Today’s review is on the Prudential MyRock Advisor Variable Annuity, with the purpose of showing you its strengths and weaknesses. Because in order to make an informed decision, it is important to consider all available facts such as the following:
- Product type
- Investment options that are available and their realistic long-term investment return expectations
- How it can best help your financial plan
- How it’s most poorly used as part of your financial plan
Prudential MyRock Advisor Annuity Quick Facts
|Product Name||MyRock Advisor|
|Type of Product||Variable Annuity|
|Standard & Poor’s Rating||“AA-” (Good)|
+ 1 (800) 778-4357
Before we go into detail, here is an important legal disclosure.
This review of Prudential MyRock Advisor Variable Annuity is an independent review at the request of readers. Intended to explain my perspective when breaking down the positives and negatives of this particular model annuity. This is an independent product review, not a recommendation to buy or sell an annuity. Equitable has not endorsed this review in any way, nor do I receive any compensation for this review. Before purchasing any investment product be sure to do your own due diligence and consult a properly licensed professional, should you have specific questions related to your circumstances. This review is not intended to give specific advice and your adviser may know more about your circumstances to make an appropriate recommendation. All names, marks, and materials used for this review are property of their respective owners.
Before we go into the review, some information on Prudential Financial, Inc Insurance Company
Prudential Financial, Inc is an American Fortune Global 500 and Fortune 500 company whose subsidiaries provide insurance, investment management, and other financial products and services to both retail and institutional customers throughout the United States and in over 40 other countries.
It is the largest insurance company in the United States, with total assets amounting to approximately 1.456 trillion U.S. dollars. Prudential is composed of hundreds of subsidiaries and holds more than $4 trillion of life insurance.
There are a few ways that Agents might pitch Prudential MyRock Advisor Variable Annuity
- Guaranteed Lifetime income
- Flexible Investment Options
How does Prudential MyRock Advisor Variable Annuity Actually Work?
The main purpose of Prudential MyRock Advisor Variable Annuity is to offer lifetime income to its buyers, however, to do this not only you will have to purchase this variable annuity but also its income rider, which allows you to receive income for the rest of your life.
The issue with the income rider is that they charge you an extra fee for it, which is fixed whether your annuity performs well or not. They do tell you that your account value can be negatively affected by market conditions and withdrawals. As you may think, the market does not always perform at its best, it is the long-term view of the market that is most favorable for investors, thus this indicates that when the market returns are negative, your account value will not only have to deal with that but also with the fees and your needed withdrawals.
They explained that in a very subtle way in the chart below.
They also tell you to not worry about depleting your account to zero because if you purchase their income rider you will receive guaranteed income for the rest of your life. But is that what you want? You want to deplete your income, not leave any legacy and receive a “guaranteed income rider” that won’t keep up with inflation? Think about it.
Nevertheless, not everything is lost, nowadays there are a lot of options that you can utilize in your favor to maximize your investment profits, live your dreamed retirement and at the same time creating legacy for your heirs.
Prudential MyRock Advisor Annuity Fee Breakdown:
Surrender Charge Fees: No surrender charge (access funds fee)
|Type||Prudential MyRock Advisor|
|Management Fee||0.28% – 1.50% + $50|
|Fund Access Charge||0.35%|
|Portfolio Operating Expenses (Funds)||0.13%-1.02%|
|Insurance Fees (admin and M&E fees)||0.40%|
|Prudential Dynamic Income Benefit||0.40%-1.00%|
|ROP Death Benefit Rider (return on premium)||0.50%|
|Aprox. Max Fees with Riders||6.75% Max Fees|
|Aprox. Current Fees With Riders||3.00% – 3.60%|
Having to pay more than 2% for withdrawing your own money does not seem like a smart choice to make. Remember that Prudentia MyRock Advisor Variable Annuity, wont provide you with any protection due to market downturns, it will create little to none value to your investment compare to other investments, since the mutual funds in this annuity can be easily found outside this annuity and probably with a lower fee. The only thing this annuity gives you is the “illusion” of lifetime income, but as we explained before it is not what it seems to be.
Later on this review you are going to see how this income rider really works and why you probably don’t need it in order to accomplish your retirement goals.
Investments for Prudential MyRock Advisor Variable Annuity
Prudential MyRock Advisor Variable Annuity does offer a variety of different funds that you can invest in, however, besides the fund’s fee they also charge you what is called a “Fund Access Charge” just to be able to buy the funds. This is something that very few annuities have, and it’s totally an unnecessary cost.
If you have an Investment advisor you might be able to buy funds that are equivalent to these ones, for a lower price, even you might be able to diversify more, and structure a plan. I’m not against annuities, but annuities should not be your retirement plan, annuities can be part of your retirement plan. That’s why it is important you structure the proper plan that better fits your retirement goals.
How does the Prudential Dynamic Income Benefit Rider Actually Work?
When you read the brochure guide of the Prudential Dynamic Income Benefit rider, it states that purchasing it, will be a great decision for your retirement because it will be provided with guaranteed income for the rest of your life. They said it does not matter your withdrawals, your income will not be affected by it and that it can increase if you defer it. However, what can really affect your income is the annuity investment returns, that can potentially lower or increase income.
They also state that your account is going to reach “zero”, but you don’t have to worry about it because they will keep giving you income to you or your beneficiary for the rest of your life.
This represents what we were talking about before, which variable annuities and their riders give you the illusion of security because they provide lifetime income, but your concern as a retiree is not only running out of money but also your money running out of purchasing power and being hit by inflation. With the amount of money the Fed is printing, most likely it will lower the real value of that “guarantee income” in the next 5 to 10 years.
That’s why it is important that not only that you don’t run out of money but also protect your assets against inflation and potentially grow them for your heirs. Which in this case a variable annuity with all the high fees in it will be incapable of doing that. You will need at least 3%(fees) plus 2-3% (inflation) returns on your investments every year in order for that income to really maintain the kind of retirement you wish to have. It can be accomplished one, two or even 3 years in a row, but when the market goes down, your account value will be in the process of depletion with the high fees, and your income will decrease substantially.
Don’t rush when you hear your agent say “lifetime income”, do your research, consult with a specialist, and you will see that most likely there are better options for you and your future. We encourage you to meet with Certified Financial Planner which is the highest accreditation in the retirement planning industry, so you not only can see one scenario but multiple ones on how your money can perform and give you your desired retirement.
This Annuity works Best:
- For those who want to deplete their money to zero.
- Tax-deferred growth.
- For those looking for lifetime income
This Annuity Works Worst:
- Those who need liquidity after buying a rider.
- For those looking for high returns and low risk.
- Purchasing power risk
- Income risk
- For those who want principal protection.
If we compare Prudential MyRock Advisor Variable Annuity to other similar annuities in the marketplace, it is not a very high fee variable annuity, but it does not mean it is a low fee. It offers you a guaranteed income rider that is only 1% against 2-3% over other similar annuities. However, after all we’ve seen this variable annuity really do for you, it is really a no-brainer to reach for other options available in the market, unless that you don’t care about running out of money and purchasing power in your retirement.
Variable annuities are complex products that might deceive anybody that doesn’t understand them, however, AnnuityEdu was created to help you understand these complex products so you fall into your agents sales pitch trap. We are offering you a complimentary meeting where you can get an annuity check with our Certified Financial Planner, as well as a comprehensive retirement income analysis.