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fidelity annuity
Old 08-27-2013, 12:01 PM   #1
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fidelity annuity

hello all,
I just visited my fido advise/rep for a yearly chat, I asked for ideas/direction on what to do with some cash I have from selling off some mid to long term bond funds recently, he advised to put it in a a 5 year CD at a return of 2.35%. That sounded OK so I asked a few more questions about the "CD". we then discussed a few more asset allocations issues and then he asked if I wanted to do the paperwork for the CD, I told him I would just do it on line and his reply was that I needed to sign papers at the office. then he stated it a was an annuity. that raised a red flag for me and I requested the paperwork and left. it's for a fixed deferred annuity. it would be over 25% of my IRA, the rest of my IRA is a 60/40 stock/bonds mix at this time.
Should I be leery of this sales pitch? It just doesn't seem right for me.
Dawgster.
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Old 08-27-2013, 12:06 PM   #2
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hello all,
I just visited my fido advise/rep for a yearly chat, I asked for ideas/direction on what to do with some cash I have from selling off some mid to long term bond funds recently, he advised to put it in a a 5 year CD at a return of 2.35%. That sounded OK so I asked a few more questions about the "CD". we then discussed a few more asset allocations issues and then he asked if I wanted to do the paperwork for the CD, I told him I would just do it on line and his reply was that I needed to sign papers at the office. then he stated it a was an annuity. that raised a red flag for me and I requested the paperwork and left. it's for a fixed deferred annuity. it would be over 25% of my IRA, the rest of my IRA is a 60/40 stock/bonds mix at this time.
Should I be leery of this sales pitch? It just doesn't seem right for me.
Dawgster.
If he said the words "CD", and it is a 5-year annuity, he's a crook.
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Old 08-27-2013, 01:26 PM   #3
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Seems kind of strange.

While FIDO has both CD's and annuities (various kinds), I never had to sign papers at the office - an hour's drive for me.

All transactions requiring signatures (including our joint SPIA) was handled overnight via Fedex.

I wonder if something was lost in the conversation...
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Old 08-27-2013, 01:29 PM   #4
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he did offer to email the papers after I resisted signing on the spot.
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Old 08-27-2013, 05:32 PM   #5
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Never have an annuity as an IRA. Belt and suspenders.
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Old 08-27-2013, 06:05 PM   #6
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I'd get a different adviser. It seems very wrong to me that he passed off an annuity as a CD. He should've also explained why he thinks it's appropriate in an IRA, because it seems doubtful it would be (but I've haven't looked into this too thoroughly). At best case there was a communication issue between you and him.
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Old 08-28-2013, 07:41 AM   #7
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Talk to his supervisor, what he is doing is unethical.
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Old 08-28-2013, 07:56 AM   #8
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Never have an annuity as an IRA. Belt and suspenders.
+1. Why would you ever put an annuity in an IRA?
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Old 08-28-2013, 08:04 AM   #9
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+1. Why would you ever put an annuity in an IRA?
To help the annuity salesman make his boat payments...
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Old 08-28-2013, 09:56 AM   #10
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I would dump him. One, he misrepresented a deferred annuity as a CD. Second, he recommended putting an annuity in an IRA, which is already tax deferred. I could never trust him again and would just move on.

At a minimum, report it to his supervisor and ask to be assigned a different adviser and be skeptical of anything they recommend.
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Old 08-28-2013, 10:03 AM   #11
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Maybe you show up with the "60 Minutes" crew. I would like to see the back pedal.


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Are Fixed Term Annuities Ever a Good Idea?
Old 08-28-2013, 10:07 AM   #12
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Are Fixed Term Annuities Ever a Good Idea?

It sounds like the adviser sales guy may be trying to pass off a fixed term annuity as a CD; if so, I definitely agree that is unethical and he should be reported.

However, I have wondered myself if a fixed term annuity might make some sense for a piece of my fixed income portfolio. Granted, no real opportunity for capital appreciation; but, very little risk of absolute losses either. (Yes, I realize I would still be taking on inflation risk and some risk of insurance company solvency; but, these seem minimal to me in the short term.)

I have not taken the plunge on these products myself mostly because I have not done enough research to resolve my doubts about any investment product sold by insurance companies. But, I am wondering if others here can give good reasons for me to either run away from these products without looking back or to not think I am completely crazy for considering them.
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Old 08-28-2013, 11:45 AM   #13
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However, I have wondered myself if a fixed term annuity might make some sense for a piece of my fixed income portfolio. Granted, no real opportunity for capital appreciation; but, very little risk of absolute losses either. (Yes, I realize I would still be taking on inflation risk and some risk of insurance company solvency; but, these seem minimal to me in the short term.)
You judge that the risks enumerated above are minimal.

