Pundit v. Professor
A recent article from an insurance industry expert refuted financial pundit Suze Orman. Michael Finke wrote the below article to challenge Suze Orman regarding the advice she gave a follower — “never use an annuity for tax purposes”. Suze is not alone in her general dislike of annuities but at least she is open to some of the more basic forms of annuities like SPIA’s.
Ken Fischer who “loves to hate annuities” and thinks that you should too. He is also quoted as saying “I’d die and go to hell before selling an annuity”. In his next breath he clarifies he is not referring to SPIA’s.
An annuity is simply a tool, and perhaps the best question for an advisor to ask is – which one of my clients might find value in using this tool?
Suze Orman Gets It Wrong on Annuities & Taxes, by Michael Finke
The Problem with Pundits
Most of what pundits spew out to their audience is “one size fits all” advice. Some of your clients may be listening, perhaps wanting to follow a pundit’s generic advice or challenge you about any difference.
Many of these commentators appear anchored to the past—operating under the assumption that the only annuity worth considering is a SPIA or a DIA. Yet today’s pricing environment has produced notable income anomalies, where certain income-rider products can generate higher guaranteed income than traditional SPIAs or DIAs for some clients.
I am reminded of the famous quote from Mark Twain (Samuel Clemens): “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
Below is a case study illustrating how a Deferred Indexed Annuity was the Right Fit™ solution for one client—after careful evaluation—and their fee-only advisor agreed with the recommendation.
Explore: Three Ways to Design Lifetime Income
Client Compliment
I recently received a note from a client of an advisor I assisted with securing guaranteed lifetime income through an immediate annuity. The credit truly belongs to her advisor.
He is an hourly, fee-only advisor who identified a gap in her plan: reliable income to cover core living expenses. After providing advice, he connected her with IIC to evaluate and shop the marketplace. In her case, a traditional SPIA proved to be the most appropriate solution.
The client later reached out after hearing Warren Buffett speak favorably about annuities as a way to provide guaranteed lifetime income:
“Thanks again for your help in getting the Immediate Fixed Annuity set up. I was listening to a YouTube lecture by Warren Buffett on 5 things retirees need to do before 2026 and one of them was to set up that kind of annuity! And, he listed the things to make sure of and it was all the things you set up for me … like the Insurance Co being A+ or higher.
I was happy to see it endorsed by Buffett. He explained that it’s controversial (mostly because many annuities are, as you said, not good) but that he would encourage retirees to make use of it and why.”
– Barbara A