My clients and newsletter subscribers know that it is rare for me to include articles or outside authors in my newsletter. There are many great authors and sources of financial information available and this month I’ve decided to include a brief article written by Roger Ibbotson. You may be familiar with Mr. Ibbotson’s work. He is chairman and Chief Investment Officer of Zebra Capital Management, LLC, an equity investment and hedge fund manager. He is also founder, advisor, and former chairman of Ibbotson Associates, now a Morningstar company.
Roger Ibbotson, Professor Emeritus of Finance at Yale School of Management, studied Fixed-Indexed Annuity performance relative to Bonds over a very long period of time. His article included here, does not constitute investment advice, and individual performance may vary. His findings are interesting but not at all surprising to me. Let me know what you think about his conclusions!
At PCA, I’ve integrated investment portfolios with Fixed & Fixed-Indexed annuities for well over a decade. Fixed & Fixed-Indexed annuities are not considered investments by the SEC, so many investment-only firms could not, and did not, make available to clients. With this institutional bias toward product solutions involving risk and fees, it wasn’t surprising to see negative and ignorant criticism coming from these institutions toward Fixed & Fixed-Indexed annuities.
The Ford truck dealer won’t tell you what Chevy or Toyota trucks do better! PCA is an independent Fiduciary firm. If we were a Fiduciary in the truck business, we would be able to offer Ford, Chevy, Toyota and every other brand without bias and the price for clients would be the same regardless of truck chosen.
I find it interesting and satisfying to see mainstream investment firms finally coming around to offering alternatives for money clients don’t want in the stock market. Many investment firms now have contracts with insurance companies to offer Fixed & Fixed-Indexed annuities. PCA has maintained contracts with a wide variety of insurance companies for over fifteen years.
Clients may benefit from similar return with lower risk and lower fees. That basically defines value for a client.
No product or strategy is appropriate for all client scenarios and your situation should be supported by recommendations in your best interests. Fixed & Fixed-Indexed annuity terms vary, and principle is guaranteed by the issuing insurance company.