Helping People Avoid Terrible Annuity Advice
I’m not afraid to say that this is probably the best retirement planning website available. We’ve got technical information along with real case studies and stories that show you what’s relevant and what’s not. There is good information elsewhere but a lot of it comes in dictionary style terms that make it dry. I bring it to a personal level and am proud of all the work I’ve done on your behalf to make things as easy as possible. Used the right way, you will empower yourself to make the highest quality decisions for retirement based on reliable information without bias.
You are free to take your time making these important decisions. I can’t say you’ll get the same treatment elsewhere. Too often I talk to people who are rushed through the process. It’s either because the advisor just wants to make the sale or they read something from you that suggests you might need to make a quick decision. In both cases there’s a high likelihood of getting something that won’t work optimally for your retirement. Last week I gave you an example of the former and this week I’ll talk about the latter. Either one of these couples has a short-term option that will buy them time to consider all the possibilities.
The couple I’m going to talk about today is up against a deadline. One person has an ESOP and it’s common that these employer plans have a short window to get the money out. An inexperienced advisor will use this deadline to push them toward a long-term commitment. They had talked with some other advisors and they all did just that. Each had tried to get them to immediately move their money to a place where the advisor would have control over it. When we first talked, I got the idea that they felt some pressure to get things done quickly.
All of the advisors missed a simple step that would have taken the pressure away from the situation. I didn’t ask specifically what any of the other advisors had recommended because I already knew it was grounded more in greed for a quick close than it was based on the couple’s needs. After a few questions I could see that an income plan was probably the first major issue they needed to address but there was otherwise a bit of indecision as to how the money would be invested going forward. An ESOP holds the money in company stock for years so there’s no real investment portfolio to match. Someone who has one of these has to start from scratch.
The younger person in the couple is delaying social security for a few more years so the biggest gap in income comes at the beginning. After both people collect payments, their income gap drops to a modest $1000 per month. Given the amount of money they had to work with they have no need to worry and no reason to hedge any type of risk. They have all the options at their disposal but we have to deal with that deadline first. If they engage me in further discussions this will make a good case study and I can share more variables at that time. But it’s possible I won’t ever talk to them again.
All of the previous advisors missed something very simple. I don’t know if it was out of greed or ignorance but let’s give them the benefit of the doubt and just assume none of those guys are very smart. An ESOP is pre-tax, kind of like a company pension without the income benefit. All they have to do before the deadline is open up a traditional IRA and transfer the funds there first. From that point they have all the time in the world to educate themselves and decide together what they like best. I’m really surprised no one else told them it was possible. I certainly am not going to waste my time throwing a sales pitch at them. Relationships are an integral part of planning so I prefer to work on that part first and begin to build trust.
Considering the amount of money at play, I can think of a lot of different sales pitches these guys would get and all of them could probably be justified. An annuity guy might take the initial income gap (the bigger number), and try to sell an annuity that would cover that gap with lifetime income. An investment manager might tell them that an annuity isn’t necessary and they will get more growth out of the stock market. You could make an argument for either but neither one is optimal, nor do they take into account what the couple wants.
Getting into a hurry only increases the chance of making a mistake. Sometimes we have to do it but most of the time there’s a simpler middle ground. Last week a couple found intermediate safety inside a money market fund in their 401(k)s and avoided a long-term commitment that they didn’t understand. This week it’s a couple who can do something similar with an easy transfer that provides much more time to figure things out. Helping you avoid terrible advice is pretty easy. Get in touch with me if you’ve got someone putting the pinch on you.
Have a great weekend!
Bryan
Watch Episode 195: Helping People Avoid Terrible Annuity Advice
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Last Updated on September 19, 2025 by Bryan Anderson
