Fidelity’s Annuity Recommendation

I hope no one misunderstood me a couple weeks ago when I pointed out that major investment firms like Fidelity are now recommending annuities.  Those companies have always had access to annuities but typically only used them as a last resort.  Higher rates make the benefits more obvious and I think it’s good that we are a little closer to a consensus because it will make things easier for you.  In short, I applaud Fidelity’s willingness to make insurance products a bigger part of their retirement planning strategies.

As mentioned before, I’ve talked to several people in the past few months who have had similar experiences with Fidelity so I’m gonna share some numbers this week to show how I compete to give everyone the best deal.  This is a quick and easy example with just a few things that need to be explained first.  Fidelity will have limited annuity options because of the corporate structure of the company.  Sometimes it will be the best option and other times it won’t.  That’s why you need to shop around so you can get the most for your money.

Immediate income annuities pay within one year and deferred income annuities offer income that can be delayed for several years.  Fidelity will be more competitive in immediate income situations but their limited selection has not been very competitive for deferred income.  One person told me recently that she purchased an annuity from Fidelity and was wondering if she should have done more research to find a better deal.  It is not worth second guessing yourself in that case because Fidelity will always give you a contract from a very strong insurance company.

The case I’m sharing today has to do with deferred income.  A couple in their early 60s wanted to set aside some money to generate income in five years.  I shopped the market and came up with the best product in very short order.  They wanted a baseline income of $1500 per month and I found that Midland National could do it for $196,000.  Fidelity offered two recommendations, one from Guardian Life and another from Integrity Life.  Both are excellent companies.  I started my career as a Guardian agent and have used Integrity for income cases in the past.  My search for the best annuity deal included both of those companies and I had already found them to not be in the ballpark.

Either of the other two companies would have charged about $233,000 for the same income stream.  We were able to use Midland and save the couple over $37K which is not a small difference.  It’s about 16% cost savings and to be able to still get an A+ company makes it an easy decision.  I’m going to go into much greater detail in the podcast and even share the quotes from each company.  There’s a fair bit of difference between the types of contracts but the bottom line is the guaranteed income.

This is often but will not always be the case.  I can usually beat the income quotes from Fidelity and I can sell products from any of the annuity companies they use.  That doesn’t mean everyone has to do business here but saving money on retirement income should be important to everyone.  At the very least shop around a bit.  Even if all you do is confirm that you already have the best option you’ll still be able to make the commitment with more confidence.

Check out the podcast for more detail…


Podcast Episode 122: Fidelity Annuity Recommendations

Last Updated on January 26, 2024 by Bryan Anderson