The Annuity Debate
Posted by admin in Investing
Annuities sometimes seem like "The Three Faces of Eve." You get people who love 'em, people who hate 'em and some just don't know.
I want to direct you to an article in a trade journal that confronts this "multiple personality" issue of annuities. It's written by Harold Evensky who is a noted thought leader in the financial planning community.
Mr. Evensky walks through his conversion from annuity basher to, when appropriate, annuity proponent. His conversion boils down to "framing."
I believe that much of the acrimony in the VA debate is a result poor framing. Investment vs. Risk Management — If a VA policy is considered simply as an investment product, the noninvestment features are instantly relegated to a minor, minimal-value role. If however, the recommendation of a VA is considered only one of two important recommendations—namely as a risk-management tool—the noninvestment features (particularly the mortality and life income guarantees) may be raised to a significant level.
I'm interested in reading reader feedback in the months ahead. I'll let you know what sort of reaction this get.
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