Don t let your Retirement be taken to the Wood Shed! Brian C. Rezny, CFP, President and Chief Investment Officer

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1 Why Annuities are Dangerous to your Wealth & Retirement Don t let your Retirement be taken to the Wood Shed! Brian C. Rezny, CFP, President and Chief Investment Officer

2 Why Annuities are Dangerous to your Wealth & Retirement! A simple explanation of an Annuity Toxic, Highly Complex, Very Expensive, Inferior Investment, with Insane Surrender Penalties that hold your money Hostage, Abusively Sold by Salespeople, whose Interests are far, far Different than Yours Annuities are one of the most Abusively Sold investments today. The two of the Most Toxic annuities sold: Variable and Equity Index/Hybrid Annuities. Kiplinger, Standard & Poor's and Morningstar, in addition to my firm and others, have published articles discussing the abuse and misuse of these products. The volume of complaints about equity-indexed and variable annuities currently exceeds Regulators ability to respond. And the lack of integrity of the people who sell this stuff is frightening. I suggest that you Google Annuity Fraud and Abuse and then sit back and start reading. Where Abuse Starts Vulnerable seniors are the biggest targets. While the selling of unsuitable annuities is harmful to all consumers, seniors remain by far the most vulnerable. According to Consumer Action, a consumer advocacy group, people 60 and older make up 15 percent of the U.S. population, but they account for about 30 percent of fraud victims. There are many reasons for this statistic, especially as it relates to annuities. First, annuities, by their very nature, are complex. Second, many seniors, because of their age, often have diminished capacity to understand complex investment transactions. Many also have a heightened fear of outliving their assets. Seniors who may have no real familiarity with Investing Complexities can be easy prey for Unscrupulous insurance companies, their Sales Agents and are lulled into a false sense of security by the sales agents. Unfortunately, most seniors do not discover the fraud until it is too late.

3 First and foremost, annuities are not bought they are SOLD. They are SOLD not because they are great investments - far from it. They are SOLD because of the Lavish commission they pay to the selling broker and the sky-high fees they bring in for the firm plain and simple. A salesperson selling Variable or Equity-Indexed annuities (often called hybrid annuities today), will tell you all the reasons why they re right for you. What they won t tell you is all the reasons why you should avoid annuities at all cost. Non-fiduciary "so-called advisers" aggressively sell annuities because of lavish commissions. Fiduciary advisers will virtually never recommend annuities, and for good reason they are no good for your portfolio! Second Annuities are basically a highly expensive insurance wrapper. They are attractive to salespeople/brokers because they offer the highest commissions of almost all investment products sold today. Commissions drive sales and cause conflicts of interest! These Sky-high commissions, Sky-high yearly internal fees and Sky-high surrender penalties ROB the investor of returns and are an incentive for the broker to push more of these inferior investments onto unsuspecting investors who don t read the fine print. The pretense of these high expenses is that they pay for benefits, including the so-called death benefit and income benefit, which is a seldom used and vastly over-priced form of portfolio protection. The salespeople who sell these investments seldom inform clients that the benefits are virtually never worth the high yearly costs. The US Security and Exchange Commission (SEC) and FINRA have brought numerous cases against firms for mis-marketing Annuities, including for misrepresenting the product and/or selling them to clients for whom they are not suitable.

4 That Free Dinner will cost you more than you know! I know your advisor is a nice person; they call once a quarter, exchange pictures and stories about the grandkids. They even bought you a dinner at a fancy steak house. WOW, that was nice now for the Annuity Sale! Steak isn t cheap and neither is that inferior expensive annuity you are going to be SOLD, as you will soon find out! Fear and so-called Free Money Bonuses are great for selling you an annuity! Third Sell the Fear, the Greed and the so-called free money bonus they re taught that by their firms; it s an Emotional sales tactic, and brokers and annuity salespeople are great at it. They get more training on how to Sell Fear and Greed than how the products they sell actually work. Please don t mistake sales and relationship selling with real investment advice. Your annuity salesperson works under Suitability, NOT a Fiduciary Standard of Care! So they don t have to work in your best interest! A recent report by consulting firm Cerulli Associates, puts the matter as delicately as it can: "Information about variable annuity purchases reveals that they do not appear to be based on educated decisions."

