Smart Investing: Getting Rid of a Bad Annuity

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Ok, I admit it—I am biased when it comes to annuities. My generally negative view is not based on my own experiences but those of clients and a good portion of my newsletter readers (even though their preferred investments are no load mutual funds and ETFs).

The stories I hear are very similar in that most people I have talked to complain about them in regards to performance, fees and ridiculous surrender charges.

My first question usually is: “Did you go out and buy this annuity or did someone sell it to you?” The moment of silence on the other end of the phone is a dead giveaway that the former didn’t happen but the latter did.

While annuities certainly have a place, most investors are not well informed, or are even being even misinformed, about the pros and cons of such a commitment. For example, one of my retired clients, who is traveling across the U.S. by motor home, called to tell me that at his last overnight rest stop, annuity salesmen were putting on a seminar for seniors and that many signed up. He did too, but changed his mind after discussing the presented information with me.

While this may be offending to those working in that industry, it’s worth noting that high up front commission can very easily compromise the integrity of a salesperson. My suggestion is that if you think an annuity is something for you, do your own research and buy one that has no surrender charges.

While some of my clients have an annuity with my custodian (Schwab), I have also heard good things about “Ameritas Direct.” I have no relationship with them, but you can find out more info at their site at:

However, if you’re stuck with a bad annuity, what can you do? While this is not my specialty, here’s an article by Kiplinger on “How to Unload a Bad Annuity:”

If you’ve had a good (or bad) experience with an annuity of any kind, feel free to comment. You can even do so anonymously, if you want to maintain your privacy.

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