The Annuity Decision Tree

Is an annuity right for you?Step by step questions and answers our planner uses to help you decide which is right for youBefore you talk to your advisor, you need to understand the market price of what you are really buying. Annuity buying is like buying a car. Before you even step in the door of a car dealer, you better understand what you are looking for or you may NOT get what you want. The sales person is trained to guide you to the product they have to sell not necessarily what...
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Is an annuity right for you?Step by step questions and answers our planner uses to help you decide which is right for youBefore you talk to your advisor, you need to understand the market price of what you are really buying. Annuity buying is like buying a car. Before you even step in the door of a car dealer, you better understand what you are looking for or you may NOT get what you want. The sales person is trained to guide you to the product they have to sell not necessarily what you want to buy. They may steer you to the one they have over stocked, the one with the highest profit for the dealer, the one with poor quality ratings, the one with overpriced addons you don't want or the one with the most profitable financing. If you don't know what the real price of the specific vehicle is in your area, how can you negotiate and know you are not being taken? If you have not compared what other dealers have to offer in your area, how do you know how much leverage you have? All the same principles apply to financial services. In my experience running annuity sales for securities firms and banks, our customers did not know what they could have known to arrange the best deal for themselves. As a sales organization, your advisor and firm are showing you what they have to offer NOT what is "best" for you. You should know that their "best" is not the best for you. They can't offer you the best because they are in business to make a profit. They are biased. Our financial planner is on salary so there is no reason to tilt the presentation to one product. In fact, if a planner does NOT have 50% "NO annuity sale" each month, we know they are not providing the best advice. It is logical that not every financial situation MUST end in an annuity sale-or any sale. Logic also dictates that no-cost or low-cost is usually better for you because when it comes to annuities like most financials, it is better to shop like you would for "groceries, not perfume." That was the advice of Ben Graham who was Warren Buffett's teacher at Columbia.Today, retirees need to plan because the future is more than ever unpredictable.