After many attempts to refrain from making comments about the state of financial services companies in today’s market environment, an advertisement on CNBC struck me as being worth a more definitive look. Not long ago Mark Cuban in his blog wrote a story about Fidelity Investments guaranteeing income to its clients through the use of its own annuity product. This product would potentially provide income for life for the holder of the policy. Soon after Mark’s article Fidelity Life Insurance Company pulled the plug on their product. They would no longer offer this product to their clients. However, today I noticed that a television ad promoting the benefits of guaranteed income from Fidelity Investments was on the air. How could this be? Didn’t they decide to pull this product from the market? Surely this is some sort of oversight and it will be corrected quickly!
But nothing is as it seems at Fidelity anymore. After jotting down the 800 number to call about more information, I called Fidelity to find out that yes indeed they were offering the product and would I like to learn more about it?!!!! The representative that I talked to explained that Fidelity was offering this guaranteed income product, but it’s not Fidelity’s product, it’s either Mass Mutual’s or John Hancock’s. This seemed odd so I asked, “Why wouldn’t I buy the product from those companies rather than Fidelity?” The answer was an interesting and confusing one. The representative explained that, “unlike the other insurance companies we are not paid to sell insurance or annuities so Fidelity through their buying power cuts a deal with the other insurance companies to offer the product at a better price than what they can because we don’t have to pay agents their commissions. This means our rates are better!”
Really?
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