Helping a friend

[Scuba]

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Originally Posted by jazz4cash OP Nice job helping your friend. Glad I was wrong about the FA not being knowledgeable about the product.

Thanks. Yes, I was surprised how much she knew about it and the financial markets in general.

[Scuba]

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Originally Posted by CardsFan I have heard this sentiment several times from a friend. Between their pensions and SS, they have more income than they spend. They have some investments (401k, IRA, inherited after tax account) that they likely will never need, but are there "just in case". His preference is to just preserve value. While I might disagree, I can understand.

Me too.

[target2019]

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Originally Posted by Scuba [snipped content] Thanks again to all on this forum who helped me better understand this type of "investment." I still think my friend would be better off in a balanced fund or a mix of two ETF's (stock/fixed income); however the volatility would be greater and only she can decide if she is willing to have more volatility to get greater returns. One comment my friend made to me that many on this forum can probably relate to is that she feels she has everything she needs and so taking more risk to make more money isn't really necessary fo her. Very different than my attitude - with inflation and other uncertainties, I'd rather take more risk for a better long-term outcome - but then again, I'm 16 years younger and have higher risk tolerance, obviously.

I enjoyed reading about your mission, and hearing how it turned out. Once a product is sold, I feel the tendency is for the buyer to follow the path of least resistance. Remember that many years of product design and sale development go into a product. The message of low risk is very calming for some, and your friend is drawn to this.

Still, you did the right thing, and others benefit from the way you approached this. Thanks.

[Trooper]

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Originally Posted by Scuba Thanks. Yes, I was surprised how much she knew about it and the financial markets in general.

I'm a little late to this thread but just wanted to say that it was nice of you to help a friend through this process - it appears that you spent a lot of time on it.

The only thing I would have asked the annuity advisor is why she invested an IRA inside of the VA. The IRA already offers tax deferral, thereby negating one of the annuity's main benefits.

[Scuba]

Thanks to all who participated in this thread. Apparently prior to this annuity my friend had this money invested in a variable annuity that was inside of an IRA. She said that many of her fellow teachers had done the same.

I learned a fair bit helping my friend. I’m not too surprised she decided to stick with this for now, and I suppose given her age and risk tolerance, it’s not a horrible choice. She has some muni bonds and CD’s that she wants to consider doing something else with, so I will introduce her to my Fidelity guy and perhaps he can help her get a bit of growth with these funds.

I think really risk averse people sometimes don’t appreciate inflation risk. As long as their balance stays the same as when they started many years ago, they feel ok.