When planning an early surrender or excessive withdrawal of an annuity, you and your clients must factor a market value adjustment (MVA) into the transaction. Learn the basics of MVAs in relation to the current economic environment in “The MVA Opportunity and Landmine.”
In today’s customizable, satisfaction-guaranteed world, it’s no surprise that investors, too, want it all. They expect retirement solutions that provide guaranteed income, while still insulating them from downside risk. There is a solution that offers both: annuities. But even though annuities are one of the only vehicles that deliver income and risk mitigation, surprisingly only 42% of financial advisors recommend them as part of retirement and income plans. Misconceptions or outdated views on annuities may be keeping advisors from offering the financial stability their clients need. Dispelling the most common annuity myths is the first step in remedying this.
Clients fall into the psychological traps of investing all the time. They stick to old ideas and protect earlier choices, even those that aren’t financially beneficial. They follow the herd mentality, investing in the latest, hottest product without concern for how it may fit into their broader financial plan. Or they may hold as truth the advice of a friend or family member whose financial goals don’t match their own.
Did you know that, as a licensed insurance agent, you could be breaking the law by transferring funds from a 401(k) into a fixed or fixed-index annuity?
Annuities have always been the only financial instruments that can provide an income that cannot be outlived. Historically, this meant annuitizing the contract — exchanging the lump sum account value for a guaranteed series of payments for a specified period or life. The thought of forfeiting principal for income, however, was unpleasant to most consumers and therefore annuitization was rarely used.
People love get-rich-quick schemes, from the Tulip craze of 1637 and Bernie Madoff, to lottery fever and Bitcoin. There’s only one problem: substantial research shows that slow and steady wins the race.
Do you have a client who is considering a potentially large annuity purchase? If so, you may want to consider the benefits of breaking up the big contract into smaller, bite-sized ones instead. Here’s why.