Here's a table of the top current annuity rates.Ī fixed-rate annuity is sometimes called a CD-type annuity because it behaves much like a bank certificate of deposit. You're usually much better off taking the slightly lower interest rate and holding the annuity yourself outside any managed account.'īy shopping around, you may find an annuity that beats the rate offered by an investment advisor, who may not have access to many annuity companies. 'Don't let that higher interest rate lure you into a bad decision. 'Over the guarantee period, you'd pay significant management fees to the advisor that typically far outweigh the little bit of extra interest,' Nuss says. The guaranteed interest rates offered on these annuities are typically about 0.25% to 0.50% higher than on the insurance companies' nearly identical sister products that are marketed through the normal independent agent channel. 'But you'll still come out behind after paying the advisor's asset management fees,' he says. Because the insurance company does not pay an annuity agent's commission to the advisor, the savings can be reflected in a higher yield to the client. They're meant to go into a client's managed portfolio, where the advisor earns no upfront commission but can charge their recurring management fee on those annuity assets indefinitely.Īdvisors are luring savers with the siren song of a slightly higher interest rate. They're exclusively available through investment advisors that manage clients' money for an annual asset-management fee. Unfortunately, more 'advisory' fixed-rate annuities are being developed and promoted by insurance companies. Slightly higher rate dwarfed by advisor's fees But fixed-rate annuities don't need active monitoring,' Nuss says. 'That's how a skilled advisor earns his or her ongoing management fee. The advisor should regularly monitor each investment in the portfolio and periodically readjust the asset allocation when needed. The portfolio may include mutual funds, ETFs, stocks, and bonds.

An investment advisor typically charges around 1.00% to 1.50% annually on assets under management. In a managed portfolio, your assets are chosen and monitored by a financial professional.

'Once you've bought this type of annuity, you don't need to do anything other than decide whether to reinvest the interest or receive it,' Nuss says. They're sold without an upfront sales charge all of the deposit goes to work. MEDFORD, OR / ACCESSWIRE / / Fixed-rate annuities don't belong in a fee-based managed portfolio because they're so straightforward, says annuity expert and author Ken Nuss.Īlso known as multi-year guarantee annuities (MYGAs) or 'CD-type annuities,' they provide a set interest rate for a certain term-for instance, 5.40% annually for three years. Paying advisor fees will reduce what you get. CD-type annuities don't need to be managed.

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