Dear Investor,


A standard variable annuity is a tax-deferred vehicle that allows you to choose from a selection of investments and when you annuitize it pays you a level income in retirement based on the performance of the underlying investments. A variable annuity is a contract between you and the insurance company selling it. Most variable annuities are high commission products, 4 – 7% for the salesperson at the time of purchase, which reduce the investor’s returns.

To recover the high front end commission the company will place a contingent deferred sales charge to recover the commission paid to the agent if you do not stay in the annuity long enough for the company to make a profit. On top of the sales commission there are also ongoing management, insurance, and investment fees that can run above 3% per year. You may think 6% right off the top and 3% annually is not that much but when you compare against other investment vehicles it is.

For example, my funds levy no sales commission or surrender charges have an average expense ratio of less than 0.35% plus the 0.50% advisory fee for management. Overall, you pay much less than 1%. The lower fees allow you to keep more of your money invested and compounding. If the market averages 7% and you are paying 3% in fees it is going to be much more difficult to build wealth.

If you have specific questions about a financial product contact me through


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