The reason many investment industry experts dislike annuities are for their high fees and expenses. Sometimes a long term gain on a tax deferred annuity can be less than long term gain on a taxable account whereby each year the dividends are taxed. The reason is because at the end of your clients term, the gain for an annuity is taxed at ordinary income tax rates like 39.6% or more depending on the tax bracket, while the taxable dividends account is taxed at 20% or less depending on the tax bracket. So no wonder most investors like to stay clear of annuities. The two types of annuities are the fixed annuity and the variable annuity. The variable annuity carries with it higher fees and expenses because it contains more features.
Some of the fees and expenses concerning annuities are as follows:
So if your client really wants to invest in an annuity, make sure your client has long term plans for it. Thats the only way your client wont lose on this investment.