Annuities: Misconceptions, Regulations, and Best Practices With David Cranfield

David Cranfield

David Cranfield is the Brokerage Director at Pinney Insurance, a full-service BGA. Pinney's services help financial advisors, planners, and insurance agents expand their knowledge on insurance products and source solutions for their clients. Some of David’s areas of focus include annuities, life and disability income insurance in business planning, estate planning, and individual insurance planning. With extensive experience in the insurance and financial services industry, he also serves as the Regional Vice Chair of the National PAC Committee for NAIFA (National Association of Insurance and Financial Advisors).

Here’s a glimpse of what you’ll learn:

[03:12] David Cranfield explains the difference between the roles of independent and captive financial advisors
[05:58] How annuities have evolved from simple annual payments to complex financial products
[07:10] Immediate versus deferred annuities and how they function
[10:32] Why opinions on annuities are so polarized among financial professionals
[18:55] The most crucial moving parts in annuity contracts
[21:42] The significance of surrender charges and how they affect liquidity
[22:43] Which annuity riders offer valuable benefits and protections
[24:35] Downsides of annuities to watch for and avoid in financial planning
[27:26] How annuities are taxed and how it impacts financial planning

In this episode…

Annuities are one of the most debated topics in personal finance — praised for their lifetime income guarantees yet criticized for complexity, fees, and misuse. How can people separate fact from fiction and determine if annuities are the right financial tool for their needs?

According to David Cranfield, a seasoned financial professional and self-professed “insurance geek,” annuities are neither inherently good nor bad — they are simply tools that must be used properly.

He highlights that many misconceptions stem from an overwhelming number of annuities marketed by unqualified insurance advisors who fail to understand and explain critical details, such as guaranteed and non-guaranteed (i.e., movable) contractual provisions, fees, and various add-on riders.

However, at their core, annuities excel in providing security for retirees concerned about market volatility and outliving their assets. But improper use, such as locking too much of one's liquid assets into long-term products like annuities, can lead to financial challenges when unexpected life events arise.

In this episode of the Pillar6 Podcast, Roman Polnar speaks with David Cranfield, Brokerage Director at Pinney Insurance, to discuss common misconceptions about annuities, regulatory improvements, and best practices for informed decision-making. They explore how guarantees differ between products, why understanding surrender charges is crucial, and the importance of working with educated advisors. David also shares tips on evaluating annuity options to ensure they align with your financial goals.

Resources mentioned in this episode:

Quotable Moments

"A tool is neutral. In the hands of a skilled craftsman, it's wonderful. In the hands of a criminal, it's bad."
"If I wouldn't recommend something to my own mom, why would I recommend it to somebody else?"
"Life is full of change. We don't know what those changes are going to be."
"Ignore the folks that say annuities are all bad or all good. They're a tool and an appropriate tool in many instances."
"A good salesperson can take the complex and make it simple. I have the opposite talent."

Action Steps

Educate yourself on the basics of annuities: Begin by familiarizing yourself with the various types of annuities, including immediate, deferred, fixed, variable, and indexed. This foundational knowledge helps you make informed decisions and ask the right questions when discussing options with a financial advisor.
Identify and understand guarantees and movable parts: When considering an annuity, ensure you know what aspects are guaranteed and what elements can change over time, such as interest rate caps or fees. Being aware of these details can prevent unexpected changes that might affect your financial plan.
Check advisor's credentials and affiliations: Verify that your financial advisor is affiliated with reputable organizations and adheres to a code of ethics. This step ensures that your advisor is committed to professional standards and ethical practices, which can significantly impact the quality of advice you receive.
Assess the appropriateness of the annuity for your needs: Ensure the annuity product aligns with your financial goals, such as providing income you cannot outlive or protecting against market volatility. By matching the product to your specific needs, you can avoid the pitfalls of using an unsuitable financial tool.
Discuss and understand surrender charges and periods: Talk to your advisor about the surrender charges and periods associated with any annuity product you are considering. Understanding these terms will help you prepare for liquidity needs and prevent potential penalties from impacting your financial strategy.

Sponsor for this episode

This episode is brought to you by Pillar6. Pillar6 is a wealth advisory firm for successful individuals and families with active lifestyles.

Our clients appreciate having clarity and control over their finances and the peace of mind in knowing that their financial decisions are aligned with their core values, goals, and priorities. We provide financial planning services and wealth management services.

Schedule your complimentary discovery call to talk to us.

To learn more, go to www.pillar6.com or you can email us at hello@pillar6.com.