Something’s fishy in this lawyer’s annuity advice
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Dear Mr. Berko:
A lawyer in Miami drew up my trust several years ago, and I think he did a good job. He is a wonderful gentleman. He is also my money manager, my accountant and my life insurance agent. I invested most of my money, $987,000, with him in early 2005. Recently I had two certificates of deposit come due, and he thinks I should put the $132,000 proceeds in an immediate annuity that will pay me 5.4 percent for life, with only 30 percent of that income taxable. However, my son insists I keep the $132,000 in CDs. So I’m writing to seek your opinion and advice.
E.P., Delray Beach, Fla.
Dear E.P.:
Take your statements to Merrill Lynch, Morgan Stanley or Oppenheimer, etc., and ask the manager to review the account. Don’t tarry, dear lady, don’t delay – do it now.
I suspect your lawyer could be a bloody crook, and I believe your son suspects so, too. I wonder how many other trusting senior clients he may have cozened.
I also urgently recommend that you ring one of the many reputable insurers, such as MetLife, AXA Equitable, Lincoln National, etc., and have one of those agents review your life insurance policies. Please do it now.
I also urge you to visit one of the well-known law firms in Delray Beach and ask to have your trust reviewed. I wouldn’t be surprised if that wonderful gentleman insinuated himself or one of his assigns in your trust.
Now I can tell you in no uncertain terms that an immediate annuity – life only – for a 70-year-old female paying a 5.4 percent guaranteed return for the rest of her life is a joke. I suspect that creep is disingenuous, and I’m certain the agents from Met, Northwestern or New York Life will agree.
Now pay attention. That rogue would take your $132,000 and promise you $7,128 in annual income, which is a 5.4 percent return. Neither you nor I know what insurance company this fellow is using. However, when investing money for retirement income, I prefer to recommend the highest-rated, best-known companies. Below are a few sample yields, and you can see that they are far superior to the crap this guy would have you buy. And as you can see from the following, it also makes good sense to get various quotes, even among the best insurers.
A $132,000 immediate annuity with Ohio National will pay you $9,800 a year, which is a 7.4 percent return. The same investment at Lincoln National would produce $10,320, which is a 7.8 percent return. The same investment at AXA would produce $10,752, which is an 8.1 percent return, and the same investment in MetLife would provide $11,100, or 8.4 percent. Each annuity has 70-percent tax exclusion.
Please be brutally honest and ask yourself why a 70-years-young lady who lives in Delray Beach would drive 50 miles to Miami to have a lawyer-insurance agent-financial adviser-accountant prepare her trust and tax returns and manage her money. Miami has all the characteristics of a Third World country. I think you’re getting Third World financial advice, and I suspect you may be getting Third World legal advice, too.
Do you think it’s remotely possible that your confidence in this wonderful gentleman might be more a result of his charm than his capability? Please, please, E.P., take my advice: Have your trust and stock account reviewed by another attorney and another broker and have your tax returns checked by a certified public accountant.
Free advice is often worth no more than it costs, but my free advice to you could be worth hundreds of thousands of dollars.
Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net. © Copley News Service
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