Investment Companies Now Recommend Annuities

It’s a day I never expected to come so it’s pretty big news for the retirement community.  In the past, investment managers across the country have been pretty well split on the use of annuities in retirement planning.  The more open minded have been willing to admit that there is value in stability but plenty of holdouts refuse to concede and would rather use alternative investment products to produce income and manage risk.  It’s the type of environment I thought would always exist and to some extent it will.  But the tide has shifted dramatically in the past year and it certainly caught my attention.

Just about every management institution has annuities but they are rarely used and options are quite limited.  Take it for what it’s worth but in my experience, the only time an annuity has been offered by an advisor at one of these companies is when there is a threat of money leaving their management system.  “Oh, we sell annuities too” is something I’ve heard on dozens of occasions, if not more.  My response to that should be obvious.  Why didn’t they offer that in the first place?

A lot of people who find this website do so because someone else introduced them to annuities.  Most times it’s because of a salesperson or a dinner invitation but I’ve never heard the recommendation coming from a major brokerage firm.  It all changed a few months ago when I talked to the first person who started researching annuities because a Fidelity rep told him to take about 20% of his portfolio and purchase a guaranteed income annuity.  He was shopping for a low cost investment manager for his retirement assets and Vanguard was the other contender.  Fidelity offered him a few options and Vanguard thought it was a good idea but told him he’d have to find the annuity elsewhere.  I think the recommendation came as a surprise so he started searching and found me.

After looking at the numbers I determined that an annuity was absolutely the right approach.  For a small portion of assets he’d have income for life and market fluctuations would never affect his lifestyle.  The result would be far more portfolio growth that would completely eliminate any other retirement concern a person might have.  The solution to a happy retirement is always more simple than most people realize.  I’ve been fighting against these companies and the journalists they sponsor for a darn long time.  If I’ve got the major firms on my side then the only opposition will be the independent holdouts that are too stubborn to change their ways.

Fidelity isn’t the only one that has changed.  Schwab has done the same thing.  They’ve always had it but used it only as a last resort.  I’m telling you the story of the first one I heard and there have been several others since then. Hell, even Edward Jones is pushing fixed annuities (MYGAs) to some clients so maybe we really are looking at a new frontier.  Don’t forget that retirement asset distribution is a science that is relatively new.  There has been no consensus but seeing the shift from major firms is bigger news than many of you realize.  I don’t mind saying that maybe I was right all along.

Sure, rates are better so using annuities has more obvious benefits but the fundamentals haven’t changed.  The correct solution is the same no matter the environment and that’s why academic research on the topic has been settled for decades.  Large brokerage firms know they’ll lose the money if they don’t get out in front of it.  Regardless of the motivation of others, it has been satisfying to sit in this position for the past couple of years.  It’s as if 20 years of work has prepared me to capitalize at this point in time.  Don’t let that lesson escape you because it could be your time to capitalize too.

Have a great weekend!


Podcast Episode: Investment Companies Are Now Recommending Annuities

Last Updated on January 12, 2024 by Bryan Anderson