4 Things Your Annuity Advisor Should/Must Provide You

February 17, 2023

I had an unfortunate conversation this week with a lovely couple that reached out to me looking for advice.  Their story is one that I luckily don’t hear too often, but even one time is too many.  There are a lot of idiots in my industry, and there are a lot of smart people who dabble with annuities on the side of their equities business but don’t fully understand them or how they work. 

This is why I always recommend that you have 4 separate people involved in your retirement plan to help with safe-money products (i.e., annuities), risk-money products (i.e., stocks, bonds, mutual funds, etc.), tax-planning (CPA preferably), and legacy issues (an estate planning attorney).  All of these areas have lots of rules and products that change too often for any one person to be an expert in all of them.  The ball is going to get dropped somewhere if you are relying on one person to get everything right.

Anyway, here is what happened.  They had already protected their money in a Fixed Indexed Annuity with a good company but hadn’t seen the results that maybe had been projected for them.  This is another reason I always like to set a reasonable expectation that FIA’s will perform between 4%-7%.  And if it does better than that, then great!  If an advisor is showing you returns of 12%, 15%, or 18% for an annuity, be prepared to be disappointed. 

Can they perform that well?  Yes.

Should you plan your future income on that kind of return?  Absolutely not! 

You shouldn’t even expect your equities to perform that well on a year-over-year basis.  It just doesn’t happen.

Back to the story.  This great couple was advised to “surrender” their current annuity and move the money to another company that has a bonus that would replace what was lost due to the surrender schedule.  I have written about annuities with bonuses in the past and have warned that you need to read the fine print with these types of offers.  Remember:  There are no deals in the insurance industry.  Everything is based on math.  And if you’re getting a bonus, it is limiting some other area of the annuity itself.

The point is I had alarm bells going off in my head as soon as they told me they were advised to surrender their annuity.  That is a big “no-no” in my industry unless you can meticulously prove beyond a shadow of a doubt that the client will end up in a better situation after moving the money to the new annuity company.  It’s not uncommon to do it with Variable Annuities, because they’re terrible and very easy to improve someone’s situation by moving their money out of a VA.  But for most FIAs, it’s very hard to even get that accomplished with the annuity company that will be receiving the money.

Fortunately, their money was moved to a good company that I personally do business with, but they are having some issues with recouping the “bonus” money that was supposed to make them whole after forfeiting the previous annuity.

Luckily, this couple had a silver lining attitude about the whole thing, and I gave them a course of action to take that can hopefully get them a resolution.  But considering what they told me, it never should have happened in the first place! 

Their advisor left out some crucial steps that I always take with my clients.  Again, there are a lot of idiots in my industry, and there is definitely a difference between someone who can just sell annuities, versus an advisor who is an expert in annuity strategies.

Regardless of who you decide to work with, there are 4 things that you should be provided with that will allow you to understand everything you need to know about the annuity you are considering.


Illustration from the Annuity Company

It must be an actual illustration that was run on the annuity company’s illustration software, not an Excel Sheet or any other 3rd party software.  Now, I will sometimes take different RORs that the company has provided to make it easier to look at different dollar amounts, but those returns are always taken directly from the illustration which I have already provided to my client.

If you did not receive an illustration, an alarm should go off in your head!

A Product and Company Brochure

I don’t believe this is a mandatory requirement, but it’s a nice thing to have because brochures are created to relay information about the annuity in plain English, not “Financialese.”

As in any profession, we speak a certain language that is not understood by everyone, and the brochure is a good way for my clients to go back and be reminded of certain features or benefits that maybe have been forgotten.

Disclosure Statement

This is the “meat” of the annuity and has all the language that describes any fees, surrender charges, bonuses, guaranteed income riders, death benefits, or anything relevant to the performance of the annuity itself.

This is a section of the application that can be reviewed with your advisor while filling it out, or it can be provided to you beforehand.  Fortunately, with Fixed Indexed Annuities and Fixed Interest Annuities (MYGAs), this section is normally 2-5 pages long. 

It isn’t until you start getting into the world of Variable Annuities that the disclosures/prospectus’ become 100-400 pages long.  A Variable Annuity Prospectus has a dizzying amount of information in it that I would imagine even the people selling them don’t read.  But you didn’t think they would be held responsible when they lose your money, did you?  Their attorneys have that buttoned up pretty tight.  

In a normal Fixed Indexed Annuity, you should be able to understand every line in the disclosure.  And if you don’t, your advisor should be able to explain it to you without issue.

Buyer’s Guide

This is a document that was created by the NAIC (National Association of Insurance Commissioners).  It’s only about 7 pages long and contains a lot of definitions of words that are used in the insurance/annuity world. 

It’s pretty dry reading, but this one is a must that is to be provided by an advisor to anyone who is considering funding an annuity.


So, there they are!  The 4 things your advisor should/must provide to you when funding an annuity.  But don’t just fund an annuity.  Have a strategy put in place to maximize what the annuity can do for you.  The best way to dip your toe in the water and start your education is to watch my video series, “20% More Spendable Income in Retirement”, and of course don’t hesitate to reach out to me with questions or to have your own customized ATLAS Annuity Strategy designed for you by clicking the “Schedule a Call” button in the top right corner of this page!

All the best,


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