Annuities: Equity-Indexed Annuties: Knowing When You're Financially Vulnerable
33022
Finance > Investing
May 24, 2007
voudrie12
Annuities: Equity-Indexed Annuties: Knowing When You're Financially Vulnerable
It's hunting season out there, and unfortunately, you're the target! The financial services industry is on the hunt for your account and they know when you are most likely to take their bait. Knowing when you are most vulnerable is the first step in keeping you and your nest egg from being snared. First, you are vulnerable to financial advisors when you retire and get the biggest check of your life. Suddenly you're faced with the most important financial decision of your life. The security of your golden years will be determined by your choice of advisor and investment. Advisors know how emotionally difficult this time in your life can be. They also know it's a chance to get their hands on $250,000, $500,000, $1 million or more. Commission-based advisors, depending on the investments they recommend, can 'earn' between $25,000 and $50,000 by simply convincing you to invest $500,000. Now you know why they are so serious about their hunting! Advisors are taught the two ways to motivate investors to take action are fear and greed. For those nearing or in retirement, fear is used. They try to convince you that unless you buy their hot new product, you could lose tens or hundreds of thousands of dollars and you won't have enough income to make it through your golden years. Retirees feel surrounded by countless advisors, each wanting to bag your hard-earned savings. Many retirees think the advisors they talk to have the retiree's best interest at heart. They don't realize the tremendous, hidden conflicts of interest in the advisors' recommendations. In all of the confusion, it's easy for an investor to be overwhelmed and make a choice they will live to regret. I don't want this to happen to you! The number one mistake retirees make is buying a high-commission annuity product. You don't see the commission, what you do face are years and years of surrender penalties that can result in you getting back less than you invested. The advisor makes money regardless of whether you do and you are left holding the bag. And forget about service after the sale--the advisor will have moved on to bag the next trophy. Secondly, you're most vulnerable when those long surrender charges or back-end loads expire. That's when your money is once again up for grabs. Here come the hunters again. They won't help you mange your money but they are meticulous about keeping track of when it is up for grabs. Advisors will bait you by explaining how their investment is better than your existing one--but it is all just an attempt to get the sale. If your existing penalty-free investment isn't meeting your needs, why step back into the frying pan by allowing yourself to be talked into moving money to a different high-commission annuity product? Don't take their bait. Third, you are vulnerable any time your money can be easily transferred to a new investment. The commission advisors make by taking clients from other advisors is second only to the money they make bagging a retirement distribution. They are trained to make your existing investments look bad so they can motivate you to make a change. This is why advisors sell products like annuities where they, in effect, get paid 7-10 years worth of commission up-front. They have the option of only receiving 1% per year (then the client doesn't have any surrender penalties), but what happens if another advisor steals you away? Instead, they take the 6%-10% up-front commission option. That way, they aren't financially at risk if you choose another advisor. Any time an advisor is recommending an investment with a surrender penalty, they are looking after their interests, not yours. Commission-based advisors get paid to bag new money or reinvest old money. Their working hours are spent uncovering the three times you are financially most vulnerable. Don't be taken in by slick seminars and fear tactics. If you're in or near retirement, have money coming due, surrender penalties ending, or you have investments that can be moved without fees, be aware. The hunters are lurking. Don't become their prey.
Nationally-syndicated financial columnist and Certified Financial Planner Jeffrey Voudrie provides personal, in-depth money management services and advice to select private clients throughout the USA. He will answer your financial question FREE at http://www.guardingyourwealth.net
send email to voudrie12
Write a Review
Add to My Favorite
Refer it to Friend
Report Article
Other links owned by this user
Don't you just love government red tape? This time the bureaucratic process has given us a real doozy--it's called the Health Insurance Portability and Accountability Act or HIPAA for short. And the unintended affects of HIPPA could have a dramatic effect
Category:
At some point you will need to make changes to your investment portfolio. Often, investors and their advisors make wholesale changes all at once. But that's not really in your best interest. Read on to find out how to successfully adjust your portfolio.