What are the rewards that make these risks, whatever they are, worth assuming?

One of my major objections to even considering product is that unless I planned to invest a lot, the knowledge curve would be daunting. If I were an insurance agent, in the state there this product is offered, maybe I might know what tricks the company and it's salesperson have up their sleeves. But already I know I would not invest a lot, since if there might be any extra yield it is not going to matter much.

So, from my POV messing with things like this could only sidetrack me from what I know works. Keep my reserves safe, risk money or do investigative work only where it can really matter. Most pitches are not fat ones; most are pretty hard to hit.

Over the years we have had plenty stories of how investors can get snookered by investment products; and of course there are plenty examples beyond this board. We have rarely had investors report that they got taken using plain vanilla funds and safe fixed and CDs. Neither our time, nor our experience, not our brains are unlimited.

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Old 08-28-2013, 12:06 PM   #14
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Talk to his supervisor, what he is doing is unethical.
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It sounds like the adviser sales guy may be trying to pass off a fixed term annuity as a CD; if so, I definitely agree that is unethical and he should be reported.
+2. That's the kind of advisor that gives honest advisors a bad name...and I doubt Fidelity encourages that kind of very bad advice.
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Old 08-28-2013, 12:32 PM   #15
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I have not taken the plunge on these products myself mostly because I have not done enough research to resolve my doubts about any investment product sold by insurance companies. But, I am wondering if others here can give good reasons for me to either run away from these products without looking back or to not think I am completely crazy for considering them.
As one (along with DW) that successfully used an SPIA to fund our retirement while delaying SS (DW at 66 - with me claiming 50% of her benefit and me actually claiming mine at age 70), it meets our needs.

I'm not going to argue the point of an (SPIA) annuity, especially at the age we executed it (59). However, here's a recent article that discusses the plan we actually executed on our own:

Mind the Gap If You Delay Social Security-Kiplinger

The difference is that our SPIA is a dual-life annuity, with a guaranteed payment period (28 years) rather than a shorter term annuity - as referenced in the article. While the annuity selected is different, they both act as "gap insurance" to cover the period of no SS, or even aide in the plan of delaying SS beyond FRA/age 70.

FWIW...
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Old 08-28-2013, 01:35 PM   #16
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+2. That's the kind of advisor that gives honest advisors a bad name...and I doubt Fidelity encourages that kind of very bad advice.
Ask about a CD, get offered an annuity without being advised of it. Wow. Good thing OP got the paperwork to look over. I would call the boss and discuss a new advisor (and look closely at all the other holdings the current advisor set up). Nothing for or against annuities here, but definitely wonder what the advisor is up to.
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Old 08-28-2013, 01:38 PM   #17
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As one (along with DW) that successfully used an SPIA to fund our retirement while delaying SS (DW at 66 - with me claiming 50% of her benefit and me actually claiming mine at age 70), it meets our needs.

I'm not going to argue the point of an (SPIA) annuity, especially at the age we executed it (59). However, here's a recent article that discusses the plan we actually executed on our own:

Mind the Gap If You Delay Social Security-Kiplinger

The difference is that our SPIA is a dual-life annuity, with a guaranteed payment period (28 years) rather than a shorter term annuity - as referenced in the article. While the annuity selected is different, they both act as "gap insurance" to cover the period of no SS, or even aide in the plan of delaying SS beyond FRA/age 70.

FWIW...
What if you wanted an SPIA and the advisor tried to get you to buy CDs without your knowledge? Wouldn't you be as upset as the OP?
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Old 08-28-2013, 02:21 PM   #18
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What if you wanted an SPIA and the advisor tried to get you to buy CDs without your knowledge? Wouldn't you be as upset as the OP?
Please see the question the OP was posing (re-quoted) that I answered. It has nothing to do with "being upset"
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Old 08-28-2013, 02:29 PM   #19
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Please see the question the OP was posing (re-quoted) that I answered. It has nothing to do with "being upset"
It is very helpful understanding the post that you have now (after your original post which I quoted) edited to include the post to which you were referring. Not understanding the given your original unedited post. Oh well, glad you are happy with your SPIA.
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