It's hard to believe that California advisor Ray Lucia really saved financial writer Ben Stein from suicide "many a night," as Stein has said, but there is little doubt that Stein's belief in Lucia's message and investment philosophy is sincere.

Last week, the SEC charged Lucia with spreading misleading information about the validity of the backtesting that lies behind his "Buckets of Money" strategy. Lucia plans to contest the charges and may well be found innocent.

But if the SEC's claims are correct, the buckets of money strategy looks more like buckets of baloney. The SEC said that Lucia admitted that the only tests he and his firm performed were a handful of calculations in the late 1990s—copies of which no longer exist-and a couple of two-page spreadsheets. Hopefully for his sake, Lucia has a better defense than "the dog ate my backtesting."

On the surface, Lucia's theory of very broad diversification across asset classes and investment products makes intuitive sense. There is simply so much uncertainty in today's world that under-diversification looks way more dangerous than over-diversification.

As for Stein, his advocacy on behalf of annuities appears genuine, even if he doesn't mind getting paid to do it. He often cites the experience of his father, Herbert Stein, a distinguished academic and government economist who served as head of the Council Of Economic Advisors under Presidents Nixon and Ford, to back up his claim.

The best investment his father ever made, Stein has claimed, was a variable annuity. Given that the elder Stein died in 1999 and probably had access to well-managed, low-fee annuities from the likes of TIAA-Cref, it would make sense.

And to his credit, Stein has always warned advisors and other prospective annuity purchasers to check out the fees, which can be excessive. Many broker-dealers like Raymond James and LPL Financial that derive a lot of revenue from variable annuities have jawboned providers into slashing fees.

If the fees that Lucia's critics like financial blogger Seth Hettena claim he charges—Hettena says some are as high as 2.9%—that would seriously reduce any returns a client could expect. Apparently, however, the SEC has focused elsewhere, notably on his alleged back-of-the-envelope backtesting.

I've always been of two minds when it comes to annuities. Many have very high fees which devour a lot of the return. As critics say, they always tell you that you'll never run out of your money; what they don't tell you is that you'll never be able to live on your money.

That's all fine and well, but what do you tell the typical American approaching retirement with $200,000 to $600,000 in savings and no pension. The only bond funds and ETFs that cut the income mustard are junk bonds, which are pricey right now, and dividend-paying funds don't pay enough either.

It's the absence of pensions for most people that present the most compelling reason to purchase an annuity. But insurers operate in the same universe as other financial companies and the challenges of a zero-interest rate world affect them like everyone else. Furthermore, many insurers are scaling back the contract features that once made variable annuities so attractive and permitted them to perform well during the financial crisis.

The best advice, I guess, is work until 70 and then move to Panama.