If you’re like many Americans nearing retirement, you’ve been invited to more dinner and lunch seminars than you can count. What might surprise you is that only half a percent of people who receive those invitations actually attend the seminar. Even more shocking is that majority of seminars are geared toward one thing: presenting and soliciting annuities.
When I began working as an advisor, almost two decades ago, I was trained that annuities were horrible retirement vehicles sold by seedy salesmen with little regard for their clients’ financial objectives. In 2004, I was introduced to a friend who worked in index annuity planning, and he opened my eyes to what these products can do to protect people’s assets from market loss, while still giving them the opportunity to participate in a portion of market-linked upswings.
I left my old company in 2006 and began my own independent firm where I could offer my clients better products, not just the handful of cookie-cutter products I had previously offered. I began working with my clients who were in or near retirement just prior to the Great Recession. Because of these index annuity products, I was able to protect nearly 80% of my clients from market loss. The other 20% opted to stay with my previous employer, and I was not permitted to speak to them, due to a non-compete clause.
Although I entered this industry as an advisor who despised annuities, I quickly learned how important these products can be. I am now a firm believer in the index annuity’s place in a solid financial plan.
I’m sure you’re confused now because of the title of this article. How can the popularity of annuities be a bad thing? It’s actually pretty simple. The popularity of the index annuity has brought in many salesmen who focus on closing tactics and no actual financial knowledge. This is a bad thing.
How do you find out if you have a good advisor? Here are a few ways to determine if you’re choosing the right advisor:
- Ask your friends & family.
Ask about their advisor. They often become the best resource for finding a good advisor.
- Interview at least two advisors.
This is a must if the advisor is not a referral from a friend or family member.
- Ask how long they’ve been in the industry.
Although there is no test to determine how much experience it takes to be a good advisor, use common sense to determine if the advisor has enough experience to make you comfortable entrusting them with your retirement nest egg.
- Ask if the advisor works as a captive agent or if they can represent more than a handful of companies.
Personally, I always present three different investment vehicle options to my clients. This offers various concepts for retirement planning and also shows the client that I’m not limited to just one or two companies.
- Ask for references and call them!!!
Over the years, I’ve had many clients who have been more than happy to speak to my potential clients, should they wish to choose me as their financial advisor. Any person looking to entrust their retirement future with someone needs to feel comfortable with the quality of service the advisor has offered to other clients. Ask those references lots of questions!
- Finally, TAKE YOUR TIME MAKING A DECISION!
During the first appointment with my potential clients, I explain that there will never be a time where I pressure them into filling out an application. My job is to understand the client’s investment objective, develop a retirement strategy, answer questions, and explain why I believe in that strategy. Once the client is comfortable, then we can write checks and fill out applications! Never — let me repeat that — NEVER do business with an advisor on the first or second appointment! Give yourself time to think and make an educated decision.
Following these guidelines will not guarantee that you will always pick the perfect financial advisor, but you will weed out a lot of the bad ones. Remember, you should feel comfortable with your advisor and never be confused about the type of retirement plan or products he or she is presenting to you. As I’ve mentioned to thousands of clients, the most important thing to remember with your advisor is the ability to communicate with each other!
Annuity guarantees are backed solely by the financial strength and claims-paying ability of the issuing insurance company. Securities offered through TCM Securities, Inc., 2230 Towne Lake Parkway, Building 800, Suite 130, Woodstock, GA 30189, Members FINRA/SIPC, 404-889-8733. Insurance and annuities offered through Wadadli Financial Group, FL Insurance License #L093496.
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