I must admit that this tricksy annuity set up is giving me a headache And that at age 30 the client might be too young for an annuity.
However, a VA in a qualified account isn't always bad. Just today, I positioned part of a client's rollover IRA into a VA. The situation is this: We put 150K into mutual funds and 175K into a VA. The annuity carries the guarantee (yes expensive) of 7% return if held for 10 years and annuitized for an income stream: essentially a guarantee of doubling the 175 K at minimum in 10 years. I expect/hope that we will do better than 7%. But, because there are guarantees we agreed that we coud be more aggressive in the annuity than we would have been without the guarantees. The safety net feeling was important to the client and he was willing to absorb the extra costs. If we do better than 7%, then of course, there is no need to annuitize.
I would agree completely. If the client understands the costs and tradeoffs, understands he already historically stands a very good chance of beating 7% over 10 years without an annuity wrapper and still wants it, fine by me. He's made an informed decision about the costs involved in his sound sleep.
[quote=doright]I sold VAs for two years. Before this I was at Vanguard. I don't know how I did it. Going from Vanguard, always, always having what's best for clients to one of the biggest rackets in America, Variable Annuites.
Not only did I sell VAs, but VAs in 403bs and IRAs. The clients already weren't paying taxes so no added tax benefits. If anyone knew anything they didn't buy a VA. The VA market in America are investors not knowing enough.
I'm leaving my current company to go to a major wirehouse to do asset based business.
Anyone saying VAs are good, is lying to themselves. If you have a conscious it will catch up to you. [/quote]
I'm not aware of any other investment that will contractually guarantee a minimum income stream which you can't out live.
I'm in my 30's and I own a VA inside of my........(drum roll please)...... IRA.
You're kidding, right? Even if you think you need a guarantee on your IRA generated income later in life, why buy it now, at your age? Grow that money without the annuity fee structure and if you still feel the need for a guarantee, buy an annuity much later.
No, I'm not kidding. Sure, I could have purchased an annuity decades from now when I get closer to retirement and save myself some money due to the higher fee structure of the product. But Stan, I believe in the living income benefits of the VA (high water water mark, roll up base, etc). It was good fit for me.
VAs are appropriate in some situations. For instance, annuitizing part of your portfolio to guard against outliving you money. However, the sale of VAs in areas like the school market is down right unethical.
Travelers, Valic, Citi, Lincoln - all they do is barrage teachers that don’t know a thing. These salesman tell them their just as good to built your retirement as mutual funds.