Beware Deadbeat Annuity Agents
This might sound harsh but from time to time I need to vent about some of my colleagues in this business. Good advisors will agree with me so I’m not worried about offending anyone. There are a lot of deadbeats in this business. This goes much deeper than the guys going for an easy sale but it is related. The people who don’t know how to adequately explain a product are certainly no good at servicing it and basically disappear once the commission check has been cashed. Take it or leave it but I’ve been pretty good at noticing trends over the years.
In the past few weeks this came to a head for me. Most of the people I talk to either own an annuity or have been pitched one. Recently I haven’t been all too impressed with what I see. I suppose that this whole problem is what got me started on this path more than 20 years ago. When I didn’t know anything I’d see the complaints from people and do specific research on each topic to determine that much of it wasn’t true, at least not in a general sense. I learned early that if you didn’t like some feature of a contract then you can usually find one that doesn’t have it.
The biggest issue I’ve seen is that a lot of people don’t even know what they have. When someone asks for advice I first need to know what contract they have. You’d be surprised to know that plenty of people put a significant portion of their retirement money into an annuity but one or two years down the road can’t even name the company it’s with. I blame the agent for that because there was clearly no education that came before the sale. And I’m a nice guy so more than 10% of the business on my books is something I never got paid for. Years ago one client decided to give me half of the business and a local guy the other half. Within two years I was servicing both contracts.
I get calls all the time from people wanting me to help them understand how their annuity works. My first comment is always the same. “Where’s the guy who sold it?” Common responses are that he never calls, isn’t in the business anymore, or is pretty new to it and doesn’t really know. My favorite is when the salesman gets mad at the client and shames them for asking so many questions. These are all deadbeats and you should stay away from them.
Just this week a random lady called because she got a letter from a security firm claiming that there was a data breach at her insurance company. She wanted to know if it was legit and rightfully so because this situation sends up a red flag for potential fraud. Her agent said he didn’t know anything about it and told her to contact the insurance company. She had no idea how to do that because she never got any instructions. That guy is a deadbeat and you certainly don’t want to work with an agent like him. I had something similar happen several years ago and took a different approach. I contacted the company directly and emailed all affected clients so let them know the situation had been resolved. It didn’t take long and saved all of us a little stress.
Most of what I hear comes from people who aren’t meeting expectations with a contract they own. Anyone who has been selling indexed annuities for a while also sold some when rates weren’t all that high. Some of us offer solutions and others pass it off as no big deal. The deadbeats will be quick to replace a contract and get a fresh commission but they never offer other ideas that don’t involve extending surrender terms. My clients that have contracts like this have either just let it go because it’s not that big a part of their portfolio or they have maximized the free withdrawal to ladder funds to another higher rate investment. It’s not that hard to be available to those who make us a living but a lot of advisors don’t do it.
I actually had a call recently with someone who has a whole pile of annuities that have done just fine. I don’t like the companies but the contracts seem to be working well given the time period they were purchased. This person needs to take distributions from the contract to manage tax liability in the years ahead but the agent offers no ideas. I can’t understand for the life of me why an agent who made a ton of money off one client won’t come forward and offer assistance. There is absolutely no reason this person should have called me.
Earlier this week I got a call from an advisor who had a simple question. We chatted for a few minutes and I gave him my best explanation. He’s retiring in a few years with his biggest concern to figure out how to compensate someone for servicing his clients. I’m not sure what his solution will be but his head is in the right place. It’s unfortunate but some people are only in this business to make money. The reality is that it’s our responsibility to provide service for the contracts we sell. It’s not a legal obligation but just good common sense in my opinion. There are a lot of professionals doing it the right way and they know I’m not talking about them. I’m not the only one available so learn to ask the right questions so you can stay away from the deadbeats. It’s going to make retirement a whole lot easier.
Have a great weekend…
Bryan
Watch Episode 190: How To Spot Deadbeat Annuity Agents
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Last Updated on August 15, 2025 by Bryan Anderson
