Why Can’t You Buy a Retirement Fund Online?
One reason it is difficult to purchase a retirement fund online is that companies do not want to disrupt their primary distribution source, which are insurance agents and brokers. This is a business model that works well for both companies and agents. Insurance agents and brokers earn a commission when a client purchases a retirement fund. They can also sell other products to clients. Companies benefit from having good agents and brokers who educate clients and build relationships with them. It’s a win for both the company and the agent.
Additionally, retirement funds are complex and not suitable for everyone. The responsible agent will get to know the client and their financial goals and ensure that the retirement fund is a good fit for them. Agents also educate clients about retirement funds and how they work, and they may collaborate with other financial advisors for the client (accountants, financial planners, etc.) to put plans in place. Retirement funds are complex, and including a human in the process helps ensure that you understand the product you are purchasing.
How to Buy a Retirement Fund
If you cannot buy a retirement fund online, what are the available methods to purchase one? You have a few options:
Find an agent or broker: Look for an experienced insurance agent or broker. Some insurance agents work with multiple insurance companies while others work exclusively for one. Insurance brokers work on your behalf to find retirement funds and other insurance products that meet your needs. Before dealing with an agent or broker, check your agent with the insurance department in your state to ensure they are properly licensed.
Research the company and product: Another way to buy a retirement fund is by researching insurance companies and their products. While researching, look at the financial strength of the company and the offerings in retirement funds. Generally, you will find three different types of retirement funds: fixed funds, indexed funds, and variable funds. Fixed funds have a fixed interest rate, indexed funds tie the interest rate to an index like the S&P 500, and variable funds invest your premium in investments like mutual funds. Although companies may not have all the fine details on their websites, you can get an idea of their products. Once you find a company or retirement fund you like, call the company to connect with an agent.
Work with a financial planner: A financial planner is someone with deep knowledge about planning for specific financial goals like retirement. Although a financial planner may not sell retirement funds, they can advise you on whether retirement funds are appropriate for your financial plans and which funds you should consider buying. They may also be able to refer you to a trusted agent or broker. Look for a reputable financial planner you communicate well with.
Note: Variable retirement funds may include an element of risk, meaning you can lose your money in your investment. It is essential to carefully review the terms and conditions before purchasing these funds or any other retirement funds.
What Happens After Purchasing a Retirement Fund?
Many websites allow you to search for retirement funds and may even claim that you can buy one. Be sure to read the terms and conditions carefully before signing up for these sites, as most of these sites state that by requesting a quote, you give the agent permission to contact you. Unless you want to receive endless phone calls and emails, it is best to research and then contact agents or companies directly.
Do you
It will be possible to buy a retirement fund directly in the future? It’s hard to know. It seems that as we continue to move towards more online financial interactions, retirement funds will eventually follow this trend. For now, you can at least independently research and find the retirement fund that suits your circumstances.
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Sources:
- The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
- Insurance Information Institute. “Facts and Statistics: Annuities.”
- NAIC. “How to Choose an Insurance Agent.”
- Investor.gov. “Annuities.”
Source: https://www.thebalancemoney.com/can-i-buy-an-annuity-direct-3964002
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