Financial Planning
March 27, 2024

Why You Shouldn’t Say, “I Hate Annuities”

Stewart Willis

Annuities can play a significant role in retirement planning, offering a reliable income stream for you post-retirement. However, with their current popularity and complexity, many quickly declare, “I hate annuities.”

The debate surrounding whether annuities are good or bad often centers on personal financial circumstances, retirement objectives, and the specific terms outlined in annuity contracts. By delving into the intricacies of annuities, we can uncover their benefits and drawbacks while examining the reasons behind the reluctance towards them.

Why Do Financial Advisors Hate Annuities?

The negative perception of annuities stems from drawbacks associated with these financial products and personal experiences or anecdotal evidence. Financial advisors may hate annuities because of the complex contracts.

The intricacy of annuity contracts can be confusing, posing a challenge for people to determine if they're making a wise financial move. Annuities are also highly competitive, with many options on the market, and some are rife with parasitic fees.

Unfortunately, there are instances where bad actors or insurance agents employ aggressive or deceptive sales strategies. This can result in individuals purchasing annuities that don't align with their needs or need to comprehend. Some bad actors employ scare tactics to push products that are unsuitable to customers.

Why Are People Against Annuities?

People duped into purchasing unsuitable contracts won’t hesitate to say they hate annuities. It's essential to recognize that not all products are created equal. Some companies may offer annuities with hidden fees and unnecessary riders disguised as “benefits,” preying on unsuspecting customers.

In this matrix of possibilities, we can distinguish between good companies offering bad products and bad companies offering bad products. Consumers must do their due diligence and carefully evaluate the terms and conditions of any annuity before deciding.

At Asset Preservation Wealth and Tax, we only work with A-rated products. Why? Because we want you to have something that genuinely works for you. There's no one-size-fits-all perfect investment. What works for someone else might not necessarily work for you, so we tailor our offerings to ensure they suit you.

Are Annuities Good or Bad?

Annuities are good and bad, depending on your financial circumstances. If your annuity makes it difficult for you to access your money when you need it, that's a red flag. An annuity should work for you, not against you.

While fixed annuities are generally considered safe investments, they shouldn't hinder your financial flexibility or basic needs like writing a simple check. Choosing an annuity that aligns with your lifestyle and financial goals is important.

Why are annuities bad for some people? It largely depends on the terms of your annuity contract and your type of annuity. Variable annuities with costly riders could eat into your returns, shifting the focus from growth to income. Instead of just taking your own money, wouldn't it be more rewarding to make more money through wealth accumulation?

Opting for an annuity that prioritizes boosting your funds rather than merely redistributing them over time is a wiser choice. Remember, income is what you take, but interest is what you ultimately make.

Why Do Annuities Have a Bad Reputation?

Since annuities can be good or bad, why do they have such a bad reputation even though they are popular? Again, this goes back to the terms of your contract and who really benefits from a bad annuity contract.

Some agents focus more on closing deals and earning commissions than on ensuring their clients get suitable products. They may sell annuities with high commissions, adding unnecessary features to make them seem appealing.

However, these bells and whistles can actually limit clients' cash flow and liquidity, leaving them with unsuitable financial products. That’s why annuities are “bad.” Clients should be aware of these tactics and work with trustworthy professionals who have their best interests at heart.

Frustrated senior couple looking at a document

I Hate Annuities—Not!

While it might seem like everyone hates annuities, they are actually quite popular. According to Statista, retirement assets in annuities saw a significant jump, reaching an estimated 2.29 trillion U.S. dollars in the second quarter of 2023. This is a notable increase from the previous year's 2.16 trillion U.S. dollars.

Following the bond market crash in 2022, annuities have gained popularity as a bond proxy for high-net-worth individuals. Annuities are favorable in this context because they offer secure and stable long-term money.

The more money you have, the more suitable annuities are because you don’t have the liquidity restraints of those with lower incomes. The current high-interest rate environment makes it favorable for HNWIs, who see more growth. This means investing in an annuity now is better than before—you can lock in high interest rates with your contract.

How Can I Incorporate an Annuity in a Risk-Aware Financial Plan?

Generally, we want to buy low and sell high, but that doesn’t always happen; this can be out of fear or necessity. Sometimes, you need to sell low because you need access to liquid cash. When we work with clients, we assess their risk tolerance and needs. You should have the peace of mind that you won’t be strapped for cash.

If you want a stable source of funds in your retirement, we can choose an annuity that works for you and accumulates growth. For example, let’s say you are a moderate investor. Annuities offer a unique opportunity to balance risk and reward.

By providing a fixed interest rate as a safety net, annuities can allow more aggressive risks on the securities side with less financial exposure. This approach offers a moderate risk profile while potentially reaping the benefits of higher returns.

Should I Get an Annuity?

When considering if an annuity is good or bad for you, ask who’s selling them and how they are getting paid. If it’s an agent from a questionable firm, you might say, “I hate annuities” later. You want to work with a fiduciary legally obligated to serve you. We don’t make money on commissions—your financial success is our success.

Are you truly getting the value you deserve from your financial advisor? It's important to assess whether they are genuinely committed to planning with you for the long term and providing the services you need.

Don't settle for a one-size-fits-all approach or spread yourself thin across multiple advisors. Look for an advisor dedicated to standing the test of time and building a lasting relationship with you. After all, strong relationships are key in financial planning, and we prioritize that at Asset Preservation Wealth & Tax.

Claim your free Portfolio Review!

Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products. They do not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company; not guaranteed by any bank or the FDIC.

Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Stewart Willis, providing such comments, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations for services, execution of required documentation, including receipt of required disclosures. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Any statistical data or information obtained from or prepared by third party sources that Foundations deems reliable but in no way does Foundations guarantee the accuracy or completeness. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to and search by our firm name or by our CRD # 175083.

Ready To Get Started?

You spent all your working years accumulating this wealth. Now it’s the time to make the most of it.