I am a licensed banker and as interest rates have gone up, i have sold several wealthy bank clients large fixed annuities funded with nonqualified dollars. They love the guaranteed rate, term, and tax deferral features. I even had one roughly 65 yr old guy that was tired of his retirement being
subjected to market risk so we put his funds into a 5 yr qualified annuity at 5% and he is happy. I have had FAs tell me they would never sell anyone an annuity, that it is a selfish move. What's your take? (these fixed annuities have all been feeless).

Edited to say all of these annuities were sold to folks over 60

This post was edited on 2/3/24 at 11:34 am

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Posted by TDTOM

Member since Jan 2021

15000 posts

Posted on 2/3/24 at 11:38 am to Tig3rman

quote:
I have had FAs tell me they would never sell anyone an annuity, that it is a selfish move. What's your take? (these fixed annuities have all been feeless).

That is their choice. However, it doesn't mean annuities aren't suitable in certain situations.

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Posted by meansonny

ATL

Member since Sep 2012

25895 posts

Posted on 2/3/24 at 2:55 pm to Tig3rman

quote:
I am a licensed banker and as interest rates have gone up, i have sold several wealthy bank clients large fixed annuities funded with nonqualified dollars. They love the guaranteed rate, term, and tax deferral features. I even had one roughly 65 yr old guy that was tired of his retirement being
subjected to market risk so we put his funds into a 5 yr qualified annuity at 5% and he is happy. I have had FAs tell me they would never sell anyone an annuity, that it is a selfish move. What's your take? (these fixed annuities have all been feeless).

Edited to say all of these annuities were sold to folks over 60

Simply put, the annuities are lazy.

Someone wants a 5 year guaranteed return, they can most likely find something better than an annuity.

The annuity props up the return with huge penalties for early withdrawals. I've even seen huge withdrawal fees when an annuity is not fully surrendered and the withdrawal amount is below the surcharge limit. The insurance company is going to get their money out of the annuity.

That said... if you don't want to look for a better return and you don't mind huge surrender penalties and withdrawal fees, then by all means. Take out the annuity if simplicity is what you want (i.e. a sales rep dying to sell you one and is willing to make the process painless).

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Posted by slackster

Houston

Member since Mar 2009

85382 posts

Posted on 2/3/24 at 3:01 pm to Tig3rman

quote:
I am a licensed banker and as interest rates have gone up, i have sold several wealthy bank clients large fixed annuities funded with nonqualified dollars. They love the guaranteed rate, term, and tax deferral features. I even had one roughly 65 yr old guy that was tired of his retirement being subjected to market risk so we put his funds into a 5 yr qualified annuity at 5% and he is happy. I have had FAs tell me they would never sell anyone an annuity, that it is a selfish move. What's your take? (these fixed annuities have all been feeless).

I don’t mind fixed annuities, particularly for qualified money, as an alternative to bonds and/or CDs. They have a place in some portfolios.

I know people may find this shocking, but humans are emotional and do not follow sound financial advice all the time. As a result, fixed annuities can be a reasonable compromise.

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