Best Places To Get Good Annuity Advice
Where you get your annuity advice can play a significant role in determining whether or not you find the right annuity for your situation. To some degree, you need to be selective in where you get your advice as not all sources are created equal. Problems with the information can range anywhere from ignorance to blatant misguidance. We've laid out a couple of different sources you can go to after scouring our website. Take the information you've learned here and move it into the next level. Only by carefully assessing your own situation can you make an informed decision whether annuities are right for you.
Should You Get Your Annuity Advice Online?
This is an interesting question, and one that we have a somewhat biased opinion. And while we certainly give out our fair share of annuity advice online, we will be the first to admit that you shouldn't base your decision solely on what you read here. What we have hopefully provided is a base for your understanding of annuities. We believe every consumer needs is to have annuities explained in such a way as to leave no doubt as to what they are, how they function, and what benefits they can provide.
But this shouldn't be the end of the advice you receive on annuities. To properly understand whether or not an annuity is right for you, you must first meet with someone that can carefully analyze your financial situation. A fixed annuity can be a quiet powerful addition to your financial plan, but only if you have other aspects of financial planning already in place. If you are approaching retirement, you may need some specialized retirement annuity advice. If you are interested in a riskier market based annuity product, you should get find an advisor that can give you some solid variable annuity advice. The needs of each individual can be quite different; finding the right person to guide you is critical to your success.
How Do You Choose The Right Advisor?
This is certainly going to be an area open to opinion. Some will argue that an insurance agent is the best person to give this sort of advice, as annuities are an insurance product. Others will suggest that a financial planner should be able to give better advice than a biased insurance agent. And then you must step into the realm of what type of planner is best. Should you go with a fee-only planner? Fee-based? Commission only?
Perhaps the least biased way is to approach this issue is to discuss each type of advisor individually. Regardless of whom you choice, it will be a choice between pros and cons. You'll have to weigh which options suits your needs best.
The Insurance Agent
The standalone insurance agent is perhaps the closest individual to the actual product, and may have somewhat of an insider's understanding of the annuity product. Not only are they a representative of the insurance company, but they also deal with a limited amount of other financial products. As such, an insurance agent will tend to know quite a bit of the intricate details of your annuity plan, but may somewhat miss the bigger picture of how it fits into your financial plan. Another consideration is insurance agents often only represent one insurance provider, and are limited to offering the products of just that company.
Pros: Product Knowledge
Cons: Limited integration or suitability knowhow and limited product offerings.
The Commission Only Advisor
The commission only advisor is actually quite similar to an insurance agent. They base their entire compensation on the products that they sell to you. The more they sell, the more money they make. The biggest difference between an insurance agent and a commission only advisor is that the advisor often represents more than one company. As such, they are able to offer you a wider assortment of annuity types, and can shop around for better annuity rates than you may get from a standalone agent. This type of advisor should still have a strong understanding of the annuity product as the bulk of their income is based on annuity sales.
The biggest possible con of using a commission only advisor is that you may not always get unbiased advice. If your financial plan is done by this type of planner, they do not make money until they sell you the products they suggest for your plan. Their annuity advice may be misguided or simply inappropriate. You need to be careful that the products they suggest are actually suitable to your situation and not just suitable to their pocketbook. Although there are risks to using this type of financial planner, not all commission only advisors are crooks (just thought we would clarify that).
Pros: Greater access to different products. Wider understanding of annuity integration.
Cons: Possible bias involved in sale of annuity, and/or conflicts of interest.
Fee-Only Advisor
As opposed to the commission only advisor, the fee-only financial planner does not take commissions on annuity sales. Fee-only advisors charge a fixed fee for the advice that they provide. In fact, this type of advisor will usually only go as far as creating a financial plan for you to implement. It is then up to you to go out and act on the advice on annuities they have given. This often involves finding an insurance agent that can handle your annuity purchase.
Many popular financial advisors suggest that the fee-only planner is the way to go. They feel that because they have no vested interest in your purchasing any sort of financial product, they are the most likely to give unbiased advice. The problem with fee-only advisors is that they are farther removed from the products they recommend and therefore less familiar with how the annuity works. And while their recommendations may be perfect for their clients, they often face problems in getting the clients to implement their plans.
Pros: Unbiased annuities advice. Decent ability to integrate annuity purchase into greater financial picture.
Cons: Possible weaker understanding of annuities. Difficulties in helping you implement your plan.
Fee-Based Advisor
The fee-based advisor is an increasingly popular hybrid of the fee-only advisor and the commission only advisor. As a fee-based planner, not only does the advisor charge a fixed fee for the financial guidance given, but they may also take commission on products sold to the client. This type of advisor tends to have similar product knowledge as the commission only planner, and has access to a wide range of annuity providers to choose from.
Because the fee-based planner charges a fee for their financial plan, they tend to give somewhat less biased counsel on the financial products they recommend. There is still the potential for greedy planners to oversell annuities, but the chances are smaller. You will still need to make sure you trust your planner, and are fully comfortable with the guidance they have given you.
Because this type of planner also sells the products they recommend in their financial plan, they have a much better rate of implementation than other planners. Not only do they tend to create better financial plans, but they are better able to help their clients implement their recommendations.
Pros: Good product knowledge and ability to shop around for the best annuity rates. Best integration with current financial plan.
Cons: Possible sales bias.
Annuity Advice Summary
Although we hope that we have provided you a good foundation for your understanding of annuities, we recognize that we aren't and should be the end all of your annuity interest. Finding good annuity advice is crucial to helping you find the best annuity product for your unique needs and circumstances.