How to Find a Good Annuity Advisor
Annuities and investments can be one of life’s more complicated things. Not everybody knows how these things work, not everybody understands them, and surely not everybody knows the laws that govern them also. So the challenge for the Average Joe all comes down to this one: finding a good annuity advisor.
While there are really quite a number of factors to consider in choosing an advisor, an investor must make sure that he or she will only work with a licensed and certified advisor. Because annuities are considered insurance products, state insurance commissioners oversee that they abide by rules and state laws. Different states may have different and additional requirements, but if the advisor sells a variety of the products, such as variable annuities, he or she must have a license from the Securities and Exchange Commission (SEC) and must be registered with Financial Industry Regulation Authority (FINRA).
Investment advisors are either “fee-only” or “fee-based”. Fee-only advisors are paid for by his or her clients directly. This type of transaction could be hourly rates, but commonly they are paid by some percentage of assets that they are about to manage. Fee-based advisors are paid by a combination of fee-only from the clients, and commissions paid by the companies of the products he or she sells.
The best advisors are those who give the most honest advice, together with the most accurate projections of losses and profits they could possibly provide. Moreover, it is often better to look for an advisor who is not dependent or employed by a single company. An advisor who is not tied to an employer would provide better judgment based on comparisons of multiple insurance and investment products that he or she offers.
Advisors should take time to understand what an investor needs and wants. The recommendation of an investment is not something you could always know in an instant. In order to grasp the meaning of an investment, an advisor should delve deeper and know the investors better. He or she must ask to see relevant financial documents which are typically account balances, loan balances, and college plans for those who have children. It is also important to consider the age, income and risk tolerance of the investor. With that said, research is truly a main part of an advisor’s job.
Last but not the least; it is always a good idea to choose an advisor who has experience in dealing with people within the same situation as the investor. The importance of experience that the advisor has should be seen through the successes and failures of all the other investment that is entrusted to them. The ability of the advisor could well be seen if his other clients with similar goals are happy with the investment plans that they have been given.
It is important to choose an advisor that fits you, knows what you want and what you need, and more importantly, has your best interests at heart.