FYI: High-profile fixed index annuities salesman Phillip J. Cannella 3rd at one the free dinners he hosts across the region to promote his company. Cannella, who also hosts an hour-long paid radio infomercial every Saturday and Sunday, says his firm writes $100 million in contracts annually, earning $6 to $8 million in commissions.
Regards,
Ted
http://www.philly.com/philly/business/Fixed_Index_Annuities_Magical_or_Unsuitable.html
Comments
But there's another way to get this type of investment. You can buy a structured note or equity-linked CD without the annuity wrapper. See, e.g. Fidelity's structured notes.
Or you can roll your own. Buy a zero coupon bond with whatever maturity date you want, and a maturity value equal to your principal. That guarantees principal. Use the remainder to buy an index future that's at the money. At the end of your time period, you have your principal returned and if the index has gone up, you get the benefit from your future. (Participation rate is determined by how much money you had left over to buy the derivative.)
Here's an old Lehman write up on how these work. It's at a pretty basic level, so if the paragraph above seems to make sense, then so should the write up.
http://homepages.math.uic.edu/~tier/Finance/equity-link-notes.pdf
I'm not advocating using structured notes or CDs, but if you their the risk/reward profile, they can be reasonable vehicles. Not wrapped inside an annuity, though. (If you want an annuity for its tax-deferral feature, you still want one that doesn't charge a fortune for that wrapper.)