175429134In a July 13 NY Times article http://nyti.ms/12y0qAd by Paul Sullivan about notices that some holders of variable annuities have been receiving in the mail from their insurance companies that are trying to get out of some of the overly generous living benefit guarantees, he noted that these letters “may look like routine notices from an insurance company(but) might be the difference between receiving the payment they expect and one that is significantly lower”.

The article also states that as a Registered Investment Adviser (RIA), I advise clients to consider over time adding fixed annuities to your retirement savings to accomplish that same goal – having guaranteed lifetime income in retirement. I’m quoted as saying, “Our analytics suggest these [fixed annuities purchased over time] are very attractive vehicles versus variable annuities with living benefit guarantees. They’re very transparent and very low cost, and the math works.”

The challenge for advisory firms like Golden Retirement Advisors is that the issuers of these variable annuities do not provide good analytical tools to enable advisors to both compare these products with each other, and with alternative strategies.

Fortunately, with my background as the inventor of the original Guaranteed Minimum Income Benefit, we’ve been able to build our own analytical tools to enable us as an RIA to evaluate current variable annuity designs as well as the gradual purchase of fixed annuities.

My concern is that for some variable annuity holders getting that notice, the default strategy might be to exchange the old contract for a new one, like one gas guzzler for another, when the better approach may be a trade-in for a hybrid or electric car.

Bottom line – be sure to read the notice carefully, and then get assistance from an expert as to what to do next.