How would you like an extra $38,000 in your pocket each year? Or how about $76,000? That’s each and every year, by the way.
We can share with you a pretty amazing story about how we saved two clients $38,000 per year each, for a total annual savings of $76,000. Those savings will flow straight through to their bottom line, putting thousands of extra dollars of retirement income in their pockets each and every year. The savings are so extraordinary that we’re still shaking our heads over what we were able to achieve.
It all comes down to being a savvy and informed consumer, and getting solid advice from a fee-only advisor with your best interests at heart.
Here’s the background:
We’ve never been a fan of high-commission, super-complex annuities foisted on the investing public by salesmen eager to make a buck. And heaven knows, there are way too many of them out there. Guaranteed income, no risk, and so forth. You’ve heard the pitches.
We don’t like the high-commission variety, but at the same time, we feel there are occasional circumstances when an annuity makes sense, given the client’s goals and financial situation.
In those cases, having done our homework, we seek out very inexpensive no-commission annuities from one of America’s favorite low-cost investment providers (who shall remain nameless).
Annuities can be tricky to analyze, but we can often swap a super-high cost product for a better quality, less expensive version, thereby saving the client beaucoup bucks and avoiding any immediate tax hit.
So let us fill you in on the truly amazing details of a swap we’re in the process of executing for a client.
Hopefully, this example will make you STOP, LOOK and LISTEN – and think a really long time – before you fall for any high-commission annuity pitch.
So here it is. The annuities originally sold to the client by a high-commission broker (who of course made a very large commission) have steep annual costs. The client probably wasn’t even aware of this, since the costs were buried deep inside a prospectus, and scattered across multiple pages (you need to flip through the pages, locate all the costs and add them up to get the true picture, and absolutely no one does that, right?).
After doing our detective work, we were stunned to discover the total price tag, and determined to cut it down to size. Because we’ve done our homework and know what else is available in the marketplace, we were able to recommend a tax-free swap into two excellent but low-cost annuities, thereby saving the clients about $38,000 per year each, year after year. No, that’s not a typo. The swap cut overall costs by about $76,000 each and every year.
(Your potential savings will vary, based on the size of the annuity contract, but we’ve actually seen clients walk in with products sporting fees as high as 3.85% per year. That’s ridiculous.)
As mentioned above, annuities can be tricky. Due to deferred sales charges, deferred income, complex riders and other factors, it’s not always possible to swap out of an expensive – but bad – annuity.
So here’s our advice. Make your life easy. They’re hard to get out of, so don’t get into an annuity in the first place unless you’re advised to do so by a fee-only investment advisor acting as a fiduciary. Otherwise, that $76,000 per year mistake could be yours.