Phil Cannella – Phillip Cannella News: Phil Cannella exposes in just minutes how a variable annuity is just wrong for the consumer in so many different ways. A simple math example that Phil Cannella can do on a white board in front of you illustrates this very, very well.
First Phil Cannella tells us to add up the variable annuity fees from the insurance side and the mutual fund fees from the securities side. Easily, you could be looking at about 5% each and every year. Then add inflation at 3% or 3½% to that figure. If your math is poor Phil Cannella will add up the numbers for you and you’ll see that you have to have an 8% to 9% annual return on that variable annuity just to get to zero – just to pay the fees!
True, in good years, you’ll do fine, but it’s the bad years you have to worry about. In down years, your account will drop quicker than any other account because of the exorbitant fees that place a burden on it. Phil Cannella then points out that even when the market recovers, your variable annuity account won’t bounce back as easily because of the very same fees that weighed it down and caused it to sink faster than a lead balloon in the first place. These excessive fees hold back a variable annuity from recovering as quickly. And if you want to take your money out before you die, there’s no guarantee that you’ll receive as much as you put in – M&E expenses don’t cover you for that.