| NEW YORK
NEW YORK Feb 22 Getting financial advice on
complicated insurance products is, well, complicated.
Most life insurance with investment options, long-term care
insurance and annuity products come with a dizzying array of
options and many pages of fine print, the merits of which are
debatable for your bottom line. That makes solid, unconflicted
But since most of these policies are sold on commission or
with other incentives in mind, that means the salespeople are
not necessarily recommending options that are in your best
interest. They could be thinking about earning a cruise instead.
The money at stake is staggering. An annuity, which you buy
with a lump sum to get payouts as you age, can cost hundreds of
thousands of dollars up front, generating thousands of dollars
The person selling you the policy might not even understand
all the implications for your retirement.
"The complexity of some insurance products has outstripped
the financial adviser's ability to give reasonable advice," says
Glenn Daily (glenndaily.com/), a fee-only insurance
consultant based in New York.
The first stop on the road to an annuity for many folks is
when they talk about retirement to a financial adviser, from
whom it is possible to get solid, unconflicted advice if you
choose a fee-only certified financial planner. This kind of
adviser, known as a fiduciary because he or she pledges to make
decisions based on your best interests, can tell a client what
kind of annuity to purchase and then recommend a trusted
salesperson - who will likely earn some kind of commission on
Some CFPs work on a hybrid model, charging an hourly fee for
their financial planning, but can also sell you insurance.
"I tell clients I can be your agent, on commission, and I
won't charge for that time. Or I can charge for the time, and
work with another agent," says Ellen Siegel, a financial planner
with Legacy Wealth Management Inc. in Plantation, Florida.
Another option is to employ a fee-only insurance consultant
like Daily, who will offer an independent view on the policy you
are considering. Fees are based on the case, but can run about
$300 an hour.
"The vast majority of the time, people wind up doing
something different after consulting with me," said Daily.
"Sometimes it’s a minor tweak, but sometimes it's a major
difference – like not buy the policy."
Trying to go it alone can be difficult because there is not
a lot of independent research available for the average
consumer, and policies from different companies are difficult to
Some companies sell commission-free products directly to
clients. Among them are Amica Mutual Insurance Company and TIAA,
as well as Lincoln Financial Group, which offers a new fee-only
annuity. But buyers should shop around, because the
representative at one company will not have pricing to compare
with any of the other companies' products.
Even a broker may not have the widest selection available,
says Patricia Born, a professor of insurance at Florida State
University's College of Business in Tallahassee, Florida.
Daily says the safest option to handle on your own is a
single-premium immediate annuity, for which you pay a lump sum
and then receive monthly payments. "You only have a few choices
to make - it would not be that complicated to evaluate," he
Still, it is a good idea to ask a salesperson about her
commission structure and whether she has any additional
When you move up to more complicated policies, the analysis
you need may only be available via subscription to
Barry Flagg is founder of Veralytic Research, which
evaluates pricing and policy information on insurance.
"Even when you are buying car, you go to CarFax or
something. That's the only way I know whether you are getting a
sales pitch or advice," said Flagg.
One final way to determine whether you are getting good
advice from a salesperson: the sniff test.
"Do they feel like they are being sincere? Do they take the
time to explain the options to you?" Siegel asks. "Or do they
feel like they are selling you a car?"
(Editing by Lauren Young and Dan Grebler)