A Trusted Financial Advisor

It is important to do your research when considering the purchase of an annuity as there are many factors involved that need to be evaluated: “Is an annuity the right thing for me?” “What type of annuity should I be looking at?” – The list can be extensive. If you are doing your research (and we know you are) chances are you have discovered that you will most likely need to get help from a trusted financial advisor. Here at Annuities HQ we fully agree, and we’re going to walk you through the process and tell you what to expect from your financial advisor.

The first thing you need to ask yourself: “What kind of financial advisor do I need?” This really depends on your situation and your specific retirement needs. If you have a substantial amount of money saved for your future and you are considering an annuity as part of your retirement plan then it would only make sense to consult with a financial advisor who is not just qualified to give you advice on annuities, but one who is qualified to help with all manner of financial matters – stocks, bonds, mutual funds…what have you. Generally, these advisors fall into a group informally called “wealth advisors.” In this article, we will be dealing with the 90+ % of you who are just looking for some essential advice on one important part of your retirement plan – obtaining the right annuity to suit your needs. Look for our guide on “wealth management in retirement” in an upcoming article.

There have been many articles published on the internet and elsewhere presenting a dim view of financial advisors that specialize in annuities, articles which may suggest that commission-only financial advisors are not to be trusted. This is really a case of one group of financial advisors attacking another group because they want your business. It’s really as simple as that. Many of you have some form of insurance – car, home, life – you probably have all three. Now consider whom you bought your policies from. You bought your insurance from someone you trusted and who was licensed to sell that product; you had faith in the insurance company and you also felt that the individual you dealt with – the one who sold you the policy- was trustworthy and truly representing the product that he-or-she was offering you. You probably never really stopped to think about the fact that your insurance agent was paid on a commission basis, it was simply a non-issue because almost everybody has some form of insurance and it’s commonly understood that the insurance agent needs to get paid, you just didn’t think about the fact that the agent was paid commissions.

While many of the advisors in our network have advanced professional designations, there are also many that are simply insurance agents that specialize in annuities and are licensed by the State that they do business in. There are a lot of misconceptions surrounding commission-only financial advisors in the annuities field. Most financial advisors are paid by the issuing insurance company, so when you buy your annuity it is important that you ask your advisor about the commission he or she will receive. This is where the “trust” comes into “Trusted Financial Advisor,” because commission rates can vary depending on how your annuity is structured, so make sure you also ask your advisor if their commission rate on any given product varies depending on what you may or may not add-on in different riders. Here at Annuities HQ all of our advisor’s sign forms that hold them to the highest standard of conduct, so while you should still ask our advisors all of the same questions you should ask any financial advisor, we can assure you that our advisors have your best interests at heart. Also, note that all of our advisors are independent financial advisors with access to a wide variety of products and companies.

Regulatory Bodies

The two major regulatory bodies you should be aware of are The Financial Industry Regulatory Authority (FINRA), they’re the largest independent regulator for all securities firms doing business in the United States; secondly, you may have heard of The Security and Exchange Commission (SEC). The SEC is a Government agency that regulates the financial services industry. You should ask your advisor if they are registered with FINRA and/or the SEC. Additionally, your advisor should be registered with your State. FINRA and the SEC both recommend that you have a clear and thorough picture of your financial objectives. You should also ask the following basic questions from any advisor you are considering working with:

  • Areas of Specialization – Do they only deal with annuities, and what type(s) of annuities do they deal with specifically?
  • Professional Designations – Certain designations, such as “CFP” (Certified Financial Planner) mean that the individual has passed rigorous standardized exams about managing personal finances. There are a great many designations and after you know which ones your advisor has, you can look them up here on the FINRA site.
  • Registrations or Licenses.
  • Education.
  • Work History.
  • Investment Experience.
  • Disciplinary History.

So remember to ask any potential advisor as many questions as you want to have answered, they should be more than willing to answer any questions you may have. If they aren’t willing to answer questions then you probably can cross them off your list. Also remember that when you find an advisor who is open and honest and has the right product to suit your needs, don’t worry too much about a long list of professional designations, just get a few references and talk to some people that have done business with the advisor before – that should tell you all you need to know.