Ken Fisher dislikes annuities. He is not shy about it and became controversially famous with his ‘I Hate Annuities’ campaign. But is his hatred justified?
First, Fisher’s claims that annuities have ‘nosebleed’ fees is just wrong. Most of them don’t have any fees. The only exception is variable annuities, but the investor gets a guaranteed lifetime stream of income in exchange.
Do annuities keep the promise they make to investors? Ken doesn’t believe they do. But as David explains, annuities ensure a retiree never runs out of money, which is the one thing retirees fear more than death.
When it comes to withdrawing money during retirement, the 3% Rule is one of the most effective strategies you can use today.
According to David, Fisher’s claims that annuities always mean more taxes is completely false. You can essentially solve all your tax problems by implementing what David calls the Piecemeal Internal Roth Conversion.
Fisher argues that annuities do not have a liquidity option. Yes, annuities do have surrender fees, but as David explains, most people don’t need liquidity because their investments already guarantee they won’t outlive their money.
Another of Fisher’s issues with annuities is the abnormally huge size of annuity contracts. David counters that claim by saying he’s seen dozens of contracts, and they are not as complicated as Fisher paints them to be.
Can annuities provide any real value to the average investor? Fisher thinks they can’t. David, however, highlights that annuities offer value in ways no other investment vehicle can – your living expenses are taken care of regardless of the market environment, forever.
Fisher also maintains that financial advisors are the only people who gain anything from annuities. That’s a little disingenuous coming from a person who built a $7 billion business from financial advising.
If anything, Ken Fisher is consistent – consistently wrong on all his criticisms of annuities. David further adds that his advice is dangerously misleading and primarily aimed at getting you to transfer your assets over to Fisher Investments.
Mentioned in this episode:
David’s books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code
PowerOfZero.com (free video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram