Consider who is selling to you and how they are compensated
By Wendi Strom, The Denver Post
May 28, 2017
“Annuities can be complex and at times are aggressively sold. As a result, many buyers may sign on the dotted line before truly understanding what they are getting into. Since they also can come with hefty price tags and restrictions on withdrawals, knowledge is power. It’s important to arm yourself with the right questions to ask if you’re considering an annuity purchase.
With the help of the Colorado Department of Regulatory Agencies (which has an informational page on annuities at www.colorado.gov/pacific/dora/node/102771), I’ve created a list. Though it’s not exhaustive, it will give you a good start of things to consider and questions to ask any financial professional recommending an annuity purchase:
- Who is selling this annuity to you, how did you find this person and what do you know about them?
- What are the fees you’ll be paying?
- If you decide you need some of this invested money back in the next couple years, how much can you get without paying an additional fee?
- What are the risks?
- What kind of protection, if any is provided to you in this product? And if so, how much are you paying for that protection?
…If used correctly, annuities can be a meaningful component to a broader financial plan. Though they are not the easiest investment to understand, they may fill an important void. You owe it to yourself to understand the features of the product, take the steps to identify if you truly need this in your financial picture, and more importantly be aware of the potential pitfalls so you can protect yourself today and in the years to come.”
Wendi Strom is a certified financial planner at Lotus Financial Partners in Denver. A lifelong champion for women’s financial security, she serves as the president of the Financial Planning Association of Colorado.