Variable Annuity

[bleedorange2007]

My dad's financial adviser recently asked him to consider moving a large amount of his retirement into a variable annuity. My dad then asked me what I think about them. Although I have a finance degree from UT, I'm not an investing expert.

Does anyone have an opinion on them? My parents are not in the absolute best shape for retirement (but no means in bad shape) and have an investing horizon of at least another 15-20 years.

What are the positives/risks of this instrument? The mgmt fees were much higher than typical mutual funds (2.2 vs. 0.7%). Why is that?

Thanks in advance for any advice!

 

[midtown]

In reply to:

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[Sangre Naranjada]

Yep. That "advisor" is looking to make a killing off your dad. The only reason to try to sell a VA to somebody is to get the sweet commission.

 

[TxStHorn]

In reply to:

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[Teasip63]

My opinion - Do Not Let Your Dad Buy A Variable Annuity.

To get reason why just google variable annuity problems and you will have all of the reasons you need. In fact, 1,710,000 comments about it.

Don't let him do it. Now, don't make me come down there.

 

[Sangre Naranjada]

TxSt,
Most Financial Advisers are just salesmen with a fancy nickname, and they care about their own income stream more than they care about their clients.

Fee only advisers are the only way to go.

 

[RoundRobin]

One of the benefits of an annuity (fixed or variable) is the tax deferral on income. If your dad's advisor is suggesting that your dad should put qualified money into a VA then I would tell your dad to decline and look for a new advisor.

 

[pulque]

Run away from VA's; as fast as possible!

 

[OrangeBlooded]

did you ask your dad if he asked his advisor why he should consider it?

 

[bleedorange2007]

thanks guys. ive passed all this along to my dad who was very appreciative.