Tuesday, April 15, 2008

Tricks of the Trade - Annuity Salesmen - Busted

Click the above link to either read the NBC investigation into Equity Indexed Annuity salesman or watch the video. This sting operation by Chris Hansen is exactly what I've been talking about for almost 10 years.

About 10 years ago a teacher approached me and asked me to review her 403(b) account. This is when I began my journey of learning about what was then a new product, Equity Indexed Annuities.

These fixed annuity products were sold on a fraudulent basis in almost every scenario I came across. The surrender charges where rarely disclosed and the people being sold the product where told they would receive market returns without market risk. I literally met people that thought they could earn on average about 10% - the fact is that it is nearly impossible for this to happen.

Equity Indexed Annuities are not legit products in my opinion and I've never found a scenario where they are appropriate or make sense. They are sold because they generate a huge commission for the salesperson. These salespeople are not fiduciaries, do not usually sell anything other than Equity Indexed Annuities (or Equity Indexed Life Insurance) and are no better than used car salespeople.

I encourage you to watch this very interesting and enlightening video on Equity Indexed Annuities.

Another thing they highlight is how these slimy salespeople pay to get their name or picture on magazine's or books that they didn't write.....trying to make themselves look credible (when in fact its a pure sham).

Warm regards,

Scott Dauenhauer, CFP, MSFP, AIF