Recovering Losses caused by Investment Misconduct

Name Change Can’t Fix Facts: Equity Indexed Annuities Still a Bad Idea

This blog has often enumerated the many problems associated with Equity Indexed Annuities (see: here, here, and here), including: the high potential for abusive sales tactics, the overwhelming lack of disclosure, and the substantial hidden costs and fees associated with the products. Overall, despite their surprising popularity among the public, EIAs are generally a bad idea for most investors, especially seniors.

Now, the much-derided EIAs have become known as Fixed Income Annuities, a name change which was likely - as are most identity changes - a last ditch effort to re-brand a pitifully flawed product. A blog author on Forbes.com agrees:

"If you put lipstick on a pig, it's still a pig," said author Ron Rhoades, in an April 27 blog post.

In theory, Equity Indexed Annuities, or Fixed Income Annuities, are a good idea. If they were - as they claim to be - simple, risk-free products with returns up to 8 percent, the vast majority of investor advocates would sing their praises and advise everyone to invest in one. Unfortunately, the reality of EIAs (or FIAs, if you prefer) couldn't be further from the truth. They're complex, under-regulated products laced with undisclosed risks and hidden fees. With pitfalls like those, not even the most clever rebranding could fix the facts.

As Alabama Securities Commissioner Joseph Borg said in 2008 (as quoted by Rhoades on Forbes.com): "I wouldn't recommend them to anybody."

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