Why Robo Investing Is Not Competency of Investment Advice

Well the financial e-zines did it again. The Daily Wire featured SigFig saying its algorithms: “Will spotlight advisor “mistakes,” including the use of funds costing […]

5 Numbers for Investor Protection

Every investor should be proactive in protecting their financial security. Many would argue that organizations such as the Securities and Exchange Commission (SEC) and the […]

Beware of Equity-Indexed Annuities

In its January 2014 posting of disciplinary actions, FINRA disclosed that it had disciplined a broker in Wisconsin for ‘selling away’ (i.e. selling without the […]

By |March 24th, 2014|Categories: Products|Tags: , , , , , , , , |2 Comments

Why are Investment Surrender Charges so High?

First of all, sales reps say you will never pay the surrender charge or penalty for early withdrawal because you intend to hold the investment for at least seven years. That is true on the day you buy the investment – you have no intention of selling it that day. But, it is not true one year later when you determine the investment product (mutual fund, annuity) is under-performing and charging excessive fees. You determine you could do a lot better elsewhere, but you have to pay a 6% penalty (one year has elapsed) to move your assets.

Why are surrender charges just a big number? As you may know, investment product companies still pay the sales rep a 5% commission even though the assets are not deducted from your account. In effect, the product company is front-ending the commission payment to the advisor. The product company needs time to recover the commission payment. Most of the reputable companies charge early withdrawal penalties for seven years. They have that length of time to recover the commission payment and they are protected by the surrender charge if you decide to leave early. […]

Financial Tip of the Day [What Investors Should Know]

Many times I see investors being offered annuities with an income rider. My advice to investors is to do their homework. There are many varieties being […]

By |August 17th, 2012|Categories: Products|Tags: , , , , , , |0 Comments