Unheard Of

Jonathan Clements

TALKING TO A BROKER or insurance salesman? Here are 10 things you’ll likely never hear:

  1. “Wow, your 401(k) has great low-cost institutional funds. There’s no way you should roll that money into an IRA.”
  2. “Do you know that you could buy these funds outside a variable annuity and pay a fraction of the price?”
  3. “Sure, you could make that trade—but probably the only person who will get richer is me.”
  4. “My hunch is, this closed-end fund you’re buying will be at discount within a few months of the IPO.”
  5. “Given the markup on that bond you just bought, I hate to think how much you’d lose if you sold right away.”
  6. “Of course, unlike a 401(k), you won’t get a tax deduction or matching contribution when you buy this cash-value policy.”
  7. “I know the B shares look like a no-load fund, but the annual expenses will eat you alive—and the back-end commission will nail you if you try to escape.”
  8. “Actually, I’m not required to act in your best interest.”
  9. “So you pay 1.5% a year for the fee-based account and 1% for the funds you’ll be buying. Meanwhile, the stock market will probably earn 6% a year over the next decade, while inflation runs at 2% and taxes take maybe 1 percentage point out of your gain. Let me know if you need any help with the math.”
  10. “I doubt you’ll make much with this indexed annuity, but things look pretty great from my perspective.”

Follow Jonathan on Twitter @ClementsMoney and on Facebook.

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