1. The Powell Pause, Earnings & The Jobs Report. 2. Join Us! Are Annuities Worth It? 3. Naples Branch Open House! 4. It’s Getting Too Expensive To Have Fun? 5. Review What You’re Paying For Your Annuity. 6. Get Your Tax-Smart Strategy Review Today! 7. Retaining 529 Investment Value | 401(k) vs. HSA | Investing In Defense-Oriented Companies | Ask Us A Question!
1 | Week In Review
Annex strongly believes in frequent and meaningful communication.
Each Friday after market close, our experts record the “Week In Review”- exclusive insights to help you stay on top of the latest financial news.
The Powell Pause, Earnings, & The Jobs Report
The markets rallied this week, treasury yields fell significantly, and the Powell pause continues. Annex Wealth Management’s Dave Spano and Brian Jacobsen discuss.
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2 | Register Now!
Annex Wealth Management Mequon Office | 12200 Corporate Parkway, Mequon, WI
Annuities are one of civilization’s oldest financial instruments. But what are they, and do their benefits outweigh their pitfalls?
Annex Financial Planners discuss if and when an annuity might make sense – and potential dangers of annuity ownership.
Tuesday, November 7, 2023
6:00 PM – 7:30 PM CST
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3 | Did You Know?
Did you know Annex’s Naples Branch is having an open house on November 16th from 2:00-5:00 EST?
Did you know Annex‘s Naples Branch is having an open house on Thursday, November 16th from 2:00-5:00 EST? Please mark your calendars & join us to celebrate the grand opening of our Naples Branch’s new location! We’ll be celebrating the grand opening of our beautiful new office. Stop by, take a tour, and meet the team lead by Branch Director Robert Chastain! The mayor of Naples is also scheduled to make an appearance! This is an open house-style event. See you there!
When? Thursday, November 16, 2:00-5:00 EST
Where? 4901 Tamiami Trail
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4 |Poll
Concert tickets can be seen as an investment, but just how much are American’s willing to pay to attend a live musical showcase and how much is too much?
Over time, live concerts have progressed from being a one-man band to captivating experiences with high-tech platforms, pyrotechnics, colossal display screens, revolutionary lighting & powerful dancers accompanying the artist. That’s why, in today’s era of hyped marketing and sky-high revenues, such expensive concert tickets are viewed as an investment and people are willing to pay general sale prices & inflated resale prices (Source).
Now, switch gears & tune your brain into the jingle of Jeopardy and give us your best guess (no cheating or searching) in the format of Jeopardy using the clue:
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5 | MoneyDo
Review What You’re Actually Paying For Your Annuity
Do you own an annuity? If so, do you know what you’re paying for it?
In this week’s MoneyDo, we encourage you to discover what you’re actually paying for your annuity.
Many annuities are highly complex financial instruments accompanied by lengthy paperwork detailing how they work and the spiderweb of fees associated with them.
Some modern annuities are just as complex, but curiously devoid of fees. Many such annuities have performance tied to market index returns, where the “cost” of the annuity is baked into the participation rates, spreads and caps which affect the return you ultimately receive.
Craig McCann, a former economist for the Securities and Exchange Commission, built a computer model intended to calculate if an annuity is right for someone. He employed a dozen people with Ph.D.’s in math to “dissect indexed annuity products.” He said it took years for his team to master them (Source).
Although it appears investors have some exposure to the stock market, he says many are left with a return they could have achieved with a safe bond portfolio, without paying an obscured 2.5 to 3 percent annual fee charged by the annuity provider. “They are all Rube Goldberg machines,” he said (Source).
If you own an annuity, do your homework to determine how much you’re paying in fees. And if your annuity is completely free of fees, take the time to understand how the insurance company is getting paid instead. It’s important to understand these fees aren’t always broken out clearly, and you might have to read deep into the fine print in order to get all the information you need on the annuity fees you’re paying, such as the following examples (Source):
1. Administration & Contract Maintenance Charges
Insurance companies have overhead costs they need to offset in order to offer annuities. Some annuities, therefore, include a specifically listed charge to maintain the policy, covering both the administrative costs of things like preparing regular statements and the ongoing expenses of monitoring the annuity contract.
