Barron’s Rates Annuities, Read All About it! Maybe Not…

Barron's Rates Annuities, Read All About it! Maybe Not... earlebird.com

Bet you didn’t know that my favorite magazine (Or is it a newspaper?) is the financial periodical Barron’s. In 22 years, a week has rarely gone by when I didn’t read it from cover to cover. You could make the argument that reading Barron’s spearheaded my financial education into investing on my own, and, ultimately, to starting an investment firm back in the 1990s.

I love Barron’s, and it would be easier for me to give up caffeine than to give up my favorite weekly, but the magazine has been “mainstreamed” over the last few years. To boost magazine sales, and I should mention that Rupert Murdoch is now the owner, Barron’s has gone fluffy with some articles, and some of its cover pieces make me cringe with their catchy phrases and superficiality.

This week, Barron’s front page says it all, “The 50 Top Annuities.”  The magazine breaks down 50 annuities into categories: income annuities showing a few age and income options; index annuities showing projected income values using income riders 15 years from purchase date; and variable annuities showing past accumulation returns. No income projections for variable annuities were shown in the article, though the income riders were mentioned in regards to how expensive they have gotten for insurance companies to offer.

Barron’s didn’t cover annuity products until last year when they introduced this “50 top annuities” idea. In the past, the magazine published a small article on variable annuities maybe once every three years. It usually was a column tucked away that mentioned some benefits but invariably listed the product staples: high fees and lackluster investment performance. It always looked like a piece coerced by an editor who was looking for some variety in a serious investment publication. But Americans are buying annuities. They are buying index, variable and, lately, even immediate annuities. Almost every financial adviser in this great land sells annuities because guarantees in the stock market are big sellers now.

But something is a little off about Barron’s featuring annuities. It’s wonderful to discuss annuities and why their popularity has spiked the last few years. However, for a serious financial publication–we’re not taking Money magazine here folks–to start listing the “top 50 products,” boy, that really gets my feathers up. Barron’s, the annuity industry thanks you for the press, but you’re jumping the shark by thinking you know the top annuity products. By the way, here’s a few items you should include for next year’s top annuity article.

Barron’s, the annuity industry thanks you for the press, but you’re jumping the shark by thinking you know the top annuity products.

Besides the usual warnings to readers about variable annuities’ high fees in variable annuities, you should mention the high fees and surrender charges associated with many index annuities. Did you research why many banks and investment firms won’t touch index annuities due to their expenses and lack of clarity? I think the journalist got confused when writing this year’s article. I think she forgot that index annuities are accumulation products with an income rider attached, not an income product with an accumulation rider attached.

And there were no projected numbers on the income riders of the variable annuity products. The article mentioned that 90% of variable annuities have an income rider, so why not show the numbers? You did it for index annuities but not the variables? Even though the variable market outsells index annuities? I don’t get it. It seems like the author needed more education about index annuity products.

Next year, I would love a comparison between index and variable income riders. Do a real analysis between the two, using several age and deferral periods, and analyze what the projected returns and income could be. These income riders need a side-by-side comparison with projected product returns if one lives to 85, 90 or 100 years old. That’s what the highest-esteemed financial periodical would have done in the old days. So come to your senses and get it done. You have a year to prepare!

Pay-it Forward:

I just love this hubbub surrounding the Facebook stock debacle. Do you really think it was so terrible that investment firms knew some financial projections and the public didn’t? How many little investors cared about the numbers? Listen, the general public wanted Facebook stock and no numbers were going to stop them from buying it. The price-to-earnings ratio is over 100; Google is about 18 prior to this information abuse. Please inform your son that this is not investing.  This is trying to be cool and hip and boasting to your buds that you’re in Facebook. The word “cool” shouldn’t enter into any investment decision.

Earl E Bird

I'm Earl E. Bird and I am very concerned about saving for my senior years. I am amazed at the stumbling blocks that exist when saving for retirement. That's why I take my time when making decisions on building my nest egg.

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About the author

I'm Earl E. Bird and I am very concerned about saving for my senior years. I am amazed at the stumbling blocks that exist when saving for retirement. That's why I take my time when making decisions on building my nest egg.

More posts by | Visit the site of Earl E Bird

 
 
 
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