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Why Ken Fisher Loves to Hate Annuities

We all know that Ken Fisher hates annuities and believes everyone else should too.
Fisher’s ads have been everywhere, although they have abated a bit lately. But anyone who has been on the Internet or has read a national consumer magazine has seen the ads where Fisher proclaims his hate for annuities and wants everyone to share that hate.

He probably should love annuities for all the business the campaign has driven to him. Fisher, 64, has been a columnist for Forbes for 30 years and is also No. 243 on the Forbes 400 list of richest people, which pegs his worth at $2.6 billion. He has long advised against annuities in the magazine’s pages and in many of his 10 books. His counter-annuity strategy helped build his registered investment advisor (RIA) firm to serve nearly 20,000 clients, with $54 billion under management. He is picky about his clients as well, clearly stating he is looking for people with at least $500,000 to invest.

His annuity hate goes only so far as the hook, however. Once people respond to his ads, his talk and material are not anti-annuity, but “pro doing business” with one of more than 1,000 advisors affiliated with Fisher Investments (FI).

As Fisher profits from his anti-annuity ad campaign, those in the annuity business are left asking how he can get away with saying what he says and the promises he makes. One of his particular points is his offer to help people get out of their annuity contracts.

The main problem for Sheryl Moore, president and CEO of Moore Market Intelligence, is what she sees as the inflammatory nature of Fisher’s advertising. Moore, who also is the founder of market research company Wink Inc., works closely with regulators on education committees through the National Association of Fixed Annuities (NAFA).       
“My personal opinion is that people shouldn’t make inaccurate statements, make blanket statements or create fear in an effort to sell,” Moore said. “He (Fisher) is using fear to get people to put all their eggs in one basket. The S&P 500 dropped almost 50 percent from 2008 to 2009. People who were invested in just the S&P lost nearly 50 percent of their retirement funds. My grandmother owned a variable annuity after she’d worked for CenturyLink for 40 years and lost $1 million when the market collapsed.”

Moore said she is concerned that consumers are being moved from safe positions into riskier equity products. “I’m of the risk profile that if you walk into my house and try to sell me stocks and bonds,” Moore said, “I’ll kick you out quicker than you got in.”

Regulators Decline Involvement

In California, where Fisher Investments has an office in San Mateo, the California Department of Business Oversight (CDBO) regulates securities. It also regulates state-chartered banks, mortgage companies and credit unions. But it doesn’t regulate Fisher Investments because FI’s total assets under management exceed jurisdictional limits for state-regulated securities firms. FI accordingly falls under federal regulation by the Securities and Exchange Commission (SEC), according to CDBO spokesman Mark Leyes, who relayed the following sentiment: “It’s not illegal to advertise, certainly not in California,” he said, “and it’s not illegal to hate annuities.”

ken-fisher-annuity-hate-ad-denver-post.jpgEmphasizing that any violations regarding truth in advertising would be addressed at the federal level, Leyes added, “I’m not convinced the Fisher ads would trigger any of that. If he says annuities are unfair or corrupt – which could be confronted as an allegation – saying something as subjective as ‘I hate annuities’ is not slander. Beyond that, if he were actually selling annuities, he would need an insurance license, of course. But it seems he is not selling annuities.”

Leyes said that California has no issue with FI and that any complaints would be referred to the SEC, adding, “Investment advisors in California can advise to buy an annuity or not to.”

It’s different in Iowa, where Fisher Investments does not currently do business, according to Jim Mumford, First Deputy Insurance Commissioner and Securities Administrator for the state of Iowa.

“Insurance people in Iowa can say they hate stocks, but they can’t say why they hate stocks,” Mumford noted. He also said securities representatives in Iowa accordingly would need an insurance license if they recommend someone cash in their annuity – as Fisher seems to do in his ads.

“Securities people will tell you that insurance agents can’t tell you anything about securities. In Iowa, we take the position that it works both ways,” Mumford said. “We have no knowledge of Fisher or his RIAs doing business in Iowa. If the Iowa resident is contacted in Iowa, no matter if they initiate the contact, the agent must have an Iowa insurance license (resident or nonresident, depending on circumstances). If the Iowa resident is contacted outside of Iowa and the transaction takes place completely outside of Iowa’s borders, the agent does not need an Iowa insurance license.”

Speaking of Fisher’s offer to refund or rebate the costs associated with annuity surrender fees, Mumford sees a fundamental difference: “From our point of view, rebating is an inducement to buy insurance. He (Fisher) was basically giving you a rebate to get rid of insurance. Since he was paying to get rid of insurance, the question was whether it was really a rebate in insurance terms.”

SEC officials declined to comment on Fisher or his advertising. Financial Industry Regulatory Authority officials did not return calls asking for comments.

Insurance Marketing Reaction
Online marketing professionals like Denver-based Jeffrey Ziegler point to Fisher’s marketing prowess in which he uses everything from direct mail to probable “retargeting” strategies whereby cookies attach to website visitors, causing ads to pop up wherever they go online.

ken-fisher-I-hate-annuities.jpg“It makes it look like he’s everywhere,” Ziegler said, asserting that it’s nothing magic, just savvy Internet marketing.

“Ken’s a billionaire – good for him,” Ziegler said. “The (annuity-hate) ad is his opinion. You’ve got to take this head-on with ads popping up right next to his. His ads might seem outrageous, but he’s a billionaire who knows what he’s doing with his marketing campaign. He will follow you until he gets you to take action.”

Ziegler also suggested including educational videos on online sites such as YouTube and on your own website. Have your own video message ready in advance. Tell your clients to see your message so they can understand the Fisher Investments message for what it is. Send your video message to your entire client database to avoid repeating yourself time and again in customer meetings.  

If a potential annuity buyer should respond to the (annuity-hate) ad on the other side of the 800 number and ask about annuities, they would do well to remember that – Fisher Investments is strictly a stock-and-bond money manager.

Meanwhile, for agents and representatives wanting more immediate relief from large display ads shouting, “I Hate Annuities … And So Should You!” insurance professionals suggest the following:

  • Buy compliant-appropriate educational ads in as many places as possible – online, in consumer newspapers and magazines, and on the radio and television.
  • In those ads, state why annuities/other insurance products provide some of the best ways to ensure a secure income stream in retirement.
  • In the ads, point out that the annuity has a proven track record resulting in rescued retirement lifestyles from the Great Recession.
  • Prepare a point-counterpoint presentation for your clients. Contrast shopworn objections to annuities with showing the good things annuities can offer as part of a solid retirement plan.
  • Create a video presentation for your website with a title such as “Why I Love Annuities … and So Should You.”
  • Recognize that free speech is guaranteed by the First Amendment, but know the difference between your protected opinion and blanket statements that could be considered slanderous.
  • Keep spreading the word about a new generation of fixed, fixed index and variable annuities, along with a host of innovations that have given life insurance products a new presence in retirement lifestyles.

Steve Marsh is a longtime journalist covering the annuity industry along with other financial sectors. Steve can be reached at [email protected] .

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