Making the Decision to Buy Annuities
There are a lot of times when a person doesn’t make a financial move they should have. Every single person I talk to has a story about a missed opportunity. That’s not as bad as when someone makes a financial move they should not. In the world of annuities that happens too often and that’s the reason why so many negative opinions of annuities exist. If everyone made the right moves for the right reasons there would be no good or bad financial products. But we are human so that’s never going to happen.
About a week ago one couple came to me after just getting a new annuity contract and realizing it was nothing like what they thought. The salesperson didn’t disclose all the information and after looking at the contract and reading one of my reports they realized they were in for a long, low-yielding ride. All these guys asked for was protection from market risk and a relatively short time period with some liquidity if needed. Now they are facing a 30 day free look period and trying to decide if they should change plans.
I showed them the opposite type of contract that was exactly what they said they wanted. No bonus but much better growth potential and a time frame that was far less than a lifetime commitment. I ended up getting a lot of resistance that the previous salesperson surely never got. At the end of it I decided the best thing for these guys is probably a money market fund. For all I know they’ll keep that junky contract and join the ranks of people that hate annuities.
It really made me wonder why they ever bought an annuity in the first place. It’s the perfect example of people doing something they should not. As often as this happens it doesn’t happen nearly as often as people not doing something they should. Prime time for asset protection is right about now. With the market coming within inches of its all-time high once again I suppose the only thing not cooperating is interest rates.
Playing the interest rate game is more or less the secret to planning a successful retirement. It’s also the basis for the recommendations I make. If nothing seems quite good enough then consider the fact that several major economies in the world have negative interest rates. As bad as your options seem there’s a chance it could get even worse. With certain economic indicators starting to trend toward a recession there’s a strong argument that it’s more of a likelihood than a chance.
I’ve learned a lot from a close friend in Manhattan. He’s sharp guy who made a lot of money as an institutional swap trader on Wall Street. If anyone knows interest rates it’s this guy. He’s a professional at analyzing trends, reading charts and forecasting models. He has taught me a lot and given me the foundation for much of what I try to tell you all. This unique relationship is the reason why I do things a fair bit differently than most advisors.
I run my ideas by him to see if they pass the test. His critique and suggestions allow me to polish these ideas into what you see. If things change I’ll adjust so you can take advantage of those changes and stay ahead of the curve. Listen to me when I tell you not to do something. Give me time to explain it if you don’t understand. I’m here to help and I put more work in than most of you realize. The goal is not to sell an annuity to every person. The goal is to first keep you from making mistakes.
Making the decision to buy annuities needs to be first based on avoiding what doesn’t work. Understanding why one thing doesn’t work gives you a base of knowledge that will help you find what does work. I’m going to continue doing things my way because it’s what I believe. Pay close attention and at the very least you’ll avoid the potholes.
I’ll only be in the office for a few days next week before I head to the mountains for a fall elk hunt. If you’d like to chat about it then make an appointment and I’ll give you a call.
Enjoy your weekend!