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Variable annuity
Old 08-09-2012, 07:12 PM   #1
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Variable annuity

Hi, I just found this board and joined here to learn all I can, and hopefully help others out with what little I know.

We're big Dave Ramsey fans, and without going into details I'll just say that Dave would be proud of us.

My husband took early retirement from GM in 2008. This summer, GM decided to "de-risk" their plan, and off-load tons of pension obligations. Read more

We took the lump sum, which will be rolled into his 401(k) next month.

I know educated answers can't be given without all the specifics (which I'm reluctant to do on a public board), I'm having a heckuva time deciding what to do with this money.

It now represents 1/3 of our current liquid retirement savings (if you consider 401(k)s liquid).

We met with three Independence CFPs, all of whom told us to take the lump sum. And then obviously invest it with each of them.

One of the CFPs is a Dave Ramsey Endorsed Local Provider (ELP). She is really "encouraging" me to buy a Prudential Premier Retirement B Series Variable Annuity at 4.5% return, which she says is going away in two weeks and being lowered to 3.5%.

Really, I am an annuity moron. I inherited a couple when my father passed and they actually paid as promised with no glitches.

A few more details that may help: we both plan to work another 3-5 years, so we would defer the initial payment for 5 years, which we can do (at this point).

Too much info? Not enough?

Can anyone give me help to push back on this gal? I'm just so confused... I like her, and think I want to work with her, but just not sure that a variable annuity is how I want to do it.
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Old 08-09-2012, 11:18 PM   #2
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Run away as fast as you can.
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Old 08-09-2012, 11:33 PM   #3
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Plus 1. She is not your friend.
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Old 08-09-2012, 11:53 PM   #4
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If you are a Dave Ramsey fan I think he would tell you never to invest money in something you don't understand. And I've heard him say multiple times that he is not a fan of variable annuities. I do t think this ELP is advising you along with Dave's principles.
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Old 08-10-2012, 05:58 AM   #5
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I would not be comfortable with the ELP in your situation. Can you meet with a fee-only CFP in your area and then take that information as your launching point for investing the $ yourself? Try looking on the NAPFA website or through the Garrett Planning Network, I think both of those will have fee for service CFPs, who get paid like CPAs and such, rather than on commission.

The annuity wouldn't be a good choice in my mind for your situation, but it would pay a very handsome commission to your new "friend".
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Old 08-10-2012, 08:03 AM   #6
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I wouldn't recommend an annuity, especially a VA, your broker benefits more than you do. I'd consider a SPIA first, but I'm not a fan of annuities as a first choice. But don't take my word for it, here's what your friend Dave Ramsey says:
Quote:
Worth mentioning
  • Don’t commit to VAs until you’re sure you are ready. Once you’re in, you’re in.*
  • Never, ever, ever roll an IRA, 401(k) or 403(b) into a VA. These three things already have the benefit of tax-deferred growth, and you do not need a VA.
  • While Dave fits all the pre-requisites for VAs he does not personally own any. He prefers mutual funds and paid-for real estate for investors on Baby Step 7.
Dave's Investing Philosophy - daveramsey.com
Uncovering the Mysterious Variable Annuity - daveramsey.com
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Old 08-10-2012, 04:36 PM   #7
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Thanks everyone, I appreciate the input.

Interestingly enough, I called the Dave Ramsey show today, and after I explained to the screener that Dave's recommended provider was pushing a VA on me, I was given another # to call. I called that guy, who got all the specifics from me. I don't want to get her in trouble, but she's really being pushy.

I'm supposed to send her an email tonight, and BCC Dave's employee, telling her to back off & let me digest all this.

And then I'm going to run it all through the shredder.

Thanks for the recommendation on NAPFA - I have an appointment set up with one in a couple of weeks. She must be good - she's really booked.
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Old 08-10-2012, 05:17 PM   #8
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Glad to help! It always bothers me to hear about such stuff; especially when the salesperson shares my own credentials!
Hope your meeting with the fee-only advisor goes well; please report back to us if you will.
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Old 08-10-2012, 08:52 PM   #9
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especially when the salesperson shares my own credentials!
Does the ethics of the CFP organization suggest/require a fiduciary relationship with the client?
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Old 08-10-2012, 10:46 PM   #10
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Does the ethics of the CFP organization suggest/require a fiduciary relationship with the client?
Yes! Actually the Board is part of a coalition lobbying the SEC to require a fiduciary standard for all financial professions.
Here is a good resource on their efforts:
http://www.financialplanningcoalition.com/
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