When you think about innovation and the market-moving solutions of the past century, what do you think of? IRAs, Roth IRAs, Exchange Traded Funds and mutual funds are all great examples of innovations that have truly changed how people invest. What mutual funds did for the accumulators years ago, indexed annuities are about to do for retirees. Indexed annuities are creating a marketplace for products that offer baby boomers safety, lifetime income, potential for attractive returns in a low interest-rate environment and death benefits.
Part 1: Annuities go with the flow
Fast forward to the fall of 2008 when the stock market came crashing down. Lehman Brothers had just collapsed, Merrill Lynch was in talks to be sold, and AIG had just announced their billion-dollar bombshell. Gary’s advisor had him fully invested in the market, and he did not even bother to call Gary about the sudden drop in his account values. Gary called his advisor and turned the distributions off since the account had lost about 40 percent of its value‑it was now at a staggering $420,000. Gary and Betty had trusted their advisor and the markets with their life savings only to be set back by events that they had no control over and no way to forecast. What could they have done differently? Could this have been avoided?
Panicked, upset and lost, Gary started talking to friends and neighbors about his dilemma. Gary was shocked to find out that some of his friends had accounts that had not lost anything despite the fact that their interest was tied to a stock market index. He was intrigued enough to call and set up a meeting with our firm.