Variable annuity exchanges are very common yet rarely good for investors, according to an article entitled "No Surrender" in the November 29, 2004, issue of
Even in the face of criticism from the
Coolidge characterized variable annuities as appropriate "for only a sliver of the investing public" because investors trade the capital gains rate for tax-free accumulation and then the much higher income rate.
Furthermore, exchanges lock investors in with another surrender charge period. Of course, exchanges can be good for customers, but too often they are motivated by commissions, Coolidge charged, commenting: "It's uncommon for a salesman-pitched product to offer better terms. The salesman's hefty commission comes from the customer's pocket."