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Talk…about money

What’s up with the “I would die and go to hell before I’d sell an annuity” guy? Really?

by | Mar 1, 2023 | Investing

I started out the day with a great plan – pull together a post about how the right annuity, designed with your specific needs in mind, can play an important role in protecting some portion of your irreplaceable wealth. Instead, I pulled a Sidney J. Harris (a columnist for the Chicago Daily News) who would sometimes write about “things I learned on the way to learning something else”.

I thought I’d ask Dr. Google for some recent factoids about annuities. Simple stuff like: “How much money is invested in annuities”? ($3 trillion by 12/31/17), “What percent of Americans own annuities”? (about 14% – although 85% of folks within 5 years of retirement want the benefits of an annuity), and “How many different kinds of annuities are there”? (3-4 big categories but countless variations depending on your investment portfolio, your risk preference and future needs).

Then I moved on to the more opinionated questions like: “Who should invest in an annuity”? (from everybody to nobody); “What percent of your portfolio should be invested in an annuity”? (from 0% to 100%); “Why should someone consider investing in an annuity”? (from creating a downside risk buffer in their portfolio to creating an on-going income stream). It’s no wonder annuities are a confusing topic for investors trying to care for their irreplaceable wealth.

In spite of these diverse opinions, I learned that EVERY time the word annuity is in the Google search criteria, the same guy (we’ll call him George) steps into that confusion with a series of paid ads with a simple message – be afraid. The first entry is some version of “beware”, “I hate annuities” or (my favorite) “I would die and go to hell before I’d sell an annuity”. That’s a pretty strong opinion he’s sporting there. I tried to think about how many things I would die and go to hell for. Believe me, it’s a short (seriously short) list.

This is where my plan for the morning took a left turn. Instead of an overview of annuities, I couldn’t let go of all those ads and was drawn into the land of “what’s going on with George and why is he so angry?”

Now George is no fringe player in the investing world. He’s been writing for financial publications since Gutenberg was their primary printer. He runs more web and TV advertising than just about everyone in the investment management business. He’s always got a quotable quote for any and all media outlets. Some of you might even recognize George.

I tried to imagine what could generate such animus towards annuities – especially since there are so many different types, each with different benefits, costs, flexibility, constraints, liquidity, and more. This is like saying “I hate fish” because they kill people. Sure, great white sharks and piranha have a well-deserved killer reputation…but goldfish? Guppies? Angelfish? Not so much.

What kind of life experience could generate that kind of hate for and entire class of investment? I’m not a big fan of clowns or spiders and I can draw a pretty straight line to the reason why. It’s hard for me to imagine George having a bad experience with an annuity in third grade while exploring an abandon construction site (think spiders not clowns – but you get the idea).

I don’t know George personally but, in spite of his credentials as a fiduciary (i.e. accountable to act in the client’s best interest), it doesn’t make sense to write off an entire category of investments for all clients without knowing the needs and circumstances of those people.

One interpretation of his message is that he’s spending millions of dollars a year to protect you from what he believes is a poor investment choice. Another interpretation is that George has figured out how to create confusion about annuities and then leverage your fear into his alternative (one that’s coincidently more profitable for him that an annuity). Since George runs a profitable business, I can make an educated guess at which interpretation is closer to the truth but what do I know…I’m afraid of spiders.

We approach annuities differently than George.

  • We believe annuities represent a class of investments that, for some people, can play an important role in planning for your financial future.
  • We believe an annuity, if it’s right for you, is an investment tool that can be designed to work very well based on your unique situation and risk preference.
  • We believe that clients can appreciate the value of an annuity when the benefits and costs are transparently shared, when the risks are disclosed with the same clarity as the rewards, and its role in their overall portfolio is well defined.

If you want to move away from all the negative emotions to learn more about how a well designed annuity can help care for your irreplaceable wealth, give us a call. I promise, nobody is going to hell.