements, everyone could count on a company paycheck for life in retirement. Unfortunately, in …Read More »
  • Do I need an annuity with or without a pension?

    Do I need an annuity with or without a pension?

    If you are asking this question rest assured you are in good company. Today’s retirement landscape is the result of …Read More »

View Our Newest Videos! Subscribe Now
  • Annuity Guys Videos - Annuity Answers
  • New Annuity Guys Videos
    Our Entertaining & Informative
     Saturday Morning Video Blog
  • Timely Retirement & Annuity Issues - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.


  • Are Annuities Good or Bad?

    In and of themselves, annuities just like any other investment are not technically good or bad. An annuity can, however, …Read More »
  • Who Should Not Buy Annuities?

    Who Should Not Buy Annuities?

    Are You One of These Five Profiles who probably should NOT buy an annuity?Are you an Aggressive Investor with an Appetite …Read More »
  • Can Annuities Eliminate or Reduce Retirement Failure?

    Can Annuities Eliminate or Reduce Retirement Failure?

    The biggest challenge to a successful retirement is living too long and running out of money – regardless of how …Read More »
  • Choosing a Great Retirement Advisor for Financial Planning

    Choosing a Great Retirement Advisor for Financial Planning

    Remember the yellow page ads from years ago – “Let your fingers do the walking, it’s a snap!”The yellow pages …Read More »
  • Give Money to an Internet Annuity Advisor!  Are You Crazy?

    Give Money to an Internet Annuity Advisor! Are You Crazy?

    We don’t work with crazy people (okay, maybe a couple, LOL), but we do work with a lot of sincere folks who …Read More »
  • Top Five Reasons Not to Buy an Annuity

    Top Five Reasons Not to Buy an Annuity

    What are the top five reasons not to allocate funds to an annuity? Based on many years of experience and an informal office survey the top five reason …Read More »
  • Can Annuities Solve the Retirement Challenge?

    Can Annuities Solve the Retirement Challenge?

    Why does it feel like everyone is talking about annuities these days? Could it be due to the approximately 10,000 …Read More »
  • How to Get Rid of a Bad Annuity

    How to Get Rid of a Bad Annuity

    Do you think you made a bad decision on an annuity purchase in the past? Do you think you’re stuck due …Read More »
Get Newly Released Annuity Guys® Videos on Saturday Mornings
  • Annuity Guys Videos - Annuity Answers
  • New Annuity Guys Videos
    Our Entertaining & Informative
     Saturday Morning Video Blog
  • Timely Retirement & Annuity Issues - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.


  • Why are Hybrid Annuities so Popular?

    Why are Hybrid Annuities so Popular?

    What made fixed index annuities and hybrid annuities the fastest growing annuity type on the market according to a LIMRA …Read More »
  • Are Annuities Good or Bad?

    In and of themselves, annuities just like any other investment are not technically good or bad. An annuity can, however, …Read More »
  • Is One Million in Annuities or Securities Enough to Retire On?

    Is One Million in Annuities or Securities Enough to Retire On?

    If I had a million dollars, I’d be rich… but, would I be rich enough to retire for 30 plus …Read More »
  • Exposing an Advisor’s Annuity Bias!

    Exposing an Advisor’s Annuity Bias!

    Would you allow your general practitioner to perform heart bypass surgery on you in their office? Since, after-all, he or …Read More »
  • Annuity Undo Buttons – Using Your Free Look!

    Annuity Undo Buttons – Using Your Free Look!

    Most big ticket purchase come with a warranty or a **guarantee – including annuities. Did you know that all annuities …Read More »
  • Never Place an IRA in an Annuity? Wrong!

    Never Place an IRA in an Annuity? Wrong!

    One question that seems to come up on a regular basis is “should I use my IRA/401k dollars to purchase …Read More »
  • Why You Should Ladder Annuities…

    Why You Should Ladder Annuities…

    When your financial advisor starts to talk to you about laddering, realize that they are talking to you about using …Read More »
  • Can Annuities Protect Your Spouse if You Die First?

    Can Annuities Protect Your Spouse if You Die First?

    All kidding aside, when you stated your wedding vows, you likely stated something similar to “I take you to be my …Read More »
  • Understanding Immediate Annuities

    Understanding Immediate Annuities

    Today, people are living longer than ever before. While the idea of living a longer (and hopefully healthier) life is …Read More »
  • Are Annuity Surrender Charges a Deal Breaker?

    Are Annuity Surrender Charges a Deal Breaker?

    The last time you bought a new car, how much of a factor in your purchase decision was the vehicles …Read More »

 

Empowering Annuity Reference Book

 
Start Reading Now - Instant Download
  • Annuity Guys Reference Book - 250 pages of Annuity Facts

  • "The New Retirement"
    Annuity Reference Book 
    Free Instant Download
  • Confidential - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.

 
Comprehensive Site Terms and Disclosure | Privacy Policy | Copyright © 2023 Annuity Guys®


  ** Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Annuities are not FDIC insured and it is possible to lose money.
Annuities are insurance products that require a premium to be paid for purchase.
Annuities do not accept or receive deposits and are not to be confused with bank issued financial instruments.
During all video segments, Dick and Eric are referring to Fixed Annuities unless otherwise specified.


  *Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping Annuity Guys website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this educational Annuity Guys Website. He still maintains his insurance license in good standing and assists his current clients.
Annuity Guys' vetted and recommended Fiduciary Financial Planners are required to be properly licensed in assisting clients with their annuity and retirement planning needs. (Due diligence as a client is still always necessary when working with any advisor to check their current standing.)



  # Investors should consider the investment objectives, risks, charges and expenses of a variable annuity and its underlying investment options. The current prospectus and underlying prospectuses, which are contained in the same document, provide this and other important information. Please contact an Investment Professional or the issuing Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.


  ^ Investors should consider investment objectives, risk, charges, and expenses carefully before investing. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.


  ^ Eric Judy offers advisory services through Client One Securities, LLC an Investment Advisor. Annuity Guys Ltd. and Client One Securities, LLC are not affiliated.