More Advice From the Mainstream
Comments and questions from the blog posts give me valuable feedback so I can refine my recommendations and create new ideas for retirement planning strategies. Some comments are thoughtful, inquisitive and insightful while others leave me scratching my head in confusion.
After last week’s newsletter we received a call from another advisor who accused me of only trying to sell 7-year annuity contracts so I could sell another contract in seven years. Now I didn’t specifically mention that in last week’s post so he must have been reading some of the past stuff and decided to focus on a minute detail.
First of all, the main objective of this website is not to sell an annuity to everyone who signs up. The goal is to provide information and useful retirement strategies that help people find value in the various products and financial vehicles available.
Second, when I do offer recommendations I put a fair bit of explanation behind it. So focusing on the end result while ignoring the process of analysis that it took to get there is fairly short-sighted. My fifth-grader has to do better on her homework than that.
I try to make things easy for you. Over the past several weeks we’ve covered some simple topics that have technical implications.
We talked about how interest rates over different terms indicate different levels of economic certainty and dictate how you should approach the allocation of safe assets. Short and long term rates are nearly identical right now so staying more liquid and flexible with a shorter commitment makes sense to me.
Then I gave you a retirement planning checklist that gives you a step-by-step list of considerations that need to be made when planning for retirement. The point of that is to give you something useful no matter who you do business with. It illustrates the fact that planning for retirement is a much more simple process than many advisors make it out to be.
And finally, last week we brought you a common question from a retiree and the standard type of advice you might receive from the average advisor. Most of you are here because you’re in a typical situation and it helps to compare different plans and see what others are doing who have the same concerns.
None of this specifically states a belief that an annuity is the only way to get something accomplished. Different people choose unique ways to solve problems. I happen to believe that annuities have clear advantages over other assets and I clearly explain my point of view. None of it means you have to agree with me and you are free to choose any strategy that you like best.
As for how I recommend annuities, 7-year contracts are the best value proposition in the market. Terms for that time period are as good as or better than terms for longer periods. I wrote an entire blog post explaining the fundamental analysis behind it. Why go longer if it offers no additional benefit?
Shorter is always better and I actually use several contracts that are as short as five years in term. I also like three to five year fixed annuities when appropriate for a given situation.
When I put these contracts into a plan I have proved over and over again that you can produce more income and accumulation in retirement with the proper strategy. I keep the details close to the vest. It’s my intellectual property and free information has its limits. Without my help that means you have to connect the dots but I’m trying to make it as easy as possible.
The advisor who called was obviously not able to do that. I’m concerned for his clients but that’s not my problem or yours.
Here’s the deal: would you like to buy a 12-year contract with a bonus, income rider and annual fee that takes 20 or more years to break-even?
Or, would you rather buy a 5-7 year contract with no fees inside a strategy that protects assets and increases net worth in retirement?
What happens after seven years? Well you can keep the contract, buy a different one, move the money somewhere else or buy a motorhome and come visit me in Montana. It is going to depend on what the market looks like at that time and I have no way of knowing. It will always be your money so you can do whatever you like. But if I create a plan that works well, of course you’d be likely to continue doing business with me.
If not, you are fee to do whatever you want. If you buy an annuity from me I want it to work so well that your retirement is as easy and care-free as possible. The motivation goes no deeper than that.
As always you can call or email if you have any questions. Just let me know how I can help.
All my best,