Q: I’m 43 years gold with two kids. In 2009, I opened an account for a variable annuity with an initial payment of $10,000. I’ve been putting in $500 per month. I have no idea how it really works. All I know is it will provide me a pension for life.

I’ve heard rumors that a variable annuity is a bad investment, but every time I ask my financial advisor, he said not to worry and don’t listen to those rumors. I need to hear from you before I go further and ruin my retirement plan.

A: First, do you think your current financial advisor is giving you objective advice? If he earns commissions on the annuities he recommends to you, your best interest is unlikely to be his top priority. And if you already believe he’s withholding information, you can’t be making good decisions regarding your financial planning. My first piece of advice would be to find an advisor who will put your financial interests first. That means requiring the advisor to act as a fiduciary. That also means not working with someone who earns a commission from the sale of an investment. You want to work with someone who is selling only their advice, not products.

As for variable annuities (VAs), it’s hard to give specific advice since I don’t know your full situation. In general, I don’t recommend them as an investment vehicle. The negatives associated with VAs are:

To continue reading go to 5 Reasons to Avoid Variable Annuities

Brokers at each of the firms operated out of branches of affiliated banks, selling VAs, mutual funds or UITs to bank customers, who, in many instances, were elderly. The brokerage customers were referred by bank personnel, and sales of these financial products represented a significant portion of each firm’s business.

For the rest of this story…

FINRA Fines Bank B-Ds For Variable Annuity Sales

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“Forewarned is Forearmed: How to Purchase an Annuity (or not) You Will Never Regret!” is a valuable resource for those contemplating the purchase of an annuity. If your local bank investment sales person is pushing the idea of an annuity, be sure to do your  homework and read “Forewarned is Forearmed” first. Click on the hyperlink to read more about “Forewarned is Forearmed.”

This underscores the importance of what I have attempted to do with Forewarned is Forearmed: How to Purchase an Annuity (or not) You Will Never Regret! In Forewarned, among other things, I related how you can uncover the tremendous costs of most annuities and make an informed decision as to whether or not the guarantees they offer are worth it. In my opinion, they generally are not.

For those interested, you can read more about Forewarned is Forearmed, the first E-Book publication for Capital Markets U.com, at cmubooks.com.

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“Investor Education for Main Street America”

There are lots of questions, aren’t there?

Forewarned is Forearmed was written to be a consumer protection book. There has been so much abuse in the United States in the past few years that there have been special Alerts issued by the SEC, FINRA and several State’s Attorney General Offices warning about abusive annuity sales efforts. Forewarned is Forearmed will provide you with both factual data about annuities and some recommendations for how to evaluate an annuity offering and decide if it may be right for you.

To get more details about Forewarned is Forearmed, visit the special Forewarned is Forearmed page where you can learn more and add it to your shopping cart.

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“Investor Education for Main Street America”