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    Selecting an Annuity Advisor

    At a time when more people are worried about their financial security and looking to create more certainty for their retirement, annuities are quickly moving to the forefront of financial options.  The level of safety and guarantees they offer is unparalleled; however, even for the more financially savvy investors, they are a complex financial instrument that may require professional guidance.  The sheer number of annuity products alone is reason enough to engage an qualified annuity advisor, but understanding all of the components – the accumulation account, the withdrawal provisions, the rate guarantees, the income options, the riders, the beneficiary designations – is crucial to getting the maximum benefit from owning an annuity.

    First, do your Homework

    It is always recommended that, when considering any complex financial decision, you engage a financial professional.  A truly competent advisor is better positioned to match your specific needs with the right product, saving you a tremendous amount of time, and eliminating frustration and second-guessing.  However, it is important to spend some time doing your homework so that time you do spend with an advisor is well spent and productive.  Advisors can only be as helpful and accurate in their advice as the information they have on your financial situation, including your goals, your priorities, your current investments, and your tolerance for risk.  Additionally, it would be important to not go into an annuity advisory session without having done some research on annuities, so that you are able to ask the right questions.

    Your first step should be to conduct a thorough assessment of your current financial situation, taking inventory of your current savings and investments, analyzing your cash flow, and mapping out your short and long term objectives.  It is also important to understand your risk needs.  For instance, if you have most of your retirement assets invested in equities, you may need to balance your risk exposure by choosing a more stable annuity to counter the volatility of your portfolio. A good annuity advisor should be able to help you in this process, but you should be as prepared as possible with your own assessment.

    The next step is to conduct some research on annuity products to learn how they are structured and to understand the differences in various types of annuities.  The best source for this research is the Web on sites such as this one. You will be able to learn how the different types of annuities work and how they each can be applied to your situation.  You should study the information enough to develop a list of questions to ask your advisor. Questions pertaining to minimum rate guarantees, surrender periods and fees, savings options, fees and expenses are all important in deciding which annuity product best serves your needs.  These sites will also enable you to do some comparisons between annuity products so you can better understand how they can work for your situation.

    Annuities Explained

    Advisor Selection Checklist

    Armed with your homework, you will be in a position to interview several different advisors to determine which one is best suited to work on your behalf. Your best source for finding prospects if through referrals from trusted friends or relatives who have existing relationships with annuity advisors. Alternatively, you can search for qualified advisors through various directories compiled by various consumer and industry organizations.  It is important to establish a list of criteria and requirements to use in narrowing your selection. Among the more important criteria are:

    Education level –

    five years of annuity advisory experience should be a minimum.

    Education level –

    Look for advisors who have committed themselves to excellence by acquiring certifications and credentials, such as Chartered Financial Consultant (ChFC), Chartered Life Underwriter (CLU), Certified Annuity Advisor (CAA) or Certified Financial Planner (CFP).

    Independence –

    Avoid working with an annuity salesperson who is limited in their product offering.  A true advisor has access to a number of annuity providers and is in a position to work on your behalf rather than on the behalf of a specific provider. It is especially important to know that he works with the top rated companies. Ask for a list of the annuity providers he works with, and make sure there are a sufficient number of A+ or AAA rated companies included.

    Process –

    A good advisor asks a lot of questions and conducts his own assessment of your situation before recommending any products.  Ask a prospective advisor to describe the process he uses to determine which products are most suitable. If, within the first 30 minutes of meeting with an advisor, you are handed a product brochure, you should probably walk away.

    References –

    It’s always important to learn as much about your advisor as possible, and one of the best ways is through client references. Ask for references. You are likely to be referred to their most satisfied clients, so you can expect nothing but positive reviews, however, you can still learn about the advisor’s relationship skills.

    Background –

    When checking the background of advisors, Google is your friend.  You should be able to pull up information on your advisor including LinkedIn profiles, community involvement, industry recognition, etc. If your Google search comes up completely empty, it could also be a red flag.  Also, be sure to check for any disciplinary record with the Financial Industry Regulatory Authority (FINRA) and your state’s insurance regulatory agency.


    Selecting the right annuity product can be a daunting experience, but when you know you have the right annuity solution in place it can feel very rewarding.  Qualified annuity advisors should be able to facilitate the process and increase your comfort level with their knowledge, their ability to communicate (and listen), and their demonstrative willingness to put your interests first.  Annuities are long term investments that can address your most important goals. With so much at stake, it is worthwhile to take the essential steps described here to be able to select the right annuity advisor.