Locked Up With Annuities
POTENTIAL SITUATION
Frank and Linda have been working with a financial advisor for a long time but want a second opinion.
PARAGON’S SOLUTION
After a quick look at their portfolio, it becomes apparent that their advisor, during a brief period of market uncertainty, had encouraged them to place half of their entire retirement nest egg in low-returning, high-fee annuities, loaded with expensive “guarantees” to provide lifetime income should the annuities perform poorly.
However, a thorough analysis of their situation, along with consideration of their Social Security and pension income, would determine that their need was not MORE guaranteed income sources, but an opportunity to grow their nest egg in retirement, enjoying spending flexibility, and an chance to leave their children a meaningful inheritance.
What Frank and Linda might really need is coaching and confidence in a sound, academically backed, low-cost investment policy; not a sales pitch recommending expensive products that pretend to be a cure for investor worries - all the while taking advantage of the situation with high profits for insurance companies and fat commissions for the broker who sells them.
PARAGON would then analyze the fees and remaining surrender charges of the annuities and quite possibly discover that - even AFTER PARAGON’s fees - Frank and Linda could save over $10,000 annually by surrendering their annuities and rolling those dollars into a portfolio managed by PARAGON, where the average expenses were less than one quarter of one percent annually.
Now, investing at a similar risk tolerance but with lower fees, retirement planning projections would show that Frank and Linda’s nest egg will likely grow to several hundred thousand dollars more over their retirement than before, primarily as a result of reducing the return-draining fees in the annuities they had purchased in a moment of panic induced by temporary market volatility.
VALUE TO THE CLIENT
Frank and Linda would save over $10,000 dollars annually on their portfolio, even after considering PARAGON fees.
Frank and Linda’s children would likely inherit hundreds of thousands more than they would have previously – unencumbered by frustrating insurance company rules and complex tax treatment.
PARAGON’s continual coaching and communication would help Bill and Linda be better investors, sticking to an investment policy proven to maximize wealth and flexibility in retirement.
*Please Note: Limitations: The above Case Study is hypothetical-not involving actual Paragon clients. Case Studies illustrate the hypothetical experience of a fictitious client based on a scenario that an actual client might experience. The Case Studies are designed to generally illustrate how we may provide our services to our clients. Keeping in mind that no two clients, situations, or experiences are exactly alike, the Case Studies are not to be construed as an endorsement of Paragon by any of its past or current clients, nor any assurance that Paragon may be able to help any client achieve the same satisfactory results. To the contrary, none of the Case Studies should be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results or satisfaction if Paragon is engaged, or continues to be engaged, to provide investment advisory services.