Clark Howard is known as “a nationally syndicated consumer advocate who advises consumers how to save more, spend less and avoid getting ripped off.” He wrote this recently about variable annuities:
It’s possible today to buy investments that have ongoing costs of a mere one-sixtieth what you pay ongoing in a variable annuity. Variable annuities are by far the most popular product that insurance salespeople will try to sell you when you go to them for financial advice.
But variable annuities are garbage. They have huge expenses; big fees if you try to bag out before a certain point; and massive tax problems compared to other ways you can invest. But that’s what you’ll probably be steered to by a commissioned insurance salesperson.
So remember this: Paying people to guide you is money well spent, not money spent poorly. If you are at a roadblock or you don’t know where to start, hire a fee-only financial planner and pay them for guidance. “Free advice” that comes from commissioned salespeople is hazardous to your wallet.
If your “investment advisor” recommends variable annuities try paying for your advice instead of getting it “free.” You deserve a fiduciary standard of care.