2. Surrender Charges
Sometimes you’ll see the term “contingent deferred sales charges” instead. Many annuity companies charge you a fee if you decide to back out of an annuity contract within a set period of time. The length of the surrender-fee period can differ, with some companies charging surrender fees for seven to ten years.
Often, the surrender fee will go down over time, with the highest charge applying if you cancel your annuity very soon after purchasing it. Some annuities offer exemptions or partial withdrawals without a surrender fee, but with typical surrender charges amounting to several percent of the contract value, be absolutely sure you understand the long-term nature of annuities before you buy one.
3. Mortality & Expense Risk Fees
Perhaps the most confusing annuity fee is the mortality and expense risk charge. The M&E fees compensate the insurance company for taking on the risk of getting its estimates of essential factors like life expectancy and its underlying overhead expenses wrong – and therefore, the insurance company may end up having to pay some of those costs out of its own profits.
The M&E expense fee’s often large enough to cover other expenses as well, such as sales and marketing fees, and generate profit for the insurance company.
In fact, M&E fees are often the key reason annuity fees are higher than those for mutual funds with similar investments. Annuities do have some features mutual funds don’t, but many annuity owners never end up taking advantage of all of them, making it questionable whether they’re getting their money’s worth for the extra money they’re spending.
4. Premium Taxes
Many states charge taxes on insurance products. In turn, some insurance companies pass through those taxes to buyers of those products, including annuities.
5. Underlying Investment Expenses
Annuities often invest in pooled investments, which are similar to mutual funds. These investments have expenses of their own, which annuity sellers will pass on to their policyholders. Specifically, annuity owners can end up paying added expenses for mutual fund management as well as marketing and distribution fees the fund company incurs.
Like the mortality and expense risk fee, underlying investment fees are expressed as a percentage of the amount you have invested, and they’re charged on an annual basis, representing an ongoing drain on your investment capital.
6. Rider Fees
Many annuities offer additional optional features, which are sometimes called riders. These add-ons can give you attractive benefits, such as guarantees of minimum levels of income or death benefits. Typically, though, you’ll have to pay an extra fee in order to take advantage of these optional guarantees.
Riders also change and can limit what you’re invested in. Your investment in equities or stock-like investments may be limited to a cap, such as 60%. You may be required to use model portfolios or “managed-volatility” funds, which may not be the ideal investment option in your specific situation.
7. Commissions
When you buy an annuity through a broker, you’ll pay a commission. A typical upfront commission can range from 5% to 10% depending on the product (the longer the surrender period, the higher the commission typically will be).
As you can see, there’re a lot of terms and fees you’ll have to keep your eyes on as you review your annuity. If you’re having trouble determining how much you’re paying, find an advisor you can trust – preferably one who’s a fee-only fiduciary all the time – who can help you read and understand your contract.
You can also register below to attend our Event in Mequon this Tuesday, November 7th from 6 – 7:30.
Are Annuities Worth It?
- Annuities are one of civilization’s oldest financial instruments. But what are they, and do their benefits outweigh their pitfalls?
- Annex Financial Planners discuss if and when an annuity might make sense – and potential dangers of annuity ownership.
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6 |Call To Action
Get Your Tax-Smart Strategy Review Today!
Get a real assessment of your current tax strategy, including areas you might want to consider. Let our planning team create an Annex Wealth Management Tax-Smart Strategy Review for you!
Build A Tax-Smart Legacy With Our Team.
