I’m attorney Robert Port, and I represent pe...
I’m attorney Robert Port, and I represent people who have been harmed by the misconduct of their financial advisor, stockbroker, or insurance agent.
Variable and equity indexed annuities are aggressively sold by many stock brokers and insurance salesman using scare tactics and misleading sales presentations. The agent’s pitch often focuses on “Guaranties,” “Tax Deferral” and the ability to receive an income stream by “annuitizing” the annuity. These annuities are often pitched to seniors through lunch or dinner investment seminars promising “estate planning” or “tax planning.” The brokers and agents who sell these annuities are often motivated by the generous commissions they can earn on a sale – often 5% to 7% of the price of the annuity.
These annuities are generally suitable only for those who can lock up their money for a substantial period of time.
Many people who are sold variable or equity indexed annuities later realize that they are inappropriate because of the following problems, which are often glossed over or not discussed in the sales presentations. These products are only suitable for a small number of people for the following reasons:
Penalties for Withdrawal:
Annuities tie up your money for a long time by imposing “surrender fees,” or penalties if you withdraw your money within the first 5 to 7 years. These surrender charges make cashing out these investments expensive and makes them unsuitable for those who may need to use their money for current living expenses, medical expenses, emergencies, or to help a loved one.
Excessive Fees. Variable annuities and equity indexed annuities impose high management fees which make them expensive. Some are more than twice as expensive as the average mutual fund and eat into your investment returns.
Improper Placement in IRA Accounts. Seniors and those close to retirement are the most vulnerable to inappropriate sales pitches and investment misconduct. Often, they have a lifetime of savings or a substantial 401K, and need to assure that those funds last the remainder of their life. They are attracted to claims that an investment will produce more income than the Money Market or a CD, or that the investment is “guarantied,” or that there is little risk. Unfortunately, many times those claims are false. Sometimes, the stockbroker or insurance agent simply has not been adequately trained, and carelessly recommends an investment. Other times, the sales are motivated by the desire to earn a commission, even though the investment is not suitable or appropriate.
Tax deferrals are one of the benefits variable and equity indexed annuities provides and this benefit is lost if they are bought in an IRA, because IRAs are already a tax deferred investment. In spite of this, some salesmen improperly sell variable and equity indexed annuities to be placed inside an IRA because that is the only place many people have money to invest.
If you believe you have been sold a variable or equity indexed annuity that is not suitable or appropriate for you, please contact me to see if there might be a remedy.