How to Find the Best Annuity Designation, and Ways to Choose The Right Annuity School for You

Annuities training in today's financial market is an important aspect of a financial advisor's overall financial training.  With an aging population and greater economic volatility in the markets, investors are looking to annuities to secure future retirement income.  More than ever, financial advisors can benefit by having a deep understanding of annuities and how they can be advantageous to their client's portfolios. There are many annuity certificate programs available today, but how can financial advisors choose the right one?  The following article explores a few criteria to consider when evaluating annuity certificate programs.

What to look for in annuity certificate programs:

Compliance Concerns
A well-designed annuity-training program understands the concerns of compliance departments. In the case of traditional fixed-rate annuities, the key is to make sure the penalty period is not longer than the guaranteed rate period. If a contract locks in X% for five years, make sure the insurer's penalty is no longer than five years. For equity-indexed annuities (EIAs) there are multiple concerns: penalty periods that tend to be quite long and expensive, annual moving parts of the contract that cause confusion and frustration, return projections that are unrealistic, withdrawal options that may require annuitization and historical comparisons that often do not include the fact that indexing the S&P 500 under an EIA means no crediting of dividends-an important point since 40-50% of the returns from the S&P 500 over the past 80+ years has come from dividends and their reinvestment.

Conflicts of Interest
Annuity education providers are often torn between trying to get students and not offending a brokerage firm or insurance company that sells the product. The annuity training you seek out should point out the pluses and minuses of each investment vehicle. Annuity course offerings must realize that annuities are no different than any other legitimate investment; they cannot pretend to be everything to everyone. Bank CDs, government bonds and stock mutual funds all have their positive attributes and they also have their negative points. Look for annuity training that is even-handed in its approach, not a provider who is sponsored by some trade group or part of a brokerage firm's in-house training.

Ticking Time Bomb
Annuities offer the unique advantage of indefinite tax deferral. Many advisors know that income taxes are only paid when there is a withdrawal of growth or interest and that no withdrawals are required during the lifetime of the contract owner and spouse (and that taxes can be postponed for an additional five years after the surviving spouses death). However, this also creates a possible litigation time bomb. Without the proper annuity education, the broker may mistakenly have incorrectly titled the annuity contract-forcing a sooner than expected taxable distribution. Think of the broker's liability for incorrectly titling a contract that has grown from $100,000 to $300,000 or more; if a tax liability of $200,00+ of ordinary income is triggered sooner than expected, beneficiaries may look to the broker of record for restitution.

In the case of equity-indexed annuities (EIAs), heirs may question why the broker allowed a 75-year old to invest in something with a 10-17 year penalty period. Beneficiaries may also be concerned with the complexity of the contract and illustrations used. In the case of litigation involving seniors, a number of states provide for treble damages. Annuity courses can show you how to address each of these concerns without sacrificing sales or commissions.