YYY: Annuity, Fiduciary, Inquiry?

Annuities drive me crazy when discussing an estate plan. As Ron Lieber of the New York Times explains it here (https://www.nytimes.com/2018/12/14/your-money/annuity-explainer.html) annuities are a form of insurance, not investment, but annuities are so oversold as a type of investment that you would never know that they have their place.

My favorite part of the article is buried at the bottom—questions you should ask before purchasing an annuity. Here are the gems:

Aren’t you going to spend hours asking me about my assets, goals, dreams and fears before you sell me something this important? And will you agree to act in my best interest — as a so-called fiduciary — and sign a pledge saying so? If not, why not?

These are huge questions, and whether the fiduciary status applies has gained significant traction in the past few years because of 1) various bad actors treating clients like walking commission machines and 2) the proposed fiduciary duty rule the Department of Labor began to roll out. This potential sea-change has caused many in the financial sector to quake in their boots because of the likely reckoning they realized they would face once their clients realized their trusted “advisor” was more like a used car salesman.

If you aren’t sure about annuities or where you stand with your advisor, give this article a read and send it to your kids. If you have questions about how annuities play into your estate plan, feel free to send them my way.

See you on the trail.

Post by Peter Harrison