I have a relative looking to retire soon (~60 years old). Their employer uses Fidelity for retirement plans and the relative's financial consultant (Fidelity Employee) is recommending he move around 50% of his portfolio into a "Guardian Secure Future Income Annuity". He would purchase the annuity now then it would start providing income in 2 years.
The sales pitch is that this investment vehicle has no market risk and will provide a fixed monthly payment for the rest of his and his wife's life then any remaining amount would be payable to his beneficiaries. I get the impression he was told that you either; let your money ride on the stock market OR buy an annuity. It did not sound like he was informed of any other lower risk investment options. Based on what he told me, monthly payment * 12 / initial investment = 5%
I have always been under the impression that annuities are bad investments and with a 4% withdraw rate the initial principal could last indefinitely. I recommended that he seek a fee only CFP and pay for a plan and some advice however I have never worked with a CFP so I am not sure if this is how they work...
- Is my recommendation to speak with a CFP appropriate/productive?
- Am I correct to believe that the Fidelity employee has a conflict of interest and no fiduciary duty to my relative?
- Where can I find some general guidance on annuities? (when someone should buy them, what to look for when buying one)
- What other safe investment vehicles should he be looking for?
Thanks in advance for your help! EDIT:Formatting
Submitted October 16, 2018 at 12:29AM by l2son https://ift.tt/2EwXwXE
