Independent Review of the Schwab OneSource Choice Variable Annuity

What will we cover in this annuity review?

In this annuity review, we will be going over the following details that pertain to the Schwab OneSource Choice Variable Annuity:

• Product type
• Fees
• Current rates
• Realistic long-term return expectations
• How it is used
• How it is most poorly used

Annuities can be complex. That’s where having an Annuity Investigator who loves math comes in.
We make the complex, simple.

If you’ve been considering the purchase of a variable annuity, this product could require you to contribute a substantial portion of your retirement savings into it, so it is important that you have a good understanding of how the annuity works, and what you can – and can’t – expect from it.

One reason for this is because, without knowing exactly what you are purchasing, you could find down the road that the product isn’t doing what you thought it would, which in many instances can also mean that it will have a negative effect on your future financial situation.

Although insurance companies spend millions of dollars every year in marketing costs, there are still many investors who will forgo reading over all of the “fine print” and instead rely solely on the recommendations of their financial advisors.

This, however, can be a tremendous mistake – especially as it relates to annuities.

Annuities can be complex products – and more and more, insurance carriers are adding additional bells and whistles to these financial vehicles, in turn, making them even more confusing for both consumers and financial pros alike.

Therefore, unless your current insurance or financial rep has a key focus on annuities, they may not be providing you with all of the important details that you need. And, if you purchase an annuity and later change your mind, it can be pretty expensive to get out of it.

If you’ve been leaning towards the purchase of the Schwab OneSource Choice variable annuity, then, you may have noticed that just like other annuities, it will perform very well in some instances, but not so well in others.

Sorting out which is which is our specialty.

We can help you with wading through the many details about the Schwab OneSource Choice variable annuity, which in turn can allow you to make a better-informed decision as to whether or not it is the right annuity for you.

Annuity and Retirement Income Planning Information You Can Trust

If you have never been to our website before, then please allow us to personally welcome you here. We at Annuity Gator make up a team of experienced financial experts who are dedicated to helping you decode the complicated world of annuities. Here, we strive to create unbiased, yet highly comprehensive, annuity reviews – and we have been at this for far longer than most of those “copycat” websites out there.

Annuities are a unique financial vehicle in that they are the only product that can make the promise of providing you with a lasting, lifetime income stream. Unfortunately, though, some advisors – albeit unintentionally – will tend to make them sound better than they actually are. One reason for this is because, in order to obtain the nice benefits, there are oftentimes also some tradeoffs that you need to make.

For example, variable annuities are essentially designed to do two key things – grow principal and provide lifetime income. But the reality is that these products are also prone to market risk, which can have an impact on the ability of your nest egg to last as long as you need it to. They are also not really all that good at providing the income you will need down the road.

In fact, variable annuities, in general, offer a lower income payout amount than what you can typically get by putting your money into a different – and safer – type of annuity…and without enduring endless sleepless nights worrying about a market downturn.

Many annuity sales reps, and even many of the annuity websites that you’ll see online, will make some pretty bold claims about the performance of the annuities that they offer, such as:

• 7 to 8% return
• Low fees
• Guaranteed income for life
• No market risk

Look familiar?

The goal of the annuity reviews that you’ll find here on AnnuityGator.com is to provide you with information on the features and benefits inside the annuity, and to help you better understand what the benefits could mean to you and your financial situation – both now and in the future.

So, if you’re ready to get started, let’s dive in!

Schwab OneSource Choice Variable Annuity at a Glance

Opening Thoughts on the Charles Schwab OneSource Choice Variable Annuity

Initially, a consumer-friendly company that allowed customers to purchase securities at a “discount” price, Charles Schwab has expanded its offerings throughout the years. Today, Schwab offers a long list of insurance and investment products, including mutual funds, Exchange Traded Funds, stocks, bonds, CDs, money market funds, options, futures, and of course, annuities.

