Fixed Indexed Annuities
As I’ve stated in a few different places on this website, a tool that ALL advisors need to know about and use appropriately in a financial plan for clients (even Fee-Only advisors) is a Fixed Indexed Annuity (FIA).
Why FIAs? Because they can have the following characteristics:
–100% principal protection (money never goes backwards due to negative returns).
–Positive gains in a stock index are locked in every year (minus dividends).
-A guaranteed rate of return (accumulation value) between 5-7% depending on the product (non-walk away value that is used for the next bullet point).
-A guaranteed income for life you can never outlive (without having to annuitize).
-A free long-term care benefit.
After reading the above bullet points about FIAs, can you give me a reason any advisor, even a Fee-Only advisor, shouldn’t know about these products and use them when appropriate for their clients?
The obvious answer to the question is there is NO good reason any advisor shouldn’t know about and be using these products when appropriate.
FYI, the vast majority of these products (and most of the good ones) pay some form of a commission to the advisors using them.
Because Fee-Only advisors who have sworn a cult-like oath to never making a commission, in 20 years I’ve never seen one recommend an FIA to a client (and I can count on one hand the number of Fee-Only advisors who know anything about FIAs).
It really defies logic that any advisor should refuse to learn about and use a protective wealth-building tool with the above listed characteristics. This is the reason I decided to create this website (to put consumers on notice of the limitations and biases of Fee-Only advisors).
Learn more about FIAs
You can also click on the following to watch a brief overview video of what I call Safe Money tool #2 (to learn about what I call Safe Money tool #1, click here).
Roccy DeFrancesco, JD
Author of Bad Advisors: How to Identify Them; How to Avoid Them