Dear Liz: I recently purchased a variable annuity. I researched the investment only after the fact and discovered that my new advisor had not disclosed its pitfalls. I came to him with all my questions afterward, but he was defensive and unprofessional. I feel completely deceived! Do I have any recourse? I feel like I made a huge mistake.
Answer: The fat commissions that many annuities pay can tempt unethical or poorly educated advisors into painting an unrealistically rosy picture of these financial products. Variable annuities are complicated, combining investments with an insurance component, and often come with high fees and surrender charges that make them an unsuitable option for many investors.
“Unsuitable” is the word you need to remember when you report this salesman’s behavior to the insurance company and to your state’s insurance commissioner. In the letters that you write to both entities, make it clear that you weren’t informed of the annuity’s disadvantages and outline how the investment is not a suitable choice given your needs. Ask that the annuity be “unwound” and your money returned. If you don’t get satisfaction from either the insurer or the commissioner, you may need an attorney’s help.