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I guess it's time to vent a little. Why do companies and agents claim that the returns on these annuities are based off the S&P 500 with no downside risk? The company takes the money and invests almost all of it into bonds with only a small amount into options. With a cap of anywhere from 2-4 percent that is hardly S&P returns. According to Morningstar the S&P 500 had the following returns as of 3/17/15, 1 year 13.89% 3 year 16.35% 5 year 14.60% and 10 year 7.95%. I have used IA's (4 to be exact) when people have absolutely no risk tolerance and trying to beat bank CD rates. Most of the time I will allocate the money into a gov't or intermediate bond funds which have vastly outperformed my IA's without the long surrender charges. I don't think I would have a problem with them if they where sold for what they are, which is a low return safe investment. I believe if they continue to use the words S&P 500 in literature they should be regulated as a security.
I had to spend over two hours with a client that was going to move $250,000 from a bond fund (which did a little over 6% last year) into an IA because he thought he can get market returns without risk. Absolutely no mention was made of the caps or LONG surrender charges. BTW the guy did not have a security license and I feel was not qualified to talk about securities like he did.
Sorry about the rant. Time to have a cold one.
I had to spend over two hours with a client that was going to move $250,000 from a bond fund (which did a little over 6% last year) into an IA because he thought he can get market returns without risk. Absolutely no mention was made of the caps or LONG surrender charges. BTW the guy did not have a security license and I feel was not qualified to talk about securities like he did.
Sorry about the rant. Time to have a cold one.