What Does Ken Fisher Think
About Annuities?
Ken Fisher’s perspective is a classic
example of why some financial advisors
don’t like annuities. I’m going to explain the reasons why. TESTING THIS THEME
I’ve mentioned Fisher Investments several times in my previous discussions, but today, I’m diving deep into their stance on annuities. If you’ve ever wondered, “What does Ken Fisher think about annuities?” then you’re in the right place.
Fisher Investments has a much larger marketing budget than I do, so chances are you’ve seen their ads if you’ve found me. I recently stumbled upon their page on indexed annuities, and let’s just say, it’s not surprising that Ken Fisher hates annuities.
Table of Contents
- Why Ken Fisher Don’t Like Annuities?
- Ken Fisher on Annuities: Three Main Points to Consider
- Alternatives to Annuities
- Best Annuities for Seniors: A Balanced Perspective
- The Cherry-Picked Data: Fisher’s Chart Analysis
- The Real Impact of Management Fees
- Retirement Planning: Annuities vs. Investments
- Conclusion: It’s Not Either-Or, It’s Both
Why Ken Fisher Don’t Like Annuities?
Ken Fisher’s perspective is a classic example of why some financial advisors don’t like annuities.
They claim to offer a balanced view on the pros and cons of indexed annuities, but how often do you think they actually recommend buying one? My guess:
Never.
This brings us to the question: “Why do financial advisors not like annuities?”
The answer often lies in their inherent biases and the financial products they offer. It’s worth noting that these biases can significantly impact the advice you receive.
Ken Fisher on Annuities: Three Main Points to Consider
Ken Fisher’s page on indexed annuities outlines three main points, which also happen to be some of the biggest index annuity complaints:
1. Lack of Liquidity
Ken Fisher argues that most annuities lack liquidity. However, this is a myth.
Annuities are often used for retirement income, RMDs, or discretionary spending. If you need more liquidity than an annuity provides, then your financial plan is flawed. It’s crucial to understand that liquidity needs vary from person to person, and annuities can be a good fit for many.
2. Fees: The Hidden Costs
Another point Ken Fisher makes is about the fees associated with fixed indexed annuities.
Contrary to his claims, basic fixed and fixed indexed annuities have no fees.
You only pay a fee if you opt for additional benefits like guaranteed income or death benefits. It’s essential to read the fine print and understand what you’re signing up for.
3. Surrender Fees: The Lock-In Effect
The last point is about surrender fees.
Fisher used to offer to pay these fees for people who wanted to exit a contract.
Ironically, he would then make them sign a contract committing to a long-term investment.
Sounds like a surrender fee to me! This practice raises questions about the transparency of Fisher’s offers.
Alternatives to Annuities
If you’re not convinced by annuities, there are other options. Market investments can be a good alternative if you have a long-term investment horizon and don’t need immediate access to your funds. But remember, these alternatives come with their own sets of risks and fees.
Best Annuities for Seniors: A Balanced Perspective
Annuities can be particularly beneficial for seniors who have a lower appetite for risk and need to use their money.
They offer a level of security and guaranteed income that market investments can’t provide. If you’re a senior considering your options, annuities are almost always a wise choice.
The Cherry-Picked Data: Fisher’s Chart Analysis
Fisher also presented a chart comparing the growth of different assets from 1998 to 2020.
The data is cherry-picked and biased, especially the hypothetical indexed annuity column. The numbers are purely fabricated and not indicative of real-world scenarios. It’s important to scrutinize such data critically.
The Real Impact of Management Fees
Ken Fisher charges about a 1.25% annual fee for managing assets under $1M.
This would reduce the final account value by nearly $140,000, a fact conveniently left out of his example. Always consider the long-term impact of fees on your investments.
A Little Story About Fisher Investments and Annuity Straight Talk
Retirement Planning: Annuities vs. Investments
The entire “hate annuities” approach lacks context for anyone of retirement age.
Annuities are designed for retirement planning and offer protection against several risks that come with retirement.
They can be a valuable part of a diversified portfolio.
Learn how annuities make money.
Conclusion: It’s Not Either-Or, It’s Both
Ken Fisher says you don’t need annuities, and by extension, you don’t need him either.
But the truth is, that both annuities and investments can combine to create a viable retirement plan. The choice is yours to make.
