Buyer Beware! Part I

| April 18, 2018
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Don’t you wish that investment products had the yellow alert stickers that many consumer products visibly display? Certainly, as trends pop up in the market there is a need for caution. In this regard, I would like to discuss annuities which had been traditionally boring products for decades.

Annuities serve a fundamental role of providing lifetime income to the investor. To me, annuities became attractive when rates on fixed annuities captured the high interest rates of the late 80’s and early 90’s and produced compelling lifetime income streams for many of our retired investors. After the “Dot-Com” era and the bear market beginning in 1999 into the early 2000’s, annuities caught our interest by developing riders that, effectively, “shifted” market risk relative to income and death benefit values from the investor to the insurance carrier of these contracts. These products have continued in some manner but with varying degrees and methods of “shifting” investment risk.

Annuities are legal contracts that must be obligated within contract stipulations. The contracts cannot be modified or abandoned by the insurance carriers. Instead, what we see are offers coming out from the carriers to clients to change their current contract for another that may offer certain advantages, mostly in the sense of income stream. It isn’t too far flung to suggest that many of these proposals are NOT in the best interest for the majority of clients. For some clients, due to a change in their circumstances, needs or objectives there may be a reason to review the proposed terms and conditions.

We want to urge you to contact us immediately once receiving anything that appears to be an offer and caution you against accepting any proposals or taking advice that may be biased since many of these carriers will pay a commission to an advisor who induces a client to surrender their current contract for another. We will objectively discuss these proposals with you and focus on your specific situation in order to determine the validity and benefits for you and in regard to your goals.

As always, it has been our mission to put our clients’ interests first and we are committed to doing so each and every day. Thank you again for your business and your loyalty and best wishes to all of us for a happy, healthy and prosperous 2018.

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