I had someone tell me recently: "My financial advisor says annuities are terrible and I should never buy one." I didn't argue. Instead I asked one question: "How does your advisor get paid?" That usually opens up a conversation people haven't thought about before.
Most advisors are paid a percentage of the assets they manage — typically around 1% a year. When money moves out of a managed account and into an annuity, that money leaves their management and their fee goes down. That doesn't make them dishonest. It just means the incentive isn't neutral when the subject comes up.
There's a second piece: licensing. An advisor can only recommend what they're licensed to sell. If someone holds securities licenses but not an insurance license, a fixed indexed annuity simply isn't on their menu. "Terrible" is sometimes shorthand for "not something I can offer."
None of this means your advisor is wrong.
Some annuities really are terrible, and a good advisor will say so. The question is whether the opinion is about annuities as a category or about your specific situation. Those are very different conversations.
What I'd suggest is simple: ask your advisor two questions. "How are you compensated?" and "Which annuities are you licensed to offer?" The answers won't tell you what to do. They'll tell you how to weigh the advice.
And if you'd like a second set of eyes on your numbers — no obligation, no pressure to leave anyone — that's exactly what a 15-minute call is for.
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Author of Indexed Annuity Secrets and founder of Pacific Ridgeway Insurance Solutions in San Diego. Navy veteran. Licensed financial professional, CA #4132743.
Fixed indexed annuities are insurance products, not investments. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. This article is for educational purposes only and is not financial, investment, tax, or insurance advice.