December 14, 2011 / 6:26 PM / 6 years ago

A more animated explanation of annuities, this one from a duck

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Ducklings are seen at an incubating farm outside Hanoi February 3, 2009.Kham

(Reuters) - Warning: This article concerns annuities, long treated by many consumers as the bottomless bowl of cold oatmeal at the personal finance breakfast bar.

But it gets better - promise - or at least more entertaining, because this story begins with an animated cow and a Mallard duck riding choppers on a desert highway a la Dennis Hopper and Peter Fonda singing the praises of complex retirement financial products.

"Can you believe it?" the duck says, in a web-based cartoon segment entitled "Easy Riders." "My friend Cash Cow has such a wonderful life since he purchased an immediate annuity! You would never have guessed that he was an unhappy bull worried about retirement. I want to retire like the Cash Cow!"

The fowl protagonist, known properly as Earl E. Bird, resides at the blog of the same name (earlebird.com), and is not the brainchild of a frustrated animator, but rather that of an ambitious financial planning professional who hopes humor and cartoons can get through to consumers where many of his peers have otherwise failed.

"Annuities are not the most exciting topic," says creator Robert Hock, president of NestEgg Builders in Bayport, New York. "So I took a page out of the Met Life concept with Snoopy and Peanuts, and thought we would tell some stories about annuities and tax deferral."

Before you say "good grief," consider that Hock insists he wants Earl E. Bird to be a consumer advocate, filling in knowledge gaps among folks who don't know how annuities work and the various types available. Hock acknowledges that he's not an independent or unbiased resource, since he sells insurance. "But I've always been very pro-consumer, because ultimately that's your reputation at stake."

Granted, annuities are a tough financial category to explain in detail. In basic terms, people purchase annuities to grow their funds, and then get an expected payout once they reach maturity point. But investors' eyes often glaze over when agents try to explain the many kinds, from variable annuity insurance policies (which typically have high surrender charges if you get out early) to indexed annuities (which offer competitive returns, but have come under fire for their high costs and complex terms).

Because of this complexity, and because investors often make poor decisions if they don't understand what they are buying, annuities have a rough rep. There are lawsuits, allegations of fraud, conflict and more. Consumers, it seems, are all too willing to trust a sales pitch when they should talk to a lawyer, says Kevin Lynch, an assistant professor of insurance at The American College in Bryn Mawr, Pennsylvania: "Annuities are contracts with a life insurance company. Period. They come in many different types, but they are contracts - and contracts are technical legal documents."

So maybe what the industry needs is a cartoon spokesperson and a good marketing campaign?

"I've been in this business quite some time as an insurance agent, and clients find this project much more approachable," Hock says. "It makes it much more easy to learn when it's in a cartoon format."

But the annuity industry may not be ready for such a push.

"For someone who knows nothing about annuities, this blog provides good basic information," Lynch says. "But it is nowhere near the amount or kind of information a consumer would need to make a decision on amounts of money usually starting at

$100,000."

Lynch appreciates Hock's effort to get the annuities message across using a simple style that will appeal to baby boomers with fond memories of the Looney Tunes crew. But he thinks the blog puts the stress on the wrong syllable. "People want safety of principle, return of their investment versus return on their investment and lifetime income," he says. "While it's true that the 'Earl E. Bird' might get the worm, consumers who buy annuities are not in the 'worm' market."

"Financial literacy itself it is not a replacement for professional investment advice," agrees Bob Stammers, head of investor education for the CFA Institute, a global nonprofit of investment professionals from more than 100 countries. But he says the cartoon approach might not be all bad. "Most investors are so bombarded with biased information on investing it is hard for them to find good educational content that they can trust," he says. And if it's fun and easy to digest in a world of stimuli bombardment, so much the better.

For his own part, Hock stresses that Earl E. Bird is still getting his wings. He launched the blog at the end of September and says there's still much work to do.

"This is phase one, an introductory thing," he says, adding that annuities even confuse many of his colleagues. "It's a strange marketplace when you think about it; 50 percent of the agents have no idea what they're selling, and 90 percent of clients have no idea what they're buying. And if they do research, they're usually going to a website that's company-based, or insurance agent based, and trying to sell them a product. And that's where the site comes in."

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The author is a Reuters contributor. The opinions expressed are his own.

Editing by Lauren Young and Beth Gladstone

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