The company has earned a long list of awards and accolades, including:

• Ranked as #1 Broker Overall in the 2019 Investor’s Business Daily Best of the Online Brokers Survey
• Ranked at #1 in the Customer Service, Low-Cost / Free ETF Trading, and Trade Reliability categories in the 2019 Investor’s Business Daily Best of the Online Brokers Survey
• Ranked as one of the Top 50 companies on the 2019 “World’s Most Admired Companies” by Fortune
• Ranked as “Best in Class” Overall in 2019 by StockBrokers.com

Schwab does not itself underwrite the annuities that it offers to its clients. Rather, they provide products via insurance carriers. In the case of the Schwab Retirement Income Variable Annuity, this product is actually underwritten by Pacific Life Insurance Company – a company that is also well respected in the insurance and financial services niche.

Great West Life – the offeror of the Schwab OneSource annuity – is a wholly owned subsidiary of Great-West Lifeco, a member of the Power Financial Corporation group of companies. As of 2016, this company had more than 13 million customers and had paid out in excess of $9 billion in benefits.

Due to its strong financial stance, Great West Life has earned high marks from the insurer rating agencies. These include a(n):

• A+ from A.M. Best Company
• AA from Fitch Ratings
• Aa3 from Moody’s Investor Services
• AA from Standard & Poor’s Ratings Services

Even though many investors have shied away from variable annuities over the past few years, there is still a definite need for this type of product – in particular with those who are looking for a way to generate a higher return (as versus that of a fixed or fixed indexed annuity), as well as seeking a way to grow assets on a tax-deferred basis.

Before we get into the gritty details, here are some necessary legal disclosures…

This is an independent annuity product review. It is not a recommendation to purchase or to sell an annuity. Charles Schwab has not endorsed this review in any way, nor do we receive any type of compensation for providing this review. This annuity review is meant solely to be an independent review at the request of our readers so that they may see our perspective when breaking down the positives and the negatives of this particular annuity. Prior to committing to the purchase of any type of insurance and/or investment vehicle, it is critical that you do your own due diligence, and that you also talk with a properly licensed professional if you have any questions that relate to your specific situation. All of the names, materials, and marks that have been used in compiling this annuity review are the property of their respective owners.

For additional information on how to compare variable annuities so that you can decide which may be the best one for you, in order to obtain our free truth about variable annuities report.

How Schwab Describes the OneSource Choice Variable Annuity

On its website, Schwab describes the OneSource Choice Variable Annuity as a way to take charge of your retirement with more investment choices, as well as guaranteed income, and protection for your beneficiaries.

This annuity is offered through Great West Life and Annuity Insurance Company, and it features several enticing benefits, such as:

• Personalized tax-deferred growth strategy
• Ability to make adjustments as your financial needs change over time
• Protection for your loved ones – regardless of how the market performs
• Guaranteed retirement income for life through either annuitization or with an optional Guaranteed Lifetime Withdrawal Benefit, or GLWB
• Lower costs than some other comparable variable annuity offerings

The Schwab OneSource Choice annuity features a “dual segment” design (investment and income), which provides the flexibility to shift your focus from investment growth over to income protection as you get closer to retirement.

The investment segment offers tax-deferred market growth potential with a choice of more than 95 investment options from more than 20 fund companies in the Schwab OneSource program. This could be a good option for you if you are well into your working years, but you still have ten or more years until you plan to retire. The income segment offers the potential for moderate investment growth through four investment options.

For updated information on the various investment options that are available with the Schwab OneSource Choice variable annuity, go HERE.

There are some additional bells and whistles that are available with this annuity, including two death benefit options. One allows your named beneficiaries to receive your account value, minus any premium tax. The other offers – for an added premium charge of 0.20% – the guaranteed return of premium death benefit. Here your beneficiaries would receive the greater of your current account value or the amount of your original investment, minus any withdrawals and premium taxes. This is the case, no matter how the market performs.

To check out the full prospectus for the Schwab OneSource Choice Variable Annuity go HERE.

