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Fixed Annuity Income Riders: The Goldilocks Syndrome

Howard Hafetz

In regard to “GUARANTEED INCOME RIDERS”*, the explanations of how they work fall into the “Goldilocks Syndrome”. In some cases, not nearly enough information, in others, much too much!

Some authors feel the need to explain “actuarial reasoning”, others, do what typically inexperienced advisors do, “tell clients what they want to hear”. Too hot, too cold….. not “just right”! I am going to try to do just that, tell it like “Goldilocks” would!

The reason these riders were created was to enable clients to have “income they cannot outlive”, but not have to give up access to their cash. Immediate Annuities have been available for some time, and still have viability. They still do offer maximum guaranteed income, at a given age, and that benefit is unparalleled. But the loss of access, and future options, is a hardship, and typically what most people do not want.

What people do want, based on almost 30 years of financial advisor observation, is as much guaranteed income as possible, and still has access to their cash. Many people cite the possibility for change in their lives, or change in the outside environment, that would necessitate a change in their financial decisions.  This is where this “income rider” has the most applicability.

These riders come in many forms. I always evaluate the entire package that accompanies the rider, to see if the “rest of the story”, matches the client’s needs, and desires. The way the company credits the “market”, or cash account, total access to their deposit, surrender charges, and their schedules, viability of the carrier, and fees, are among the most critical components to be reviewed.

The products that offer these riders are numerous, and very different. Each company, and their various iterations of the concept, seeks to differentiate themselves from their competition. They do such a good job of this that this whole subject has become “fodder”, for the critics of the world. Because these products end up being very convoluted, and have so many moving parts, the critics dismiss one component or another, without evaluating the entire product package. Of course, that is what critics do! They very rarely evaluate the whole story; they just concentrate on the “part” that validates their criticism.

As a Financial Advisor that focuses primarily on the retired or soon to be retired client, in many cases, these riders offer the “Goldilocks” solution. I am an Investment Advisor Representative, and as such, can offer my clients a full spectrum of financial instruments, including securities. I find though, because of the fact that “guaranteed income”, is so critical, these riders play a pivotal role in my financial plans.

They are not perfect and have flaws, like every financial product in the market. Each client’s personal circumstances should ALWAYS be evaluated first, before any recommendation is made. But these riders, if thoroughly understood, should be a viable option to retired clients.

When advisors explain them wrong or inadequately, they fail their clients, as do advisors that summarily dismiss them for “actuarial reasons”.

All advisors should always follow the golden rule, “Do the right thing… Always!” Not just when it is convenient. Knowing the nuances of these riders, and being able to explain them completely, without confusion, is essential.

Most clients, and actually most people, want to know what time it is, not how the watch is made! The most important thing is that you have the correct time, and are able to explain it in such a way, that they understand, and believe you!

To learn more from this annuity professional, simply click here (Howard Hafetz).

About the Author:

Howard Hafetz, CLU, ChFC has been a Financial Advisor for 30 years. He started his career with American Express, and was initially trained as a Financial Planner in 1984, when the discipline of “financial planning” was just beginning. He earned his Chartered Life Underwriter, and Chartered Financial Consultant designations in 1987, from the American College, the oldest, and one of the most prestigious schools specializing in Financial Advisor designations. He currently holds series 6, 7, 22, 63, and 65 securities licensees, and the California Life, Health and Annuity license.

Howard resides in Redondo Beach, California, and works with clients throughout Southern California. You can contact Howard by clicking on the blue button below, calling 888-885-3383, or visiting www.hmhfinancial.com.

 

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39 Comments

  • Allan Miller says:

    I had the privilege of speaking w/ Mr. Hafetz by phone earlier this year (around the Summer); very pleasant & most knowledgable; his wife was shooting a film @ the time & he stated that we'd speak after completion of that project…I still very much look forward to his contact as well as to his very fine blog…thank you, Mr. Hafetz!!

  • Howard says:

    Allan,
    Thank you for your kind words!
    Howard

  • Daniel Bragg says:

    I can attest to Howards expertise. He is true professional and one that has spent countless hours educating other professionals in the financial planning industry.

  • Howard says:

    Thank you Danny! You were a great student!

  • Thank you very much, Danny! I appreciate your comments! Please share the site! Thanks again!

  • Howard is honest, ethical, and always does the right thing for his clients. Always ensure his clients fully understand both the pros and cons of each investment option. He listens and provides recommendations based on each investors unique situation, goals, and risk tolerance. He is extremely knowledgeable and has the heart of a teacher.

  • Jim O'Neil says:

    Solid, no BS information! Facts I needed to know before making investment decisions. Smart! Thanks

  • susan says:

    Great info & true. These annuities are too complicated for most people. You need a broker you trust to help figure out what works for you.