Category:
Rising interest rates are another reason to avoid Equity-Indexed Annuities. If you are retired or near retirement, don't let yourself be talked into purchasing an Equity-Indexed Annuity. If you do, it could easily be a decision you regret for many years t
Category:
If you're getting ready to retire with a large IRA rollover, or your current IRA account is nearing the end of any surrender penalties, chances are you'll be pitched this product. So this week I'm going to reveal more secrets about the truth behind the va
Category:
You may be paying too much for health, life or long-term care insurance! I know because a life insurance company recently tried to charge me double. My experience may save you money and keep you from being turned down the next time you apply for insurance
Category:
Equity-Linked Certificates of Deposit are a safer, low-cost alternative for those who must have an Equity-Indexed Annuity type of investment. These little-known investments allow you to participate in the growth of the market index while your principal is
Category:
One email in particular recently caught my eye. And it wasn't from being flamed by irate insurance agents (I got plenty of those!), or emails from thankful consumers, pleased the public is being warned about equity-indexed annuities' pitfalls.
Category:
Equity Indexed Annuities (EIAs) have become the hot product of late. I believe you can easily find other alternatives that will bring a better return, without locking up your money or levying hefty surrender penalties.
Category:
One of the greatest financial challenges faced by today's retirees is the rising cost of health care. Prescriptions, insurance premiums, doctor's office visits and hospital stays are all increasing more rapidly than inflation.
Category:
Everybody wants to find the secret to investing on Wall Street. But the truth is, you don't have to be a genius to be a successful equity investor
Category:
While you're making your New Years' resolutions, don't forget to give your financial house an annual tune-up. As the old saying goes, an ounce of prevention is worth a pound of cure, and few adjustments now could save you thousands of dollars, not to ment
Category:
Clyde and Claudette's financial future is now ruined! Make sure it doesn't happen to you. These tips will help you protect yourself from the time-bomb that devastated them.
Category:
In our culture, the main goal of retirement is to put our working days behind us and devote ourselves to the pursuit of pleasure. Many find, though, that continuing to work in some form keeps them active and gives their lives purpose. Changing your concep
Category:
Getting a new mortgage? Watch Out! Mortgage brokers (even at banks) get paid on commission. As interest rates rise, they must become more creative to make a living. Many are honest, but there's plenty that won't blink an eye at taking advantage of uninfor
Category:
One of the biggest mistakes I frequently see investors make is needlessly losing control of their money. Any time you pay a hefty commission or face surrender penalties in order to get YOUR money you lose control.
Category:
Are you a gambler? Do you like to play the odds? Here are some real-life odds for you to consider: 90% of people become incompetent before they die!
Category:
Living wills have received a great deal of attention due to the recent Terry Schiavo situation. Because her end-of-life wishes were in dispute, family members battled each other in the courts over her treatment and care.
Category:
Financial advisors have been preaching the use of portfolio diversification to reduce risk for years. Unfortunately, the way most do it leaves your portfolio vulnerable! Read on to find out how to properly diversify your portfolio.
Category:
Recent legislation in Congress may make it even more difficult for seniors to qualify for government-paid long-term care coverage. If you don't take action now, you may be setting you and your family up for a Long Term Nightmare!
Category:
Perhaps the only area outside the financial world where performance is so closely measured is the Olympics. Competition is fierce, and with events measured to the hundredths of a second, athletes go to great lengths to gain even the slightest edge. The Ol
Category:
Other links at Finance > Investing
Debates on internet trading chat rooms have been going on for as long as the internet itself has been in existence...
Category:
I was shocked when I found out I actually lost money on the bonds I invested in
Category:
Try not to fall prey to these online investment scams that have bilked investors out of millions of dollars
Category:
Learn about the foreign currency exchange market and why it has become so popular with traders
Category:
In a "University town" there is usually a heavy demand for rental housing. A savvy investor would do well to take advantage of this situation!
Category:
Site Sponsor
Directory Statistics
Articles: 68252
Categories: 501
Yahoo Entertainment
