New Garbage Article on Annuity Advisors

[DHK]

Before the financial advice, check out the adviser - Omaha.com: Money

What kills me, was that this article was promoted by The American College on their Facebook pages. I wrote this response:

What a slanted article!!! Why is my Alma Mater promoting such garbage?

1) Variable annuities DO have fees: M&E, rider fees, and mutual fund sub-account management fees. I have little doubt that all these fees were disclosed at the time of proposal and sale of said annuity.

2) The article does state that there was a lifetime income benefit... which (in nearly 100% of the case) would provide income REGARDLESS of the fees charged on the cash balance. There is very little reason NOT to add such a rider to an annuity.

3) That "evil 7% surrender charge" is typically waived upon being admitted to a skilled nursing facility. Yet this article conveniently doesn't point that out. Also, that surrender charge is ABOVE the 10% free withdrawal amount that is typically built into nearly ALL annuities. This would "skew" the lifetime withdrawal benefits and require a re-calculation, but there wouldn't necessarily be a surrender charge.

4) The recommendation of an annuity is always smeared in the media as an unsuitable recommendation. Yet there are always MATERIAL facts omitted from such press. The media always focuses on 'fees' and 'locking money up'... when they don't have a clue about overall financial planning strategies.

5) In regards to a fiduciary standard, I would like to see the MEDIA adopt a fiduciary standard as to what they report. They get to say whatever they want, and because it's in print, it has more "authority" and "credibility" over what professionally trained and credentialed advisors recommend?

6) Did this article mention that with the additional guarantees available on variable annuities that it helps preserve their assets and income stream in the event of market declines? While tactical asset management is a risk-based solution, it cannot GUARANTEE against a stock market decline.

I'm amazed that my Alma Mater is promoting this junk.

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The only part of this article that mentioned The American College was this little paragraph:

Investors can’t simply accept an adviser’s title at face value. For example, certified financial planners, a professional designation with some of the more rigorous curriculum and experience requirements, pledge to put their customers’ interests ahead of their own when providing advice — and can lose their designation if they don’t.

"But even they do not have to act as fiduciaries if they are just selling an investment without including any advice," said Craig W. Lemoine, a program director at the American College of Financial Services in Bryn Mawr, Pennsylvania.

 

[Charpress]

Journalists know nothing, as usual, about the subject they report on. Most are willing to take their cue from the same usual suspects that nearly ruined the country, i.e. the Merrill Lynches. Let me enlarge a bit on what you are saying about variables in particular, because it applies across the board.

The broker lobby worked overtime to make sure that such nonsense disclosures like "Only as good as the financial strength and claims paying ability of the underwriting insurance company" were foisted on the public.

Why do I say nonsense? Because it is a scare tactic that on it's face might make sense to someone who knows little of the insurance industry. In fact, can anyone name a situation where a widow lost all her money because her husband's insurance carrier couldn't pay? This would apply to life insurance contracts or annuity contracts. And lets not forget that life contracts and annuity contracts come from the same normally respected companies -respected when it's insurance, not so much when it's an annuity.

When I run into someone who has an objection to an annuity and repeats the "only as good as..." crapola, I ask them "Do you have any life insurance?" The answer is usually "Yes". I then ask "Do you have doubts that they will pay up when you die?" And the answer is always "No". Then "Do you realize that annuities are just contracts from the very same companies that issued you a life contract?" If the variable contract has a life rider, then the beneficiary is going to be paid regardless of what the market did to the underlying value of the investments.

Not to mention that nearly all (if not all) states have provisions to deal with the situation of people losing money because a company goes under. But, of course, we're not allowed to bring that up.

 

[Justin Bilyj]

When I run into someone who has an objection to an annuity and repeats the "only as good as..." crapola, I ask them "Do you have any life insurance?" The answer is usually "Yes". I then ask "Do you have doubts that they will pay up when you die?" And the answer is always "No". Then "Do you realize that annuities are just contracts from the very same companies that issued you a life contract?"

That was a good piece of advice there...

 

[DHK]

For want of a vowel, the fiduciary was lost | BenefitsPro

There’s nothing wrong with that. In fact, that’s the safer approach, since “adviser” has a specific meaning.

For some unknown reason, the editorial board of the New York Times has taken the opposite view. They only use the word “adviser.”

This recently resulted in a laughably ironic headline meant to promote the virtues of using a fiduciary adviser rather than a non-fiduciary advisor.

The article, titled “Before the Advice, Check Out the Adviser,” alludes to non-fiduciaries not acting in the best interests of clients.

It even accuses a well-known “too-big-to-fail” brokerage firm of touting themselves as “Trusted Advisers” (note the spelling). The Times even links to the broker’s webpage. Nowhere on the broker’s site could you find the word “adviser.” They only used the term “advisor.”

At least Merrill Lynch gets it. Too bad the New York Times doesn’t.

Apparently calling yourself a "Financial Advisor" is not the same as calling yourself a "Financial Adviser".

Ironically, this article is brought to you by the letters "E&O".