TriQuest Newsroom

Fixed and Index Annuities
2 Biggest Myths And Why You're Being Misled

Chesapeake, Virginia, August 23, 2009 -- The Internet has changed our way of business and life. But the one drawback is that anyone can publish false or misleading information and present it as fact.

If you are considering an annuity as part of your retirement planning or wealth-building strategy, you need this information.

The fixed and index annuity industry has been on the receiving end of a well-craft and aggressive "anti-annuity" campaign. Much of the false and misleading annuity information on the Internet comes from stockbrokers and financial planners who gain nothing when someone invests in a fixed or index annuity.

We feel this is wrong and misleading, and the same type of thinking and action that started the entire financial crisis in the first place.

The following "Myths vs Facts" information sets the record straight about fixed and index annuities and their advantages for retirement planning and building wealth.

MYTH
Fixed and Index annuities are a bad financial tool.

FACT
• Equity index annuities were introduced in the mid-1990's and significantly grew as more and more people used them for predictable retirement planning. Today, over $123 billion is invested in indexed annuities.

• Fixed and index annuities are protected assets and can be used to build a predictable and comprehensive financial plan.

• Fixed and index annuities are excellent retirement and estate planning financial tools because they are safe money -- money that cannot be put at risk like retirement accounts. Fixed and index annuities are guaranteed against stock market losses.

• On the other hand, as we've all found out, it's risky to use variable products like variable annuities that are invested in the stock market and are exposed to the ups and the downs of the market. These variable products are designed for younger people who have time to make up for stock market losses.

• Variable products require higher risk tolerance.

MYTH
Fixed and Index Annuities are expensive and pay large commissions at your expense.

FACT
• The "expensive" and "large commission" mantra is aggressively repeated by financial advisors and brokerage firms that sell mutual funds, stocks, and bonds. Here's a quick investment example that highlights why these folks knock index annuities.

• You invest $100,000 in an index annuity where your advisor gets a one-time 9% commission. You invest another $100,000 with a broker in equities who charges a modest annual fee of 1.50%. The hypothetical rate of return in both accounts is 7.20%. Below is a 10-year, year-by-year account of how you and the advisors fair.

• Which one of these advisors is paid the most over the 10 years? As you can see, the index annuity expert does not get a bigger commission than the advisor who sells mutual funds, stocks, and bonds. And, the index annuity expert's commission comes from the insurance company, while the broker's commission is taken directly from your account. So why do these financial planners and brokerage firms continue to misrepresent index annuities?

• The main reason financial planners and brokerage firms discredit fixed and index annuities is profit. There is less profit for them if you utilize these financial tools. For instance, a broker will discourage a client from converting a taxable IRA into a tax-free Roth IRA.

• Why? Because the brokerage firm collects a fee on the amount of money it manages. If they're making 1.5% on managing $10 million, that's $150,000 a year. If clients convert to a Roth IRA, one-third of that money goes to the government for the upfront tax liability. That means the brokerage firm will lose fees on $3 million in just the first year. The client-friendly Roth IRA is not broker friendly, so there is no incentive to use it. It creates a spigot of money leaving the firm. Better to manage the money that goes to the government in a deferred state, than to take advantage of the tax-free, pay-upfront-while taxed are low benefit.

FINAL FACT
At TriQuest Equity Management, none of our clients lost money in the financial crisis America is still experiencing.

If you have questions about turning your IRA or other retirement plans into a Roth Conversion, please contact Merle Gilley at (757) 424-8901.


About TriQuest Equity Management
We are a financial planning company whose financial advisors specialize in converting deferred taxed IRA’s to tax free ROTH IRA’s, 401(k) strategies, home equity services, equity management, equity for life, home equity management, home equity uses, investment real estate equity, retirement planning, Roth IRA conversions, IRA conversions and fixed index products for clients in Virginia Beach, Norfolk, Chesapeake, Suffolk, Portsmouth, Newport News, Hampton, Williamsburg, Hampton Roads, Eastern Shore, Richmond, and throughout Virginia. Our retirement planning advisors and Roth IRA advisors are the backbone of our equity management company, and separate us from other asset management firms, financial advisor companies, and retirement planning firms.


For a no-cost phone consultation, feel free to call us at (757) 424-8901 or fill out this form.