Annuity Evaluation

Annuities are often promoted as safe, income-producing products that can assist you in securing a comfortable retirement.

However, with some due diligence and research, you will likely find that annuities are complex and fraught with pitfalls. In our view, these products are seldom in investors’ best interests and can actually make achieving your long-term investment goals more difficult.

Fisher Investments does not sell annuities. Why? We believe almost anything you can do with an annuity can be done better with other investment vehicles. We have worked with countless investors who were sold annuities that did not meet their needs. Annuities are often complicated products that promise many things, but their long-term outcomes can be disappointing or downright dangerous.

Common Pitfalls of Annuities

  • Layers of Fees
  • Inflexibility
  • Limited Growth Potential
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Layers of Fees

Some annuities come with complex, layered fees. You may pay a fee for the base contract, an administrative fee, a fee for investing in mutual funds and a fee for an optional guaranteed lifetime withdrawal benefit. These fees can add up and substantially lower your returns.

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Once you purchase an annuity, accessing your money may be difficult if you need it sooner. If you face an unexpected expense, you may incur costly surrender fees that could endanger your long-term goals.

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Limited Growth Potential

Annuities can protect you in downturns, but they can also prevent you from fully benefiting when markets are up. For example, a fixed-indexed annuity may guarantee a 0% floor, meaning that the credited interest won’t be negative, even if the index decreases in value. While the 0% floor may be attractive, investors shouldn’t ignore cap rates and other limitations on the upside growth potential. For example, an annuity with a 5% cap rate would deliver a maximum of 5%, even if the market posts a return of 15%. That difference could affect your ability to reach your financial goals.

How We Can Help

Over the years, we have helped investors evaluate thousands of annuity policies. In many cases, we have found that these policies are not a good fit to achieve investors’ longer-term goals. In response to the frequency with which we saw annuities failing to fulfill investors’ goals, we developed an Annuity Evaluation Program.1 We designed our program to educate investors about the annuities they own or are considering. We want to help investors differentiate between contracts that fit their needs and those that don’t.

In our Annuity Evaluation Program, you work with a licensed Annuity Counselor who will take the lead in gathering the necessary information. Our fact-finding and analysis can offer insights on income, fees, penalties, death benefits and much more.

Ultimately, you may find peace of mind in your annuity strategy, or decide that it is time for a change. Bottom line: You deserve to know exactly what you are getting into and whether it is the best way to achieve your long-term financial goals. If you decide that it is time for a change, we help make the annuity conversion process as simple and painless as possible.

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The Evaluation Process

STEP 1: Gather information specific to your annuity –  We start by gathering information needed for our in-depth analysis via a conference call with you and the insurance company associated with your policy.

STEP 2: Analyze the facts of your annuity – Our comprehensive annuity analysis will review your contract and personal situation at an exceptional level of detail.

STEP 3: Explain the results of your annuity evaluation – Once our team has the opportunity to thoroughly review the details of your annuity, we will walk you through the various features identified.

STEP 4: Determine if your annuity is the right investment for you – If you’re comfortable with your annuity strategy, you are free to carry on without any obligation to Fisher Investments.

STEP 5: Fisher Investments’ Annuity Conversion Option – If you determine that your annuity is not the best option for meeting your financial goals, our team may be able to provide assistance.

1Annuity Fee Credit Terms & Conditions

Limited offer: Fisher Investments reserves the right to cancel, suspend or modify the offer at any time and for any reason without notice.

Eligibility: The offer is available only to qualified investors who become clients of Fisher Investments and who surrender an annuity and transfer the proceeds to be managed by Fisher Investments. Nothing in the offer infers any right on any person to become a client of Fisher Investments. Fisher Investments reserves the right to refuse or terminate any person as a client for any reason. Any request to participate in the offer is subject to acceptance by Fisher Investments.

Conditions: The maximum surrender cost that Fisher Investments may agree to pay will depend on the actual surrender cost or exit/liquidation charge of the product (excluding capital gains and other taxes) and the value of the total portfolio transferred for management by Fisher Investments. Any portfolio already managed by Fisher Investments will be excluded for the purpose of determining the maximum surrender cost to be paid.

Any surrender cost that Fisher Investments may agree to pay will generally be reimbursed in the form of a credit to the Fisher Investments quarterly investment advisory fee. Installments for ERISA plan assets will only be credited to the Fisher Investments’ managed account that contains the ERISA plan assets. Installments are subject to adjustment based on withdrawals of assets from Fisher Investments’ management.

All payment obligations will immediately cease if the client relationship with Fisher Investments or the account receiving payment is terminated for any reason before the end of the payment period and no further installments will be paid. Payment periods can last over ten calendar quarters or longer.

Risks: There is no guarantee any proceeds from any product mentioned above managed by Fisher Investments will achieve any specified level of performance, or that performance will be any higher than what could be achieved within the product. Investing in securities involves the risk of loss. Past performance is no guarantee of future returns.

The contents of this site should not be construed as tax advice. Please contact your tax professional.

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*As of 3/31/2024

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