Straight Answer

Why do some financial advisors say annuities are bad?

Sorting legitimate criticism from blanket dismissal — and why both exist.

Short Answer

Some advisor objections target specific products, high costs, or past sales practices — and those objections can be legitimate. Other objections are philosophical, rooted in a belief that lower-cost investments serve most clients better. The key is distinguishing criticism of a particular annuity from a blanket dismissal of the entire category. Both exist, and they're not the same argument.

What this means for you: When an advisor says "annuities are bad," ask which annuity, what specifically, and why. A specific critique of a specific product is useful information. A blanket dismissal is an opinion.

The suspicion some advisors have toward annuities is not random. It often comes from real history and real tradeoffs. Understanding the sources makes you a better evaluator — whether the advisor recommending or criticizing an annuity is right in your case.

Legitimate objections

Cost in some products: certain annuities — particularly older variable annuities with multiple riders — carried high cumulative charges. That criticism can be valid for those products.
Complexity and opacity: crediting methods and rider terms can be hard to understand, which creates room for mis-selling. A good advisor flags this.
Liquidity mismatch: placing money an annuitant needed soon into a long surrender period is a real problem. The objection is to the mismatch, not necessarily the product.
Suitability: annuities are wrong for some money. An advisor who says "not for this portion" is doing their job.

Philosophical objections

Some advisors favor low-cost, liquid, market-based investing for most clients and view insurance guarantees as expensive relative to their benefit. This is a values-based stance, not a factual claim that every annuity is bad. It may be right for some clients and wrong for others.

Conflicts of interest (both directions)

Advisors compensated on assets under management may have a structural incentive to keep money invested rather than in an insurance contract. Advisors compensated on annuity sales may have the opposite incentive. Neither makes an advisor wrong, but both are worth knowing.

Who Might Consider This

Those who hear "annuities are bad" should ask which product, what cost, and whether the objection applies to the specific contract and portion of money under discussion.

Common Misunderstandings

"If advisors dislike them, they must be bad." Advisor opinion varies by product, compensation, and philosophy. It's a data point, not a verdict.
"Advisors who recommend annuities are just selling." Some are; some are matching a product to a genuine need. The compensation question is fair to ask either way.

Questions to Ask Before Deciding

Which specific annuity is the advisor criticizing or recommending?
How is the advisor compensated, and does that affect the recommendation?
What portion of my money are we discussing, and what job does it need to do?

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Sources & References

Last updated: 2026-09-29This content is a draft pending qualified human review.

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Disclosures

The content on TheAnnuityTruth.com is educational and general in nature. It is not individualized investment, legal, or tax advice. Annuities are insurance products; product availability and features vary by carrier and jurisdiction, and guarantees are subject to the terms of the issuing insurance contract and the claims-paying ability of the issuing insurer. Annuity contracts are not FDIC insured, are not bank guaranteed, and are not a deposit or obligation of, or guaranteed by, any bank.