The Retirement Product That Sparks More Drama Than a Reality TV Reunion
If you’ve ever asked a financial advisor about annuities, you’ve probably seen one of two reactions. Either their eyes light up like you just offered them front-row tickets to a rock concert — or their face tightens like you suggested investing in Beanie Babies.
So what’s the deal?
Why do annuities — which are basically long-term, guaranteed paychecks wearing a suit and tie — inspire such wildly different opinions in the financial world?
Let’s pull back the curtain and look at why some advisors love annuities, why others act like they’re financial kryptonite, and what this all actually means for people trying to retire without running out of money.
The Real Reason This Debate Exists
Despite what some might say, this isn’t really about “good products” versus “bad products.” It usually comes down to three things:
- How the advisor gets paid
- Their investment philosophy
- Whether they value growth or guarantees more
Once you understand those three factors, the love-hate relationship suddenly makes a lot more sense.
Why Some Advisors Strongly Dislike Annuities
Let’s start with the skeptical crowd — the ones who shift uncomfortably in their chair the moment you say the word “annuity.”
- “It Takes Assets Off My Books”
Many advisors earn a living by charging a percentage of the money they manage for you. If you move a chunk of your savings into an annuity, that money is no longer in their “managed portfolio.”
Translation:
Less money under management can mean less ongoing income for the advisor.
That doesn’t automatically mean bad intentions — but it does explain why some advisors aren’t exactly thrilled when annuities enter the conversation.
- “It Doesn’t Fit My Growth-Only Strategy”
Some advisors are all about market growth. If it doesn’t go up, down, and sideways with the stock market, they don’t see the appeal.
Annuities — especially income-focused or fixed types — don’t promise jaw-dropping returns. Instead, they promise something much less exciting but arguably more comforting: predictable income you can’t outlive.
For growth-focused advisors, that can feel boring. For retirees who like knowing their bills will still be paid in a market crash, it can feel like a warm financial blanket.
Why Other Advisors Love Annuities
Now let’s flip the coin.
Some advisors talk about annuities the way car enthusiasts talk about classic Corvettes. They see real value in what these products can do — and sometimes, they enjoy the incentives that come with them.
- “They Pay Commissions”
Let’s not pretend this isn’t part of the conversation.
Certain annuities pay advisors an upfront commission instead of a long-term management fee. In some cases, that commission can be higher than what they’d earn managing the same money in a traditional portfolio.
This can create enthusiasm — sometimes genuine, sometimes financially motivated, sometimes both.
- “They Solve a Big Retirement Problem”
Here’s the part annuity fans usually lead with:
Annuities can create guaranteed lifetime income.
That’s a big deal for people who worry about outliving their savings. Unlike a traditional investment portfolio, which depends on market performance and withdrawal strategy, some annuities are designed to keep paying as long as you’re breathing.
For advisors who focus on retirement income planning instead of just account growth, that guarantee can be a powerful planning tool.
So… Are Annuities Good or Bad?
Short answer:
Neither. And both.
Longer answer:
Annuities are tools — not miracle cures and not financial villains.
They can be incredibly useful in the right situation and completely unnecessary in others.
When Annuities Can Make Sense
- You want predictable, guaranteed income
- You worry about market crashes in retirement
- You like the idea of not outliving your money
When They Might Not Be a Fit
- You want maximum growth potential
- You need full liquidity and flexibility
- You don’t like complex products or long-term commitments
The Fine Print Matters (A Lot)
One of the biggest criticisms of annuities is that they can be complicated.
Some have:
- Surrender charges if you access money early
- Optional features that increase fees
- Rules that are buried deep in the contract
That doesn’t make them bad — but it does mean you should never buy one without understanding exactly how it works, what it costs, and what you’re giving up in exchange for those guarantees.
The Advisor Red Flags to Watch For
Here’s a simple rule of thumb:
- If an advisor says “annuities are always terrible” — that’s a red flag.
- If an advisor says “everyone should own an annuity” — that’s also a red flag.
The best advisors talk about annuities the same way a good mechanic talks about tools:
“This one is great for this job. But you don’t use it for everything.”
The Bottom Line
Annuities don’t deserve blind loyalty — and they don’t deserve automatic rejection.
Some advisors dislike them because they disrupt their business model or don’t fit their investment style. Others like them because they provide guaranteed income and, yes, sometimes higher compensation.
What really matters is this:
Do they fit your retirement goals, your risk tolerance, and your need for income?
If you want your retirement to feel like a reliable monthly paycheck instead of a financial rollercoaster, annuities might be worth exploring. If you’re comfortable riding market ups and downs in pursuit of growth, you may not need them at all.
Either way, asking the right questions — instead of accepting extreme opinions — is the smartest investment you can make.