My earlier article brought out harsh critiques. Some were sensible, others illogical, and several simply made no sense at all. None of the criticisms levied, however, addressed my central assertion concerning breaches of fiduciary duty. The key point to keep in mind is that it is a segment of clients—not all clients—whose financial profiles demand the inclusion of guaranteed income. I asked David Blanchett to provide a quote for this article. Here’s what he said:

First, if you are a financial advisor, and you have, say, 100 retired clients, and you’ve never once recommended an annuity to client, I would say the probability that you’re giving the best possible advice to your clients rounds down to zero (the whole fiduciary breach concept). There is 50+ years of research demonstrating the potential value of annuities. Note, I’m not suggesting that all retirees need more guaranteed income (or an annuity), or even that most do… just that some retirees could potentially benefit, but too many advisors totally ignore them.

I believe the argument for recommending annuities in the context of best serving constrained investors has a moral dimension: If your client can’t tolerate the risk of not meeting his or her essential expenses in retirement, then an advisor has no moral basis for failing to recommend a guaranteed income annuity.

For Pete’s sake, why is the recommendation of an  annuity so darn controversial? Advisors who would never leave their homes uninsured against fire, or who would prudently refuse to drive uninsured automobiles, will oftentimes have no qualms about foregoing the recommendation of income insurance?

It has been 14 years since I have had a financial interest in the sale of annuities. In 2007, my career shifted to the business of building systems that help advisors better serve clients who need income planning guidance. But my appreciation for the critical role annuities play in bolstering retirement security has never waned. My wish for those advisors who continue to reflexively reject annuities is that they take time to reassess their thinking. No other form of lifetime income insurance is available for purchase. Moreover, it is a virtual certainty that at least some of your clients need that insurance.

David Macchia is an author, public speaker and entrepreneur focused on improving the current state of retirement income planning. He is the founder of Wealth2k Inc, and the developer of the widely used retirement income solution, The Income for Life Model. Recently, Macchia developed Women And Income, the first retirement income solution developed to address the differentiated needs and preferences of female investors. He is the author of the consumer finance book, Lucky Retiree: How to Create and Keep Your Retirement Income with The Income for Life Model.

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