Annuity FYI Blog

FINRA alerted investors last month about financial scams based on “green” companies.  Their Investor Alert, “Save Your Greenbacks-Don’t Fall for Green Energy Scams” describes how green energy scams work and how to avoid them.  Investments that promise huge gains by investing in alternative or renewable energy products should be looked at with a fine-toothed comb.  Since green energy initiatives are so popular right now, scam artists have emerged with “green” based Ponzi schemes and “pump and dump” stock fraud to try and get investors’ money.  This is happening through Twitter, text messages and webinars targeting investors looking to make a lot of money on something different.

The purchase of fixed annuities might be a wiser investment for you.  While you aren’t going to get rich quick with annuities, you can guarantee a stream of lifetime income to help pay your expenses.  Any investment that is recommended to you unsolicited should be fully researched and questioned, especially those promising enormous returns.  A recent “green” scam advertised a potential 1,000 percent jump in a company’s stock value.  As the old adage says, if it sounds too good to be true it probably is!  Another scam warning sign is the pressure to go “all in” with these investments.  A recent scam encouraged investors to liquidate all of their other investments and borrow against homes and businesses to put all of their money into a new “green” company.  It is crucial for investors to spot these potential scams before being financially hurt by dishonest people.

In The Insurance Letter‘s article “Proposed Legislation Should Boost Retirement Annuity Sales,” Alan Levine describes Senate bill 2832.  The proposed amendment to the Employee Retirement Income Security Act of 1974 is meant to help broaden the awareness of planning for a lifetime of retirement income.  Most retirement plans now only show the lump-sum value on participants annual statements.  This bill would require 401k and other private retirement plans to show more information on their annual statements.  Plan sponsors would have to show how that lump-sum value will pay out in guaranteed monthly income, based on retirement age and the investment vehicles used by participants.

Senate bill 2832 could encourage investors to make 401k annuity rollovers with their retirement income.  Since a lump-sum value is really only half of the retirement picture, investors ability to see how their money translates into guaranteed lifetime payments is crucial.  With the government’s possible new requirements, 401k and other retirement plan sponsors might be adding more immediate annuities and variable annuities that have guaranteed lifetime withdrawal benefits.  With more than $3 trillion in retirement plan assets, the government’s regulations could surely effect a lot of annuity decision making.  The government would not require annuities to be offered, but by requiring monthly payout options to be disclosed, annuities seem to offer the best guaranteed income benefits.

From the Financial Industry Regulatory Authority (FINRA)’s news release, the “FINRA Investor Education Foundation and the American Library Association Announce $1.5 Million in Grants to Public Libraries to Support Grassroots Financial Literacy.”  There are 19 libraries receiving the $1,522,122 through the program ‘Smart investing@your library’.  Providing the public with financial education information is the program’s goal.  This is the third year for ‘smart investing@your library’, whose goal is to help library patrons with small and large financial decisions free of bias.

The library programs implemented with grant money are meant to help all ages of people, from youth just learning about money to senior citizens looking to compare annuities for retirement.  They also target low-income citizens and immigrants that are new to America with education programs.  The education programs include online learning, teaching in classrooms, individual clinics, and other online educational activities.  Libraries receiving these grants also partner up with other organizations to extend community education even further.  This includes schools, colleges, local government, and veterans clubs.

Grants are not only given in urban communities but also suburban and rural areas as well.  People often turn to free services like libraries when they are struggling economically.  With grants from FINRA and the ALA, libraries can better serve and educate these citizens about their finances and help to either get or keep them on track.  Whether they need information on annuities, credit cards, saving for college, or just budgeting; ‘smart investing@your library’ is there to help and educate.

AXA Equitable Life Insurance Company has a new financial training program called “Cracking the Code,” according to PR-Canada.  AXA Equitable’s unit for annuity wholesale distribution, AXA Distributors, LLC, created this curriculum for professionals to continue their retirement income planning education.  The materials for self-study and presentations have been approved for continuing credits in 49 states.  Since growing savings before retirement is only half of the big picture, investors are looking to their financial advisers to help them make decisions that will keep them financially secure throughout their lifetime.  “Cracking the Code” aims to help advisers guide their clients from pre-retirement all the way into the asset distribution phase.

The “Cracking the Code” guidebook takes financial professionals through all the necessary steps to help their clients through retirement.  It explains how a client’s personal savings works into their retirement plan and information about IRA use.  There is also information regarding Social Security and Medicare benefits that affect retirees.  There are different strategies for dealing with risk including using the best annuities and other financial retirement products to guarantee future income streams.  Advisers will receive information about running a successful practice, such as help with marketing and time-saving tips.  With the use of AXA’s “Cracking the Code” information, advisers can be better equipped to help clients with every aspect of their retirement plan.

The FINRA (Financial Industry Regulatory Authority) Foundation has some financial advice for all of us as we move along in a new decade.  FINRA’s news release this week was entitled “FINRA Foundation Issues Seeking Solid Financial Footing for the Next Decade: 10 Tips for 2010.” This advice released by FINRA’s Investor Education Foundation is meant to help people regain financial footing.  The Foundation’s recent ‘Financial Capability Survey’ highlighted the financial mistakes that many Americans are making.  From engaging in behaviors that carry excessive fees to being unprepared for financial emergencies, the FINRA Foundation realizes that many Americans need sound financial advice.  They hope that this new decade will bring better financial decisions to keep us all out of another financial meltdown.

Some of the highlights are as follows.  Research financial products by shopping around.  Whether looking for the best fixed annuity rates or credit card offer, take your time and compare products.  Determine how much money you need to save for retirement well in advance of needing that money.  Make every attempt not to overdraw your bank account because overdraft fees are high and are a waste of your money.  Use 529 plans and other tax-advantaged accounts to save for college education.  Take advantage of the plans the government has in place to help you save more.  Perhaps the most important is to have an emergency fund for at least three months worth of expenses.  Any layoff, emergency, or illness can put you in a bad financial spot without some money saved up to get you through.  FINRA hopes that Americans will follow their financial tips towards a secure decade starting this year.