• High Fees and Expenses
• The Hard Sell
• Complexity
• Lack of Good Information
• Loss of Control
• Liquidity Constraints
• Bequest Constraints
• Credit Risk
• Misrepresentation

The following list provides links to some of the key terms discussed in this chapter on annuity taxes:

Expenses should be a top priority for any financial services consumer.  Many people have been conditioned to be aware of expenses when it comes to investment products.  Indexed-bases investment management companies such as Vanguard have contributed greatly to this awareness by consistently demonstrating the detrimental impact that expenses have on investment performance over time, and how actively managed and more expensive mutual funds actually tend to underperform their index-based peers.

Retail financial advisors are generally compensated through fees, commissions, or a combination of fees and commissions.

With regard to an annuity, it will completely depend on the structure of the annuity contract and any additional riders that might be attached to that contract.  At a basic level, the death value can be the initial deposit amount, less any withdrawals and market performance.  Most of the bigger companies provide a somewhat enhanced death benefit.  This usually is the initial

Two leading companies are partnering to provide a new annuity offering.

MetLife has developed the "MetLife Growth and Guaranteed Income (MGGI)" product that will be distributed exclusively through Fidelity.

The MGGI is a deferred variable annuity that contains a guaranteed lifetime withdrawal benefit (GLWB) that, depending on the age of the client, ranges between 4 and 6 percent of the initial single premium.

A very good article in Forbes magazine discusses the many downsides of using group annuity contracts as a wrapper for 401k plans.

This is not to be confused with 401k or defined contribution plans that offer  an annuity option within their plans or an annuity option outside of the plans to participants who are retiring or leaving the company. 

In fact, most of the group annuity wrappers provide no ability to annuitize.

The practice is especially common among 401k plans offered by smaller employers.

This is the first part of an interview with Ryan Hinchey.