For most people approaching retirement, annuities occupy a strange space. They have heard the word. They may have heard it dismissed. But very few have sat down with someone who walked them through how these products work, what they cost, and whether one might fit their specific situation. Deric Ned, founder of Ridgemont Capital, based in Los Angeles County, CA, thinks that gap is worth closing, and that the reason the conversation has never happened traces to something much simpler than the products themselves.
The Incentive Problem
Deric’s explanation starts not with annuities but with how most financial advisors get paid. A typical fee-based advisor charges around one percent of assets under management each year. On a $500,000 account, that is $5,000 a year, collected as long as the money stays where it is. When a client moves money into an insurance contract, that dollar leaves the advisor’s management. The fee stops. The structural incentive to mention annuities is, in Deric’s words, negative.
“He’s not a liar. He’s a man whose paycheck has been quietly editing his opinions for thirty years.”
That framing matters. Deric is careful not to cast advisors as villains. Most, he argues, have built a professional worldview that doesn’t include this product category because their training, their peer group, and the conferences they attend are all organized around the products their pay structure rewards. As a result, a client can spend years in a financial relationship and never once be shown a product class worth considering.
What the Market Looks Like Now
For most of the past three decades, the annuity market was not particularly interesting. With interest rates near zero, insurance carriers had little incentive to offer strong terms. The products of that period carried annual fees, capped returns, and limited flexibility, and many buyers learned the details after the fact rather than before.
That changed in 2021, when the Federal Reserve began raising interest rates for the first time in a generation. Banks started offering certificates of deposit at four and five percent. Insurers suddenly had real competition for retirement money. They responded by improving their products.
The contracts that came out of that period are different in meaningful ways. Many carry no annual fees. Some offer sign-on bonuses of 15, 20, or more than 50 percent of the contract value. Riders that previously cost one or two percent a year are now included in some contracts at no additional charge. The carriers offering these products are not new entrants. Most have been in business for a century or more, with strong independent credit ratings and audited financials going back decades.
Deric’s position is not that every retiree should own one. It is that the product class deserves an honest evaluation, and most people have never been offered one.
What an Honest Evaluation Looks Like
Deric describes a clear line between how annuities are typically sold and how they should be. The selling version starts with a number: a bonus, a rate, a monthly income figure on a given amount. The evaluation version opens with a diagnosis: how old is the client, when does income need to start, what obligations exist, what does the rest of the plan look like. One is a pitch. The other is planning.
Deric also points to a pattern he sees consistently. Those who dislike their annuity and those who are satisfied with theirs are often holding similar products. The difference almost always comes down to one thing: whether they reviewed the full contract details before signing or discovered them afterward.
The practical takeaway, in Deric’s view, is straightforward. If your advisor has never raised annuities in the context of your retirement income plan, it is worth asking why. The answer may have less to do with the product’s quality than with the structure of the relationship.
