“I purchased an annuity from a financial planner and found out, after the fact, that what he sold me and I agreed to is not the same product that I purchased through him. He pre-filled the application and showed me where to sign. I feel foolish for not understanding how this annuity works.

I am disappointed that he presented himself as a fiduciary and told me this product would provide me guaranteed income, liquidity, and stock market returns. I now realize that the income guarantee, liquidity, and returns are not as straightforward as he described and appear to be costly versions of benefits I could have achieved with less complexity and lower fees. Do I have any recourse? Would hiring a new financial advisor help me figure out what to do?”

— Email from a prospective client

Have you heard the tale of a three-legged chicken? It serves as an apt metaphor for the "too good to be true" products marketed to unsuspecting investors. Recently, a client of mine was reminded of this tale when dealing with a complex Guaranteed Minimum Withdrawal Benefit (GMWB) variable annuity. Sold by a "friend" years ago, this annuity promised guaranteed income and stock market growth. Unfortunately, it turned out to be more of a cautionary tale than a golden goose.

Years later, the underlying investment value hadn't grown significantly. My client had been paying high annual fees—over 2%—which steadily eroded returns. When he wanted to move the account, he faced hefty surrender penalties, as high as 7%. Thankfully, we found a solution that helped him preserve his investment, but it underscored the dangers of chasing unrealistic guarantees.

For anyone considering "guaranteed" products, let me share a story about a chicken...