The Society of Annuity Facts and Education (SAFE) responds to “Steak Dinner and Annuities: Retirement Product Surges after Fiduciary Rule’s Demise”
November 6, 2018 by Bob Phillips
Dear Mr. Eisen and Ms. Beilfuss,
We are longtime readers and subscribers to the Wall Street Journal and are always interested in discussing the facts about annuities. That said, we found some errors in your article “Steak Dinner and Annuities: Retirement Product Surges after Fiduciary Rule’s Demise” and would like to clarify some misconceptions.
Because the term “Annuity” encompasses such a diverse variety of products, requiring different licenses across a variety of distribution channels, it is often difficult to make general statements. Rather than debating the pluses and minuses of specific products, limitations, and benefits.
Some of the points we would like to make follow:
- While many types of annuities protect the consumer from loss of principal, some do not (Variable Annuities can be subject to loss).
- While there may be varying surrender charges on annuities, many provide for penalty-free withdrawals surrender charge waivers, return of premium provisions and other liquidity features.
- The commission of “over 6%” may be misleading. After checking with Sheryl Moore from WINK, we were told that was for Index annuities in one specific channel and not the industry average. In that same channel Multi Year Guarantee Annuities commissions were recently pegged at an average of 2.28%. With increased competition and D2C products entering the market, we expect to see commissions continue to decline.
- We would like to applaud Ms. Winterberg. If anyone is in a situation where they feel pressured to enter into an annuity purchase, or they do not trust the advisor they are working with, they should not proceed with the annuity sale.
As with all financial products, we encourage consumers to do their research, understand all the terms and, based on their own circumstances, decide what is best for them. Whenever possible use a trusted financial adviser and understand their licenses, know their background and their experience.
There are many strategies and products in the market that can help you prepare for retirement.
In closing, we expect the trend of increasing annuity purchases to continue and increase for a variety of reasons: the ever-increasing number of retirees; increasing interest rates; the development of new annuity products; and the future ability to obtain annuities in retirement plans.
An Annuity is still the only product available to American consumers that can provide an income for their lifetime.
Bob Phillips
Executive Director
The Society for Annuity Facts & Education (SAFE)
www.SAFEAnnuityEducation.org
(800) 952-SAFE
The Society for Annuity Facts and Education (SAFE) is a non-profit organization committed to educating consumers about annuities, and providing them with the information they need to consider whether an annuity is appropriate or not. For more information visit us at www.SAFEannuityeducation.org or call us at (800) 952-SAFE (7233)