5 How that annuity will Rob Your Retirement of $40,000 a year! Simple math: what is that annuity REALLY costing You? Over 28 years I have reviewed hundreds, if not thousands, of inferior annuities. The vast majority of annuities my firm has reviewed have a yearly cost of 4%, every single year. I have reviewed annuities where the cost is substantially higher than 4% annually! On a $1 million dollar annuity that s $40,000 a year of sky-high expenses, every single year, year after year. Those sky-high expense Rob your returns and your retirement income. Over 10 years you lose over $400,000 in added expenses in an annuity! I don t know about you, but $400,000 is a lot of money to lose to the insurance company and sales agent selling you an inferior investment. All annuities sold by brokers have high yearly expenses, some more, some less. DON T let the selling agent convince you otherwise! There is NO Freebie with annuities, just sky-high expenses and sky-high surrender penalties that hold your money hostage! An alternative to the Annuity Sale Job: You could hire a low cost Fee-Only Registered Investment Advisor (RIA) Money Manager, like Rezny Wealth Management, for a fraction of the cost of that annuity. RIAs work in a Fiduciary Money Manager capacity, NOT suitability like the annuity sales agent. The benefits of working with a Fee-Only RIA: significantly cut your costs, get real money management, avoid the conflicts of interest working with an annuity salesperson and put more of your hard-earned money back in your pocket instead of fees to the insurance company! Income for Life and Income Riders are a Joke! Another way Your Retirement is taken to the Wood Shed with an annuity! Income Riders are a Joke! Here is how they work: you put in $500,000 into an annuity at age 65, you get $26,000 a year for life yes life! Wow, that s sounds really good until you do the math! Take $500,000 and divide it by $26,000: it takes you almost 20 years to get your own money back, your own money. So if you live to age 85, you get your own money back no return on your money, just your money back. If you live longer, the annuity will keep paying, but again, if you do the math your return is next to nothing! These are ACTUAL numbers taken from the many income riders I have reviewed, from disgruntled investors who where sold an annuity.

6 Wait, it gets Worse! The $26,000 a year never goes up and there is NO inflation protection! So every year while inflation goes up, your income DOES NOT. At just 3 percent inflation, in just 5 years you lose 15% purchasing power, so your $26,000 is really like $22,100. In 10 years you lose 30%, so your $26,000 is more like $18,200. Can you live on less money every year? I know inflation impacts my spending needs; I m guessing inflation impacts you too. From the Thousands of disgruntled annuity investors I have talked to, NOT one has ever told me the selling agent explained any of these Facts to them. The sales agent just SOLD them on Fake free money bonuses and Fake 8% returns they NEVER saw! Susan Nash, associate director of the SEC s division of investment management, gave a speech before the Insured Retirement Institute on June 26 that laid out a myriad of problems with the way Variable Annuities are sold. They are complex and costly and are often oversold. Investors are often befuddled by prospectuses steeped in legalese. Index Annuities are a Safety Trap What especially galls consumer advocates is that the problems with index annuities have been known for years, but insurance regulators haven't done nearly enough to stop them. According to data that 16 states provided to MONEY, index annuities accounted for 30% of annuity-related complaints to regulators in 2009, even though they represent just 13% of annuity sales. In seniorheavy Florida, it was 55% of complaints. "When you have a market incentive to sell, sell, sell, why would anyone be surprised that there are all sorts of abuses?" says Birny Birnbaum, a former consumer representative to the National Association of Insurance Commissioners (NAIC) who worked with New York's insurance department to craft a new requirement that agents disclose compensation. For example, in 2009 American Equity Investment Life, which does 92% of its business in index annuities, collected $63 million in surrender penalties -- equal to more than half its $101 million operating income. SOURCE: MONEY Magazine 1/17/2011

7 There are Few investments more lucrative than selling annuities for the annuity salesperson! FACT: Commissions drive conflicts, which is bad for your Money and worse for your Retirement! The majority of the calls I receive on my Radio and TV show are from Disgruntled people who were sold an annuity, didn t understand it, were mislead and want out. Don t be SOLD! Over half of all new potential clients that interview my firm have been sold 1 to 4 annuities by unscrupulous annuity salespeople in the past. This is what they tell us: The salesperson sounded so convincing, They told us it won t cost us anything, They said we get a free money bonus but it turned out it wasn t really free, or We never read the prospectus - it was too complex, we didn t understand it. Don t be SOLD! One of the ugliest potential costs of an annuity is the surrender charge: annuities come with surrender periods often as long as 20 years, and if you withdraw money from the account in that time you ll pay a hefty surrender charge just to get your cash. In other words, as soon as you park your money in an annuity, it s held hostage for the duration of the surrender period with limited availability. Don t be SOLD!

