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Guarding Your Wealth for Senior Citizens
Equity Indexed Annuities: 'The Investment from Hell'
Too bad that Greg’s grandpa didn’t know the truth
By Jeffrey D. Voudrie, CFP
March 12, 2007 - If you were nearing the edge of
the cliff and didn’t know it, would you want someone to warn you before
it was too late? Of course you would. That’s been the guiding principle
of this column, to inform everyday investors of the pitfalls that could
cause them and their nest egg irreparable harm.
I’ve been hearing from many of these investors
lately. Some of them got the message before they stepped off the cliff.
For others, the warning came too late.
Over the past several years I’ve been sounding the
alarm bell due to the inherent dangers found in equity indexed annuities
(EIAs). And the message is being heard. I’ve recently issued detailed
reports on EIAs in general and one specifically on the most popular EIA
on the market, the Allianz MasterDex 10. In these free reports, I
explain the risks and pitfalls to you that the person selling them
doesn’t.
Too bad that Greg’s grandpa didn’t know the truth.
Greg explains: “Back in 2000, my Grandpa was talked into buying one of
these by an agent. He was planning on just withdrawing the interest each
year to live on. Well, for the first 6 years, they distributed 10% of
his initial investment. Recently, he has come down with terminal cancer,
and wanted to get out.
“He asked for a full withdrawal, knowing that he’d
have to pay the 4% (surrender) penalty. Well, his total withdrawals over
the seven years came out to less than 90% of his initial investment!
Reading through the contract, it looks like he wasn’t supposed to start
receiving distributions until 2015, when he would 98 years old! Does
this sound right to you?”
No, Greg, it doesn’t sound right to me. But
unfortunately, that’s how some of these EIAs work. The truth is written
in the fine print of the contract, which most people fail to read, much
less understand.
Fortunately, Jim read his contract, and just in
time. Jim said, “I meet with an advisor. He recommended the Allianz
MasterDex 10, since at the time they were offering a 12% bonus up front.
After he went through his talk it sounded good so I rolled my IRA over
into it.
That was the first time I saw the booklet, when he
laid it out for me to sign, and I did. Upon getting home, I read it and
saw I had messed up, thank goodness for the ‘three day cooling off
period.’
“I called him back and stopped the deal. I get cold
chills when I think how close I come to really messing up. I thought he
was on my side and was trying to help me out, when all he was trying to
do was help himself to my money. I’m glad I got on the internet and
found you. You answered even more questions.”
Not all agents are unscrupulous. As Mark found out,
some of them are just as ignorant to the truth as most investors are.
After reading my free report, Mark forwarded it to
his advisor. The advisor replied, “I printed the report, talked to the
Allianz representative and hit him with each point. I can’t believe that
they could have BSed me so well. This is a lousy product. You shouldn’t
buy it and I don’t plan on EVER showing it to anyone else again.”
I’m glad Mark has an advisor that doesn’t put the
profit motive above doing what is right for his clients. That wasn’t the
case for Phil and Donna. Here’s their story, in their own words: “We
were stupid enough to be swayed into turning my husband’s entire 401k
into an EIA.
Obviously, if we would have understood what we were
getting into, we would have run, not walked, away from this! This is
really the Investment from Hell!
“We would like to find out if there is anyway out
of this mess, without losing almost 25% [in surrender penalties]. This
policy made 0% the first year.” Even though the market went up almost
15% in 2006, Phil only made 1.5% that year!
Don’t repeat their mistake. Go to my website and
check out my free report for yourself -
click here. I promise
you’ll find it very revealing, and you’ll never look at an EIA the same
way again.
If you have a specific question or would like more
information, give me a call toll-free at 1-877-827-1463 or you can also reach me by email at
jeff@guardingyourwealth.com.
I will answer your financial question FREE.
About Guarding Your Wealth:
“Guarding Your Wealth” is a
nationally syndicated weekly personal finance column written by Jeffrey
D. Voudrie, CFP. Mr. Voudrie is the President of Legacy Planning Group,
a private wealth management firm that employs sophisticated proprietary
strategies designed to protect and grow its clients' investments. Visit his website,
www.guardingyourwealth.com to read past articles under the Guarding
Your Wealth Article Archive that may not have appeared in
SeniorJournal.com.
Guarding Your Wealth for Seniors, on
SeniorJournal.com, is
a collection of columns by Voudrie that deal with issues of particular
interest to senior citizens.
Click here
for all columns.
In addition to being a nationally
syndicated columnist and Certified Financial Planning Practitioner, Mr.
Voudrie provides personal, private money management services to select
private clients
nationwide.
Looking for an energetic expert who
is passionate about financial and wealth management? Mr. Voudrie is an
excellent speaker who will excite and inspire your audience. Mr. Voudrie
is available for a limited number of speaking engagements, television
appearances and radio talk shows. For bookings, email
jeff@guardingyourwealth.com.
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