Index Annuities DEBUNKED!



“Index annuities are a danger to your financial health.” — Clark Howard “We don’t recommend an allocation to annuities for ANY portion of your portfolio.

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8 Replies to “Index Annuities DEBUNKED!”

  1. Pretty funny how the annuity slayer gets destroyed on his own thread. Sounds like your pushing percentage based fees over commissions. Time and the uncertainty of the markets are the only variables on which route is more expensive. Annuities can be good or bad just like everything else in this world. You have to first ask what the purpose or goal of the individual is. I have seen diversified portfolios get hammered over the past decades as well as annuities being sold for all the wrong reasons. So, the answer is, it always depends on the situation. You are failing the individual if you are trying to compare an annuity to an investment portfolio. They do not belong in the same conversation. People cant take you serious when you generalize entire industries like this.

  2. 1. I am biased, and so are you, and so is everybody else in this world, period. Bias can come from commissions as you state, but it can also come from receiving recognition, gaining popularity, or any number of things. So, your bias may come from something other than a commission being generated by youtube (I assume you are not making money on this as it only has 2,300 views in 3yrs) but you, and the insurance salesman alike are bias. Finally on this point, how in the world did you buy a computer to post to youtube, or chose an internet provider for that computer to use the internet if buying something from salesman is ALWAYS bad?
    2. You accuse insurance companies and salesman of comparing apples and oranges, so to compare apples to apples you a 75/25 portfolio. Well, I hate to tell you but your comparison is not even close to fair or "apples to apples." Why, you are comparing a product (the indexed annuity) which has ZERO risk to the clients principal (not a good or a bad thing by the way to have zero risk, it is just the facts of the product) to an investment portfolio of stocks and bonds. So you compare a non risk products to products that have risk (regardless of how much risk the client can lose money, period)? That is like saying a CD at the bank is bad b/c it only yields 2% when your investment account (regardless of the makeup of that acct) did 5%! This isn't apples and oranges it is apples and watermelon!
    3. To expand my previous point. At the highest level of "making money on your money" or investing the client or person has to decide if they want to risk their principal to try to get a return or not (again, not a wrong or right answer here as it is all up to the person and their appetite for risk, and the outcome they want with their money). If you don't want risk (CD, Gov't Bond, Fixed Annuity) you have to be ok with a time commitment. Does that make a CD, Gov't Bond, or a FA bad b/c they have a time commitment? Of course not, but it doesn't make them good either! It is just a fact of the products. So if the client doesn't want risk with their money, but they want some return they have to decided which of the 3 products above makes the most sense for them.

    ANYBODY, salesman or NOT, that throws out a blanket statement that ANY products are good or bad has no idea what they are talking about regardless of what product (securities or insurance) they are talking about. A product cannot inherently be good or bad until it is applied to a certain set of facts related to the person buying it. PERIOD.

    Are Annuities good or bad? NO
    Are ETF's good or bad? NO
    Are Mutual Funds good or bad? NO
    Are (insert any financial product you want in here) good or bad? NO
    ETC…. you get the point? IT DEPENDS ON THE PERSON AND THE OUTCOMES THEY ARE LOOKING TO ACHIEVE!!!!!

    I am curious how you will respond to logic, and I didn't argue in hyperbole, nor use pure rate of return as my reasoning for why one thing is good and one thing is bad (which is just idiotic).

    Have a great day! 🙂

  3. Wow, just took 20 minutes to make this account to comment, first let me say that nobody is collecting any HUGE commission from debunking your debunks, it would be nice to pickup some commission for proving your "theory" very biased, but that is not the case. Now etfs are great, if you can play the market yourself and are comfortable doing so, as well as have time to make up any losses, rock on with your bad self. That being said, seniors don't have the time to makeup from a 2008 replay, that is why safe investments like index annuities are around. Lets say you lose 10% in the market, you now need a bigger return like 12% to get back to your quota. My humble opinion, brokers are the "commission hungry" bad guys you should be referring too. No matter what happens you better believe they are still sleeping well knowing they're collecting a certain percent keeping their client in the high volatility market. DIVERSIFICATION, don't ever put all of your eggs in one basket, yet you are encouraging people to put there whole nest egg in stocks, bonds, and securities in your 75/25 deal. Lastly, what's the exit strategy in the market, a 70 year old senior is just going to keep pulling there 4 5 6% out a year until it goes down to 0 and they have nothing and all of the sudden there relying on their children and medicaid to keep them afloat? These new income riders are a nice tool to give people the peace of mind that years down the road, they will never run out of money no matter what happens to the market. Please prove me wrong in a manner that is unbiased, I would love to hear it, because you my friend are biased. There is good and bad in everyone and everything, and the right thing to do is to let your client know the ups and downs of EVERY option out there, and decide if what you have to offer is right for them.
    Best regards,
    Unbiased agent

  4. 1. Clark is off the subject. 2. The Index Annuity numbers are "net the fees". 3. The Index Annuity numbers are "not an illustration" but tracking actual clients account. 4. Can Clark give us annualized returns since inception of a clients actual account? 5. Sounds like Clark is a competitor (you don't ask a Ford dealer what he thinks about a Chevy). Clark's analogies is DEBUNKED!

  5. I forwarded your video to a finance professor with a university in Canada who makes it his life's work to educate & research real life issues like retirement income, risk & the role that annuities play in addressing the needs of retirees.

    I received the following response from him this morning… "The way real science progresses, is that the researcher submits his or her detailed work to anonymous peer-review, which objectively examines the claim, criticizes the methodology and then forces the author to modify, refine or retract their claim. The end result is published in scholarly journals and disseminated to the world via the media and press. This exact process has been followed by many of the scholars who have argued in favor of allocations to annuities — especially for retirees. Producing inflammatory videos on YouTube isn't science. Its self-promotion."

    Following is an example of a peer-reviewed study published on the real world returns of fixed index annuities: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1482023

  6. My financial adviser is a fiduciary. My wife and I are just retired and he took 1/3 of all our saved money and bought Allianz 360 fixed annuity so that we can withdraw money. Is this bad?

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