Breaking News- Annuities Are Good For Retirement Planning

Is it troubling when you read financial magazines or the Wall Street Journal and all the pundits are dismissing annuities as a “bad investment”? Do advertisements from the likes of Suzy Orman or Ken Fisher give you angst? Well you are not alone. For years we have been fighting an uphill battle- we know the truth and the power and the safety provided by the annuities we represent. David Scranton is one of us. I have known Dave for 10 years. Dave is knowledgeable, straight forward and a real advocate for telling it like it is. In this article he explains the why- why we must continue the struggle to bring the truth to our clients. Enjoy.



Everyone is well aware that the mass media has changed drastically in the last 10-to-15 years. Not so long ago, we relied on daily newspapers, TV and radio for all the information we needed to help us make informed decisions and stay abreast of current events. But in the Internet age, we seem to be bombarded with headlines, updates, and “breaking news” constantly from our laptops, desktops and cell phones, not to mention— still—our TVs and radios!

One thing that hasn’t changed, however, as the mass media has become so omnipresent in our lives, is the existence of “spin.” In fact, the explosion of media outlets in the past decade has dramatically increased the pervasiveness of spin, and made it harder to find truly objective reporting. With competition to “get the story” fierce and the line between news, advertising and “infotainment” increasingly thin, modern journalists are under more pressure than ever to cut corners and put “pleasing their bosses” ahead of “serving the public” on their priority lists. The result—more often than not—is reporting “spun” to someone’s liking or advantage, and lacking objectivity.

I often remind clients of this fact because I’m well aware that, amid this daily bombardment of mass media, it is likely that they will come across news and information about annuities that has a negative “spin.” I point out that financial news is particularly susceptible to being “spun” in a certain way because of a fundamental flaw in the financial system. This flaw is no one’s fault; it’s just a fact that no system is perfect, and this one is no exception.

The ‘Need’ for Optimism

The crux of the problem is that the heads of major financial firms on Wall Street are financially obligated to their shareholders first, to their customers and clients second. They have a legal obligation to maximize shareholder value, in part by keeping customers invested in the markets as much as possible. Now, obviously people are more likely to invest and stay invested when they’re optimistic about the markets and believe they’re trending upward. Thus, Wall Street CEOs and the people who work for them have an inherent need to sell optimism and to always speak optimistically about the markets—often regardless of economic realities or how the markets might really be trending.

Now, keep in mind there are two sides to every coin. That means that this need to speak optimistically about the markets and market-based financial products can create an accompanying need to speak negatively about alternative, non-stock market based types of investments. And what are those, exactly? Well, I explain to clients that there are basically there are three types of institutions vying for an investor’s money: The first type includes brokerage houses and mutual funds—which are both basically stock market-based. The second is insurance companies, and the third is banks.

Obviously, with the Fed holding interest rates near zero and likely to do so for a long time to come, it would be difficult for anyone to put any kind of positive “spin” on banks right now. So that leaves brokerage houses (i.e. stocks) and insurance companies (i.e. annuities). And if a Wall Street source is inherently obligated to put a positive spin on the former, what kind of spin is he likely to put on the latter?

Convenient Sources

But then why does the media, which is supposed to be objective, dutifully serve this spin to the public? Well, as I said at the start, today’s competitive, 24/7 media makes lazy, subjective reporting more pervasive than ever, but the bigger issue is that this “flaw in the system” has always made finding honest, objective financial news and information challenging.

The reality is that most articles written on financial topics and in financial publications aren’t written by financial advisors or money experts; they’re contributed by professional writers—and in this day and age, sometimes not so “professional” writers.

But even if the writer is a true pro, he is not likely to have one particular area of expertise. His resume may include everything from athlete interviews for Sports Illustrated to travel articles for National Geographic. This month, however, he’s writing a feature on annuities for a top financial magazine or website. Of course, not being an expert, he has to write his story with the help of a lot of outside research. Now, he could do basic research on his own, or he could turn to a more convenient source.

Naturally he’s going to take the easy road, and who might be the easiest source to work with? Well, probably someone who advertises with the magazine or website he’s writing for. And just who are those advertisers? Very often they’re Wall Street brokerage firms and mutual funds! So when the writer calls one of these friendly sources, of course they’re going to be more than happy to put their spin on the subject of annuities. And given their inherent need to sell optimism, it will most likely be a spin more favorable to the sale of their products and the markets in general, and one that casts a negative light on annuities.

I think it’s important for all investors to understand how this inherent “flaw” in the system makes the prevalence of “spin” especially common in the financial media. I encourage my own clients to stay informed, of course, but to also be aware that much of the media that bombards them in the Internet age is just so much spin, rhetoric and disguised advertising – not really news. I tell everyone that to get the real story on annuities or any other type of investment, always consult a trusted, accredited financial expert or advisor.

David Scranton is Founder/CEO of Advisors’ Academy

About Jeffrey Berson

40 years in and around the industry has made Insurance a part of my DNA. I have had the pleasure of working with and for some of the greatest minds in our industry. My "Bersonal" View is an attempt to capture some of the best ideas, the best concepts and the best practices in a way that can lead to success for others. It will certainly be my point of view, so please...don't take it "Bersonal".
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1 Response to Breaking News- Annuities Are Good For Retirement Planning

  1. Roni Roslyn Berson says:

    Excellent letter! Can I get David’s permission to send this letter to some of my clients?

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