Bob Kargenian’s Letter Published in Barron’s

Bob Kargenian’s letter was published in Barron’s, a weekly newspaper that covers financial information, relevant statistics, and market developments.

In his letter, Bob says, “Karen Hube spent considerable attention on the hot products of registered indexed-linked annuities and fixed-indexed annuities and their downside protection.

“There was virtually no mention, however, of the complexity of these products and their illiquidity and surrender charges. Understanding the cap formulas and all of the variations is challenging for even the most astute of advisors, let alone clients.

“We’ve seen surrender charge schedules in the past of up to 15 years, which is a crime. It boggles my mind that the Securities and Exchange Commission doesn’t regulate these products, which produce some of the worst abuses in our industry because of the large commissions typically paid.

“All in all, should investors want more downside protection for their overall portfolio, they would be better off adjusting their asset allocation to stocks and bonds than buying something they can’t understand and will probably regret.

“But those who still want to venture into these products should remember that most of them are like the Eagles song ‘Hotel California’—’You can check out anytime you like, but you can never leave.’”

Read Bob Kargenian’s Entire Letter (login required)