Arbor Wealth Management's Annuity Rescue Workshop
The Five Questions You Need Answered

After working with clients for more than 20 years, I can definitively say that the number one "investment" people tell me they regret making is buying an annuity contract. And although the basic premise of an annuity, using portfolio assets to create a steady income in retirement, is a good idea, Wall Street and insurance companies have twisted an originally simple concept into a complex, murky system where the investor is usually the last to benefit.

As a fee-only, fiduciary firm, Arbor Wealth Management has never and will never sell annuities. Why? Because when you buy a variable annuity, most investors have no idea they are paying exorbitant fees, subjecting their assets to the highest level of taxation, taking on interest-rate risk and inflation risk and receiving no preferential tax treatment at death all while locking up their assets in a contract that even the salespeople don't fully understand.

If you can't answer any of the questions below (or didn't know to ask them), we welcome you to reserve a seat at our annuity rescue seminar or call 850.608.6121 to schedule a private, complimentary consultation. It's your money, you deserve to know.   — Margaret R. McDowell, ChFC®, AIF® 

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Question 1 - Why did i buy this annuity contract?

Annuity salespeople are well-trained, what investor doesn't like hearing the terms "guaranteed never to lose money" or "safe, conservative income for life"? But like most things in life, if the promises sound too good to be true, they usually are.

According to an industry study published a few years ago, less than 5% of variable annuities are ever annuitized, meaning all the "guarantees" an investor has been (over)paying for never get utilized. If you need income in retirement, there is almost always a better (and cheaper) way. 


Question 2 - what fees am i paying?

Most variable annuity owners have no idea they are paying exorbitantly high fees to own annuity contracts. Mortality and expense fees, variable sub-account fees, guaranteed income benefit riders, guaranteed death benefit riders, long-term care insurance riders, administrative fees - they can add up very quickly. And regardless of how well the variable sub-accounts in your contract perform, those fees are still assessed every day. 

To make matters worse, fees on variable annuities are usually calculated on an aspirational contract balance that you can only achieve if you follow all of the terms in the contract, meaning the fees are charged on a total higher than they actual real value of contract.


Question 3 - Who Is Managing My Investments?

Generally speaking, you are. Surprised? In most cases the annuity owners don't know that they are responsible for making variable sub-account allocation changes, and very rarely have they ever actually changed the allocations in the contract.

Most annuity contracts only have 15 to 20 variable sub-accounts (also known as mutual funds, which come with their own layer of fees) to choose from. And to make matters worse, some contracts only allow annuity owners to re-allocate their assets among those limited options once a year. 


Question 4 - Can I Get My Money Back?

Once most investors understand the exorbitant fees they're being charged and the limited investment options they have in their annuity contract, their next question usually is, "Can I get my money back?" And the answer is yes (unless you have annuitized the contract) but not without some huge handcuffs, gotchas and penalties.

If you want your money back before the contract's surrender period is up, you'll pay a surrender fee. If you were sold an IRA annuity and you withdraw your government-mandated required minimum distribution (RMD), you could possibly invalidate the riders you're paying such high fees to get. And to make matters worse, once you invalidate the riders, you can never take advantage of them...but you'll keep paying the fee!


Question 5 - What Are My Options Now?

There's an old saying, to the carpenter who only owns a hammer, every problem looks like a nail. When confronted with the facts above, most brokers and annuity salespeople offer the only option they have, another annuity with promises of better returns, lower fees, and more incentives. If those options are available to you in a new annuity contract now, why didn't you get sold that annuity in the first place? 

Our advisors have worked with clients all over the country for more than twenty years to educate them on the real facts about annuities. And as fiduciary investments advisors (a standard of care that variable annuity salespeople would have a very difficult time achieving), we are required by law to always act in our client's best interests. That's why we never have and never will sell our clients annuities. 

It's your money, you deserve to know.

P.S. - Do You know the commission You Paid your annuity salesperson?

If you bought a $1,000,000 variable annuity, you probably just put the salesperson's child through a year of Harvard. With commissions ranging from 5% up to 15% for some complex variable annuities, there's a reason why annuity companies have to charge you high fees, penalize any withdrawals from the contract and lock up your money for years - they have to recoup the commission they paid the salesperson!

We're all for people making money, but we are forced to ask, what have you gotten for paying such a high commission? Active portfolio management, on-going holistic financial planning from a CFP®, estate planning advice from a Florida licensed attorney? Probably not. Instead, you probably got a phone call around the 7th year you owned the contract. Why? Because that's when the salesperson can sell you another annuity.