8 Don t let your Retirement be taken to the Wood Shed! What your salesperson won t tell you about annuities: One of the most expensive and complex of all investment products. Internal costs often as high as 3 to 5% every single year, year after year, robbing your returns and retirement! Unnecessarily and insanely locking your money in prison for many years. Surrender penalties that often last 7 to 20 years! Lacks liquidity due to early withdrawal penalties. Surrender Penalties up to 22% to get your own money! Are marketed based on unrealistic fears of loss of principal over long time periods. Fear sells annuities; your broker knows it and he will work your Emotions! So-called "advantage" of tax deferral is a joke. You pay higher taxes when taking your money out based on ordinary tax rates, not lesser capital gains tax rates! "Guarantee" against loss of principal is actually not guaranteed if insurance company fails. Yes, you could lose your money if your insurance company goes belly up! Higher taxes for your beneficiaries when you die. No stepped-up cost basis = higher taxes to your heirs! Limited, Mediocre, Expensive investment options. You won t find the best or lowest cost investment options - NOT EVEN CLOSE! So-called Free money Bonuses Misleading claims There are NO FREE money bonuses. There is a cost for those bonuses often as high as 1.15% every single year! Misleading claims again by salespeople! 8% returns on your money - Misleading claims Those claims of 8% returns come from unscrupulous annuity salespeople who mislead you into thinking you get high returns on your actual money. What you actually find is an income bucket that comes from your real money and at a high yearly cost. Again, no free money and no 8% returns on your money. Misleading claims are common with annuity salespeople. Read the fine print!

9 Annuities FAILED Want more Proof? See what others are Exposing! Tricks of the trade, the Annuity Salesperson Dateline NBC Equity-Indexed Annuities A Complex Choice, Why an Alert on Equity-Indexed Annuities? 14 Variable Annuities Beyond the Hard Sell Protect Yourself 76 Beyond the Hard Sell, FINRA and SEC Warn About Annuity Risks Equity-Indexed Annuity Alert, The State of Florida has issued a warning Index Annuities are a Safety Trap 9 Reasons You Need To Avoid Variable Annuities Annuities Are Not Bought, They're Sold The Truth About Equity-Indexed Annuities Indexed Annuities Cap Gains, Obscure Fees as Sellers Earn Trip to Disney Wharton Prof index annuities terrible Congress Sells Out Seniors: No SEC Regulation for Indexed Annuities

10 Rezny Wealth Management, Inc. Private Wealth Management for Pre-Retirees and Retirees Before you re SOLD an Annuity, call my Firm. No Emotional Roller Coaster for our Clients... Our Clients Just Enjoy Retirement There is a Difference! We invite You to Experience It. You would benefit from a Consultation if: You realize out-dated, old-school, asset allocation "set it and forget it" is ineffective You desire an Adaptive Investment that includes growth, income and risk management for a more secure retirement You do not have the time or discipline to effectively manage your own portfolio, but you desire a firm that has the time, talent and discipline to help you achieve your investment and retirement goals There is a Difference! We invite You to Experience It. Brian Rezny, CFP President and Chief Investment Officer * For qualified investors and you are considering the benefits of Private Wealth Management services offered by Rezny Wealth Management. *We have set a minimum account size for new clients. Please feel free to discuss your situation with us to see if we can help you achieve your retirement and investment goals.

11 Rezny Wealth Management, Inc. A Fee-Only Registered Investment Advisor Fiduciary Standard of Care In Your Best Interest Investment Strategy Risk Management Strategy Active Money Management Office locations: 5237 Summerlin Commons Blvd., Suite 209, Fort Myers, FL Panther Lane, Suite 395, Naples, FL Ponce de Leon Blvd., Suite 470, Coral Gables, FL NW Executive Center Dr., Suite 100, Boca Raton, FL Macom Dr., Suite 101, Naperville, IL W. Montello, Montello, WI (800) Visit our web site: DISCLAIMER The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of Rezny Wealth Management, Inc., herein (RWM) may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Investors should always consult an investment professional before making any investment. Rezny Wealth Management may hold investments in above-mentioned securities; positions can change at any time without notice. Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do not ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither (RWM), employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided. The analysis provided is based on both technical and fundamental research and is provided ''as is'' without warranty of any kind, either expressed or implied. Although the information contained is derived from sources, which are believed to be reliable, they cannot be guaranteed. The S&P 500 is a stock market index containing the stocks of 500 large-cap corporations, most of which are US companies. The index is the most notable of the many indices owned and maintained by Standard & Poor's, a division of McGraw-Hill. S&P 500 is used in reference not only to the index but also to the 500 companies that have their common stock included in the index. You can't invest directly into an index. (RWM) makes no claims in any way, shape or form that past results are indicative of future results. BEFORE MAKING ANY INVESTMENT DECISION, AN INVESTOR SHOULD CONSULT WITH A FINANCIAL PROFESSIONAL TO DETERMINE IF THE INVESTMENT IS APPROPRIATE, OR CONDUCT THEIR OWN DUE DILIGENCE BEFORE MAKING ANY FINANCIAL DECISIONS. ALL INVESTMENTS INVOLVE RISK, INCLUDING THE POTENTIAL LOSS OF PRINCIPAL INVESTED. Rezny Wealth Management, Inc. is a Fee-Only Registered Investment Adviser Copyright Rezny Wealth Management, Inc. All rights reserved.

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