  • Daniela Aljawad says:

    Thank you so much for this wonderful article! I have had the pleasure of working with Howard for a number of years and his level of expertise and professionalism are second to none!

  • HP Hsu says:

    Howard does explain the fixed income annuity and riders concisely, it all boils down what kind of financial service an individual wants. His article presents information that shall be helpful for people considering annuity product. Thanks. HP

  • Steve Fleming says:

    Howard took the time to learn my objectives and goals by spending a lot of time on the phone and a face to face meeting. After learning what I had in mind, rather than try to sell me an annuity that didn’t fit, he suggested that we wait a bit as he knew of one that was in the approval process that would fit my goals. Imagine that, a salesperson not pressuring someone to buy at that moment. Amazing.

    Steve Fleming

  • Allan Miller says:

    @ the author's request, though I needed no persuasion, I'd like to briefly comment on the substantive nature of his maiden voyage article on Annuity 123…as w/ everything in his professional practice, Mr. Hafetz graciously shares his experience & qualifications with us in a field of which he has abundant!!…As Mr. Bragg stated in this blog below, "He has spent countless hours educating other professionals [and novices] in the [retirement] financial planning field." Highly recommended w/o reservation!! & if that article doesn't fully satiate your needs, the link to the Chafetz brothers' video series is another "must see" on this exemplary website!!…

    • Howard says:

      Thank you again, Allan! I completely agree with your suggestion to view the exceptional educational materials on this site. You can never be “over informed”!

  • Alan Tooraen says:

    Howard has a unique understanding regarding the crossroads at which human nature and finance meet. All of us want our cake but wish to eat it simultaneously and Howard understands how with proper structuring that elusive desire can become a reality. A timely and much appreciated summation!

  • Brenda Grelock says:

    An excellent article and very educational. Howard’s integrity comes through when he mentions following the golden rule…do the right thing – always. I look forward to working with Howard in the near future.

  • Joe Simonds says:

    Well said Howard. And great title to go with the candid article. Keep it up!

  • Lesley Rich says:

    Good article written by the best! I am happily retired thanks to two wonderful annuities Howard found after thoroughly researching my needs. Thanks, Howard.

  • Howard couldn't be more accurate about everything in this article. I've known Howard for several years and I know he has always done what is right for his clients. I've always accepted Howard's advice without a doubt or questioning it because of this long experience and thorough knowledge about annuities and financial planning.

  • Michelle Martin says:

    Every time I see the turquoise water that surrounds us on the boat of our dreams, and watch the spectacular sunsets in this tropical paradise, I realize with great joy; Wow, this is not a dream, I don’t have to wake up! Its our reality! That’s when I give thanks for that fateful day my husband met Howard. I have never had more faith in another human being as I have in Howard. This article is an excellent example of his brilliant brain. I can clearly understand how an income rider (which we have) could fall into the ‘Goldilocks Syndrome’ category. Ours, however, is not too cold, nor too hot. For us, (Howard made sure) its just right!

  • Howard you have been a tremendous help…allowing me to ask questions over and over again until I understand…thanx so much for your knowledge and patience

  • Luis Robledo says:

    Having been personally advised by Howard, I can attest to his expertise, attention to detail, and "no b.s." approach.

    I highly recommend him!

  • Afshin Min says:

    Working in financial services and dealing with all types of people with various levels of understanding is not easy. The great thing about Mr. Hafetz is that he uses his expertise to explain financial terminologies and benefits in such easy way so everyone can understand them.

  • Marilyn Miller Olpinski says:

    He has been a stand out in his field and will give you the best results. He strives to make this as easy as possible for you the " lay person" to understand and will guide you with his expertise of 30 plus years of experience….He values your trust in him and earns it.

  • Howard says:

    Marilyn,
    You know me the longest of everyone! Going back to 7th Grade!
    Thank you so much for you wonderful comments!

  • OH THATS VERY FUNNY!!! I WILL BE LECTURING AT UNIVERSITIES ACROSS THE GLOBE.

  • Sam Bassily says:

    An excellent very well written article. It is extremely educational, yet easy to understand.
    I was privileged to know the writer, Howard, for the past two years. He is thoroughly knowledgeable in all insurance matters, and his actions always reflected the utmost integrity.

  • Maureen Kemper says:

    For someone who has no interest in “financials”, other than having enough retirement income to avoid living on plain-wrap dog food, it really is important that a financial adviser provide the “right” amount of information. Thank you Howard for providing “the right stuff”. Look forward to more articles by you!

  • Irene Lucero says:

    Great article Howard! Howard you have been a tremendous help to me. You have always taken the time to explain everything precisely to where I get it. I wouldn't be where I am today without your expertise and knowledge. Very smart Man! I have worked with many advisors and I can say without a doubt, you are the most honest and knowledgeable advisor and I have learned a lot from this man!

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