Final answer:
An agent must consider the client's financial goals, risk tolerance, time horizon, liquidity needs, existing financial portfolio, and financial obligations when determining the suitability of an annuity recommendation.
Step-by-step explanation:
An agent must consider several factors when determining the suitability of an annuity recommendation. These factors include the client's financial goals, risk tolerance, time horizon, and liquidity needs. Additionally, the agent should consider the client's existing financial portfolio and any other financial obligations.
For example, if a client is close to retirement and seeking a steady stream of income, an immediate annuity might be more suitable. On the other hand, if a client has a long time horizon and is comfortable with some risk, a variable annuity with the potential for higher returns may be appropriate.
By carefully considering all of these factors, an agent can make a recommendation that aligns with the client's financial needs and objectives.