Annuity products were initially set up to transfer risk for lifetime income guarantees and today, the majority of sales are indexed annuities and variable annuities with "dream scenarios" that don't necessarily work out. Annuity expert, Stan the Annuity Man, tells people that if they want true growth, to do market products and if they want to put an annuity in place, they need to look at it as a transfer of risk product. The amount of growth is not known until the person passes away and up until then, it's a transfer of risk. "To compare annuities with growth products is ridiculous," he says.
With everyone out there talking about the upside associated with variable and indexed annuities, people want to buy the dream and will do so on fear and greed, Stan says. For the annuity industry, he believes these people are missing the boat. The annuity "gunslingers" should be selling the guarantees in that annuities are the only product that can pay you for the rest of your life, regardless of how long you live, instead of falling into the "stock market trap," he adds.
As people are living longer today, they're realizing they need an extra twenty years or so of steady income and when Stan hears people question annuities, he asks them if they dislike social security as well, as that's just what annuities do. People don't care about the growth potential associated with social security, just that it hits their bank account. The only thing that can provide the lifestyle that most retirees want are annuity-type transfer-risk payments and they're not growth products. "People need to stop looking for that," emphasizes Stan.
While he doesn't say that indexed annuities are bad, Stan wants people to understand that they're not going to get market returns they're hoping for and if they do, they should consider themselves lucky because it was an anomaly. Typically, you will get CD-type returns, which Stan thinks is just fine, as long as you have realistic expectations going in. Stan blames the agents for "pumping up" annuities and blames the industry for not regulating the sales message. "It is appalling, it should be stopped immediately and if this was regulated by the securities industry, they would," Stan says.
If you'd like to get in contact with Stan, you can go to his website at stantheannuityman.com, or via email at email@example.com. He spoke with Retirement News Today, providing online retirement news video content. Retirement News Today is a featured network of Sequence Media Group.