Why Do So Many Financial Advisors Hate Annuities?

The Annuity Man

The originators of the "I Hate Annuities" mantra are mostly financial advisors that have their own agendas when it comes to managing client money.  Whether is just a lack of education or an actual hidden revenue agenda, saying that you hate all annuities is like saying you hate all restaurants.  It makes absolutely no sense.

Annuities are transfer of risk contracts that are issued by life insurance companies.  They primarily solve for 4 things.  The acronym I use to remember those 4 goals is the word P.I.L.L.

P stands for principal protection

I stands for income for life

L stands for legacy

L stands for long term care/confinement care

If you don't need to contractually solve for one or more of those 4 items in the P.I.L.L., then you do NOT need an annuity of any type.  In my opinion, annuities should never be purchased for stock market type growth potential.  Fixed Index Annuities (FIAs) are commonly pitched for market growth, but they are a fixed annuity (not a security) and designed to produce CD (Certificate of Deposit) type returns.  Variable Annuities (VAs) have a small argument for market growth, but your internal separate account (i.e. mutual fund) choices in the policy are always limited.  Pure market growth strategies should never have limitations, in my opinion.

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