How a Financial Sales Person Might Pitch this Annuity to Clients

If you have been offered the Schwab OneSource Choice Variable Annuity by an insurance or financial salesperson, it is likely that he or she would key in on the opportunity for tax-deferred growth, as well as investment diversification due to the long list of subaccount options this product offers. Because of that, this product could be appealing to a variety of investors’ goals, including conservative, balanced, and even aggressive.

Certainly, the dual segment design of this annuity could appeal to some investors, depending on where exactly you are in terms of your retirement time frame, as well as your risk tolerance and objectives.

But this brings us to one of the key drawbacks with variable annuities. Because the return on the underlying investments is performance dependent, there is the real possibility that some (or all) of these could actually lose value. This isn’t necessarily something that you want to happen, though, especially as you inch closer to retirement time.

Fees Associated with the OneSource Choice Variable Annuity from Charles Schwab

As with most other insurance and financial products, variable annuities are oftentimes loaded with fees – and there are definitely some charges on the Schwab OneSource annuity that you should be mindful of.

While Schwab boasts that the OneSource annuity is “less costly” than many other annuities, it still isn’t necessarily cost-free, either. This annuity has charges that you could incur in both the investment segment and the income segment. These are outlined as follows:

Investment Segment Fees

Income Segment Fees

To take a look at the OneSource annuities fees at a glance, you can go HERE or you can check out the full product portfolio, which also discusses the annuity’s fees in-depth HERE.

The Annuity Gator’s End Take on the Charles Schwab OneSource Choice Variable Annuity

Where the annuity works best:

As a variable annuity, the OneSource Choice annuity product from Schwab could be a viable option for those who:

• Want the opportunity for high, market-related returns
• Are seeking a lifetime income
• Want to keep depositing money into a tax-advantaged financial vehicle after they have maxed out their IRA and/or their employer-sponsored retirement plan(s)

Where it works the worst:

Conversely, this may not be a good option for those who:

• Have a lower tolerance for risk
• Do not plan on using the lifetime income feature

In Summary

When you are weighing the pros and cons of purchasing any financial product, it is important to consider your overall goals – both the short and long term. With some investors, the primary draw of a particular product may be the opportunity for growth – even if it means risking the protection of principal.

As it pertains to the Schwab OneSource Choice Variable Annuity offered through Charles Schwab, there are numerous benefits, such as the many investment options, the ability to diversify, and of course, the income stream you can obtain in retirement.

However, there are also some tradeoffs that you need to consider – which include being exposed to market-related risk, as well as the numerous charges and fees that are involved with variable annuity products such as this one.

So, if you are a bit hesitant to move forward – especially with depositing a sizeable chunk of your retirement savings – it is possible that it is because there are other financial product alternatives that could fit your needs a bit better.

The only way to truly know if this, or any, annuity is a good fit for you is to have it tested. We can provide this service for you, so if you would like to input your specific information and see the resulting details, just simply contact us.

Have Any More Questions on the OneSource Choice Annuity?

We realize that this annuity review went a tad bit on the lengthy side, so for that, we thank you for sticking with us thus far. However, we believe that it is important to provide “too much” information, versus as not enough.

If, after reading through this annuity review, you still have any questions or concerns about the Schwab OneSource Choice variable annuity, we encourage to reach out to us directly via this secure online contact form. Our annuity experts will be happy to walk you through any of the information that you need.

Also, if you benefitted from this annuity review, please feel free to share it by forwarding it on to anyone whom you know that may also benefit from it. We are always happy to help others in determining whether or not a particular annuity may be right for them.

In addition, we know just how quickly information about annuities can and does change. Therefore, if you happened to notice anything in this review that may be outdated or in need of revision, please let us know that, too and we will make the necessary updates as soon as possible.

Are there any other annuities that you would like to have us review?

If so, no problem! Just let us know the name of the annuity (or annuities, if there is more than just one), and our team of annuity geeks will get on it!

Best,

The Annuity Gator