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Monday, April 27, 2009

Now is the time to be Selling ANNUITIES!

Now Is the Time to Be Selling Annuities!

Headlines like these swamp my email box. Also the magic silver bullet offers for agents, advisors etc… also do. What does this mean for the buying public? First let me say that Annuities are one of the great planning tools available and as long as the proper suitability factors are discussed and reviewed it is something that every senior should know about!

The fear factor though has taken over; first Dateline NBC ran an incredibly one-sided and poorly designed program on annuities. Again, they went for the so-called sizzle and left out most of the facts. Not to mention they ran a fixed game as they had ringers in the show. They did not take a totally non-biased fully objective observation of annuities. But quite frankly, that would have been a VERY boring show and certainly wouldn’t have done anything for ratings. Misinformation is always more glamorous and between NBC and incompetent sales people there is plenty of misinformation to go around.

The greatest danger in today’s ever changing market place is incompetence. By basing your decisions about important financial vehicles totally with misinformation basically gives you no chance of making a smart decision about money. And, the market place is ripe with myth, innuendo and misinformation. You would hope that the media would simply stick with facts and try to help consumers simply weed out bad information. Unfortunately in the race for ratings and sizzle most media has joined the ranks of the purveyors of misinformation (and I use that phrase lightly). The Insurance industry is under some tremendous strain with their bond investment portfolios and these for the first time have created a very unique challenge to the Insurance industry that has long been the beacon of GUARANTEES!

Annuities are wonderful contracts that offer guarantees of principal, guarantees of lifelong income and many tax advantages such as tax deferral. Those guarantees have long been backed by the wonderful concept of legal reserves. Amazingly the irresponsibility of the Banking institutions has even jeopardized the sanctity of the golden goose of Legal reserves within the insurance industry (I will expand this thought in a future blog).

For the first time Annuity contracts will be subject to the law of supply and demand. Yes, there are actually insurance carriers that have to limit the amount of annuity premiums they make available this year. For that reason, it is more important then ever which companies one chooses to have a life long contract with. There are IMPORTANT questions that every potential annuitant needs to ask. Due to this incompetent advice is NOW MORE DANGEROUS then ever before. A flim-flam sales person can put your entire retirement income at risk with poor advice and a poorly designed annuity contract.

Yet, this does not mean you need to avoid annuities, on the contrary you need to look more closely at this financial tool then ever before. This is the ONLY financial weapon in the arsenal that deals in GUARANTEES! For that simple reason alone you need to review this option closely.
In review though you will need to look for totally objective professionals to help you weed out the BAD players in this market place. There will be a surplus of bad players and their sales forces will be legion. Yet in the midst of it all will be sound, true and objective advice. I would like to think that sound information and the best interest of the client will win out.