For almost 40 years, Phil Cannella has dedicated his professional life to his passion—advocating for people in or near retirement.
Sometimes that means educating retirees on the financial climate, while helping them to select the investment vehicles that are most advantageous to maintaining and preserving their nest eggs. But for Phil Cannella, other times it means taking advocacy to the next level—demanding that financial advisors and other professionals work in the best interest of their clients.
That’s exactly what Phil Cannella has offered to do for Philadelphia-area retirees who are invested in what Cannella calls “the worst financial vehicle in the history of the world”—variable annuities. Cannella recently made an offer to anyone with a variable annuity.
“If you have a variable annuity, come to our offices in King of Prussia,” Phil Cannella offered. “We’ll call the issuing insurance company right then and there. I’ll put the phone on speaker, and you can hear the answers to the question you don’t know to ask.”
What are these questions?
What investments are contained in my variable annuity?
Variable annuities are securities—risk investments. The vast majority contain mutual funds invested in stocks or bonds. Mutual funds, of course, contain ongoing fees that total 2.9 percent annually, on average.
What other fees are associated with my variable annuity?
Perhaps the best-known fee is the mortality and expense risk fee, a charge that averages about 1.3 percent each year. This charge compensates the insurance company for the risks they take under the variable annuity contract.
A more complex fee is the “living benefit rider fee” or simply, rider fees. The industry touts these riders as the “seatbelts” that protect you in the case of a market downturn. Of course, this protection is only offered if the contract meets a very specific set of circumstances.
Regardless, the two most common riders are Guaranteed Minimum Income Benefits (GMIBs) and Guaranteed Minimum Withdrawal Benefits (GMWBs). Purchasers who invest in these riders can expect to pay approximately 0.9 percent -1.5 percent annually.
Add in ongoing administrative fees (which vary, but tend to average around 0.2 percent each year, and you’re looking at a total of 5.4 percent-5.9 percent each year just in fees on your variable annuity!
No wonder Phil Cannella is so dedicated to protecting investors from these financial death sentences!
Phil Cannella educates consumers around the tri-state area every week. Click here to register for an educational event near you.
