24 April 2012

At Whites IFM we are strong advocates for simplicity and transparency when it comes to investing. There are any number of investment products, particularly targeted at retirees, which purport to provide either a stable income stream or enhanced returns. In many cases there are unnecessary complexities or layers of fees that are not in the interests of the majority of investors.

Annuities are one product that offer retirees a level of simplicity (an income stream for life or a set period of time) but which are far from transparent when it comes to disclosing all the associated fees and charges. Lifetime annuities also involve a “bet” on your longevity which is not always well explained or understood.  Retirees who are confident about their abilities to invest directly in shares, cash and fixed interest products can effectively replicate what an annuity provider is doing but without paying all the provider’s fees and costs in the process. “Why annuities need work” is a worthwhile read from today’s Australian.