24 Nov Annuity Payments Not What You Expected? It Might be Time to Cut Bait
There could be a rather nefarious reason your annuity payments aren’t quite what you expected. A recent report by Sen. Elizabeth Warren (D-Mass.) highlighted what she deemed as rampant perks, kickbacks, and ultimately conflicts of interest the majority of companies engage in when selling an annuity settlement to customers.
The report released in October, entitled “Villas, Castles, and Vacations: How Perks and Giveaways Create Conflicts of Interest in the Annuity Industry,” found that 13 of the top 15 annuity companies she investigated, “admitted to offering kickbacks either directly to agents, indirectly through third party gift payments, or both.”
In a follow-up piece for concerned buyers Allen S. Roth, a financial planner and contributor to Next Avenue, wrote about the details and repercussions this sort of shady dealing can have for the average person, published in Forbes.
“Frankly, as a financial planner, there was nothing in the report that I found the least bit surprising,” Roth wrote. “In 2012, I wrote about my experience being promised a handsome 6.25% commission and an all-expense paid trip to the Ritz Carlton Grand Cayman if I sold $1.5 million worth of a particular annuity.”
His advice went on to say that generally, the more complex of a structure for annuity payments, the greater chance there’s ‘hidden’ perks and benefits for the seller in the arrangement.
Annuities can also carry fees and fines the buyer may not be fully aware of at the time and chances are if the seller is getting a nice perk for getting you into it, they’re not going to make it abundantly clear to you. A variable annuity, for example, typically comes with ongoing investment management and other fees that amount to 2% to 3% a year. Also, many annuities come with stipulations that you can’t make a withdrawal in the first five to seven years without being hit with a penalty of up to 7%.
In general, experts recommend putting no more than 25 to 30% into an annuity for a diverse portfolio. If you’ve been hoodwinked into a bad investment there’s no need to worry. Structured Asset Services offers competitive rates of cash for annuity payments.
If the deal you’re in isn’t the deal you thought you made, call us today.