'I feel like he may be taking advantage of us': Our adviser pushes annuities after we already said no. Do we fire him?

By Quentin Fottrell

'He claims that we are his only clients who have not jumped on this great opportunity'

"My husband is planning to retire next year. I have been retired for several years." (Photo subject is a model.)

Dear Quentin,

Our financial adviser wants us to invest our money in an annuity with dual directional indexed accounts. My husband is planning to retire next year. I have been retired for several years. Our adviser works for a large financial-services company that owns the product he is recommending.

I don't know much about annuities, but I've heard they can be very beneficial for the person selling them. He suggested this to us before, and we said no, but he has brought it up again.

Should I take a class to learn more about annuities? I feel like he may be taking advantage of us because we don't have much knowledge about them. He claims that we are his only clients who have not jumped on this "great opportunity."

He wants to know about every bit of money we have or expect to receive in the future.

Please help.

The Client

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You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.

I understand why an adviser would want to get your overall financial picture, but if he doesn't have it yet, why is he already pushing annuities on you?

Dear Client,

Your adviser should not make you feel uncomfortable. That's a no-no.

I don't like that your adviser heard your original answer ("no") and pushed the same idea again. I don't like that your adviser is pushing products owned by his financial-services firm. And I don't like that he is pushing you to reveal more about your assets and income in order to market more services to you.

He will say that's his job - to sell products, earn a commission or fee and make sure your money is earning money. However, there are ways to approach clients who are entering retirement and feeling vulnerable about their financial future without making them uncomfortable about the level of disclosure being asked of them.

Here are a few ground rules. Do not give an adviser withdrawal authority, read everything before signing, and get a lawyer or a certified public accountant to review the contract if necessary. Make sure you receive your investment statements directly, and have your accounts reviewed annually by a CPA to ensure all is A-OK.

Has your adviser shown you a retirement plan demonstrating why this annuity is appropriate for you? If not, I would be skeptical. If so, ask about any fees and commissions as well as rider costs, surrender charges and, ultimately, why this product is worth your while (all of that in writing). In fact, he should have given you this information already.

I don't like that your adviser heard your original answer ("no") and pushed the same product again.

Some credit unions provide financial advice to customers. The advisers are paid by their employer, so it's technically not free advice, and you should be careful that they don't sell you unnecessary insurance or annuities. Ask if your adviser works on commission, fees or both.

Not all money managers are fiduciaries who must act in their client's best interest under the Investment Advisers Act of 1940. Find out whether this adviser is a fiduciary - rather than, say, a broker-dealer - and whether he's a member of the Financial Industry Regulatory Authority (Finra).

Many fee-only fiduciary advisers operate as registered investment advisers or investment adviser representatives. They are primarily regulated by the Securities and Exchange Commission if they belong to larger firms, or by state securities regulators if they belong to smaller firms.

Reasons to look for a new adviser include failure to listen, high fees, the adviser's retirement, poor communication, disappointing performance, different values, ineffective advice and bad rapport, according to this survey by Financial Advisor Magazine.

Opinions on annuities

Annuities can come with high fees. Your adviser works for a company that owns the product he is recommending. That creates a potential conflict of interest, particularly given that with many annuities, the representative selling them receives a substantial commission.

You can give your adviser a "great opportunity" to learn how to listen to his clients' needs and respect them. You can also give him a "great opportunity" to show him that not everyone is going to be pushed around by a professional who is intent on giving his company's products priority.

It's OK to ask, "What are you hoping to achieve?" I understand why your adviser would want to get your overall financial picture - debts, income, assets, stocks, retirement fund, goals, etc. - but it would be wiser for him to have this information before suggesting investing in annuities.

Annuities provide a guaranteed income, similar to Social Security. The income depends on your initial investment, the interest rate you lock in and the payment schedule (monthly, quarterly or annual). Payouts depend heavily on age, gender and whether the product is a joint-and-survivor annuity.

If you put a chunk of your investable wealth into an annuity, you are forgoing any increases in the stock market.

If you are in very good health and have reasonably good genes, it can be a good bet. But if you put a chunk of your investable wealth into an annuity, you are locking up that cash. You are forgoing any increases in the stock market and hedging your bets against a severe downturn in the market.

In your 60s, the focus does shift from maximizing returns to preserving your assets and mitigating the effects of inflation and taxes, all while maintaining your peace of mind. Depending on your income or wealth, this might involve shifting more of your investments to bonds and cash equivalents.

An annuity is neither a bond nor cash. Like Social Security, it is effectively an insurance contract. An immediate annuity gives you income immediately, as its name suggests, whereas you may have to wait 12 months with other annuity contracts.

If you have 401(k)s and IRAs, you are partially protected from inflation. Annuity income is usually only partially inflation-protected unless an inflation rider is purchased, which reduces initial payouts. You should become more conservative in your 60s, but that doesn't mean annuities are the answer.

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More columns from Quentin Fottrell:

'I'm a big fan of DIY investing': I'm 64 and moving to the U.S. I have $2.6 million, but no Social Security. Will I be OK?

'I didn't ask a man to rear-end my car': Social Security is replacing my disability benefits. Will the fund run out of money?

'I'm simply exhausted': I'm 55 and have $1.3 million for retirement. Can I retire next year?

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-Quentin Fottrell

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06-15-26 1031ET