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7 |Ask Annex
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| Annex In Action
Outside of work, Annex’s own, Robert Chastain, Branch Director, Naples Office, belongs to the Greater Naples Officiating Association (GNOA), a partner with STARability. As a part of Naples’ officiating crew and the GNOA partnership, Robert works alongside participants of STARability, guiding individuals with special needs as they work as ball people during football games, towards their ultimate dream of someday earning their zebra stripes.
STARability Foundation in Naples is a non-profit organization existing to transform the lives of people with intellectual and developmental disabilities through an inclusive community that shines light on ability, not disability (Source).
During football season, you can find Robert under the Thursday night lights.
“I get way more from the participants, than they get from me.” -Robert Chastain.
|The Annex Wealth Management SWOT Podcast
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| Annex Exclusive
Tax Planning In Uncertain Times
Get the Annex Wealth Management Year-End Tax Planning Guide. It will help you decide if you should update, eliminate, or calibrate your 2023 Tax Plan.
|Graphonomics
Graphonomics Volume 5 Available Now!
| Events & Webinars
Annex Wealth Management Mequon Office | 12200 Corporate Parkway, Mequon, WI
Annuities are one of civilization’s oldest financial instruments. But what are they, and do their benefits outweigh their pitfalls?
Annex Financial Planners discuss if and when an annuity might make sense – and potential dangers of annuity ownership.
Tuesday, November 7, 2023
6:00 PM – 7:30 PM CST
Shula’s Steak House | 5111 Tamiami Trail North
In this CLE credit event, we’ll discuss specific uses of QDROs, their structure, and specific issues you may face when working on them.
The presentation will also review follow-through recommendations for the non-participant spouse, as well as issues to consider and the additional needs of the alternate payee.
We’ll also consider matching the A/P’s financial needs to types of investments, and what to expect.
**This event is for attorneys looking to earn 1.5 hours of CLE credit.**
Lunch is provided.
Tuesday, November 14, 2023
11:00 AM – 1:00 PM EST
M Waterfront Grille | 4300 Gulf Shore Blvd N
Navigating The Markets: Strategies In An Ever-changing Tax Environment
As rates, inflation, and the dollar fluctuate, have you calibrated your financial plan, including how your tax and wealth transfer planning?
In this interactive presentation, Amy Kiiskila, JD, CFP®, CPA, CLU® and Brian Jacobsen, PhD, JD, CFA®, CFP®, CAIA, CBE will provide an economic and market update – and present planning scenarios while discussing strategies that address key concerns, like cash management and charitable planning.
Lunch is provided.
Wednesday, November 15, 2023
12:00 PM – 1:30 PM EST
Annex Wealth Management Naples Branch | 4901 Tamiami Trail North
Our Naples branch has a new home! If you’re in the Naples area, come check it out and join us! Food & drink will be provided!
Thursday, November 16, 2023
2:00 PM – 5:00 PM EST
Annex Wealth Management Elm Grove Office | 12700 W Bluemound Rd, Elm Grove, WI
There are so many ways to be generous! In this workshop an Annex estate planning attorney and financial planner explore different ways to give. From donor advised funds to qualified charitable donations to trusts; we will introduce current strategies where it’s a win/win: for you and the charity!
Thursday, November 16, 2023
6:00 PM – 8:00 PM
Annex Wealth Management Elm Grove Office | 12700 W Bluemound Rd, Elm Grove, WI
Many are considering moving before or in retirement. As you make your decision, we’ll give you several key points to consider before you make your move – and why you should know the difference between residence and domicile.
Join us for a lively, interactive workshop where we will be discussing moving in retirement.
Tuesday, December 5, 2023
6:00 PM – 7:30 PM
Annex Wealth Management Elm Grove Office | 12700 W Bluemound Rd, Elm Grove, WI
Join us for a lively, interactive workshop where we will be discussing moving in retirement. Many are considering moving before or in retirement. As you make your decision, we’ll give you several key points to consider before you make your move – and why you should know the difference between residence and domicile.
Thursday, December 21, 2023
6:00 PM – 8:00 PM
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