An annuity comes in many forms, but a simple definition is that an annuity is a contract that converts a sum of money into a series of periodic payments for an agreed upon period of time. An annuity can be thought of as a financial vehicle that converts a pool of money into a stream of income. Annuities are most useful in addressing the financial planning needs of people in or approaching retirement. Annuities are unique in the financial world because they can provide protection against the risk or outliving one’s assets (longevity risk) by guaranteeing income payments in perpetuity or any other selected amount of time. Annuities can be viewed as a type of personal pension plan. Social Security is similar to an annuity in that money contributed over the course of one’s working years is converted into a series of periodic payments that provide income during retirement.
Bob MacDonald has had a storied career as a leading entrepreneur and executive in the financial services industry.
Some of Bob’s roles include: president and CEO of ITT Life; founder, chairman and CEO of the highly successful LifeUSA, and; CEO of...
Jerry Golden--often referred to as the father of variable life insurance and variable annuities--has had a distinguished career as an innovator...
Francois Gadenne is the Chairman and Executive Director of the Retirement Income Industry Association (RIIA).
Formed in 2006, RIIA is bringing together the leading minds and resources in the relatively young retirement income industry. RIIA members include leading academics, banks, insurers, fund companies,...
Is there a financial equivalent to the maxim “first do no harm?”
What if one of the guiding principles of medicine was applied to the world of financial advice?
What would the financial services landscape look like if product manufacturers and advisors were required to play by rules similar to those that exist for physicians?
First, my guess is that the financial corollary to the application of primum non nocere (first do no harm) would be:
I have had countless conversations over the past year or so with people who cannot believe they are actually paying to hear someone tell them that they are in relatively good shape because their portfolio has outperformed some index by fifty basis points. ...
Many financial advisors seem conditioned to wear annuity criticism as a sort of badge of honor.
As the past couple of years have so painfully revealed, however, this conventional wisdom rests on shaky ground.
What types of questions might a client present to an advisor who appears to have a reflexive inclination to dismiss most or all forms of annuities? Consider the following:
1. How are my assets hedged against...
