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Jan 31, 2016 by |

California Annuities Fraud Attorneys: Pitfalls of Annuities


The Potentially Pitfalls of the Annuity

There’s a lot of contention surrounding the annuity, an increasingly common financial product as the population ages. Opinions range from embracing the product to utterly disavowing it. There’s one thing that both sides of the argument can agree on: the wrong annuity for the wrong person can spell utter disaster for their finances. Annuities can potentially tie up large amounts of money for decades, and the fees and hurdles involved in getting at it can be prohibitively costly to a senior on a fixed income. There are a few major risks when considering purchasing an annuity, and if you see any of them, it’s worth reconsidering your options.

Pushy Salesman

Annuities are complicated products, and it’s often the case that your broker may not understand the ins and outs of your purchase either. That’s why, if they’re pressuring you to sign before you’ve had a chance to read and consider the policy, it’s likely they’re putting more importance on the sale than on your financial wellbeing. Brokers can take a whopping 15% of the cost of your annuity as a commission, so they’d rather see you buy an expensive policy than opt for something that may be better suited and less costly.

Unclear Certification

It’s a given that most people don’t know the ins and outs of the dizzying array of organizations that offer varying degrees and types of certification for financial advisors and brokers. Some certifications take years to earn; others take hours. In addition, someone who may appear confident and secure in their financial advice can have a history of complaints and bankruptcies that are invisible to a customer. It’s important to check into the person who’s selling you an expensive product, just as you might check for complaints against a car dealership before buying a car.

Unclear Explanations

You can reasonably expect that if you broker wants you to buy a product, they should explain exactly what makes it a good choice for you. They should know the ins and outs of your financial situation, and how the product can meet and fulfill your needs. Remember, they’re not doing it pro bono: they’re getting a hefty sum in exchange for doing the research and understanding the field. If they’re can’t or won’t tell you what problems an annuity can solve, it may be the case that it won’t solve anything at all.

”No Risk”

The only thing that’s 100% in financial matters is that there’s always some risk. By buying an annuity, you can try to minimize it, but in the course of the years and decades you can expect to own it, it’s inevitable that you will experience some risk. If you need to withdraw some funds for an emergency, you may incur steep surrender charges to get it out. Annuities come at a cost, and part of that is the loss of liquidity. If you need liquid funds, you’re taking a risk buying an annuity. Anyone who tells you otherwise is just trying to make a sale.

Major Sellers of Annuities

Contact Us

If you think you may be the victim of an improperly sold or administered annuity, contact our California annuities fraud Attorneys for a free initial consultation. You can reach our firm at (415) 441-8669, or by email at We handle annuity, insurance, and investment fraud, as well as financial and physical elder abuse, qui tam and whistleblower cases, and nursing home and healthcare fraud.

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