Few names are more closely associated with retirement than AARP. So Andrew Tignanelli, president of Financial Consulate, a Lutherville (Md.) financial-planning firm, figured the retirement products AARP offered were sure to be winners. But after comparing the nonprofit's new mutual funds and annuity, plus older life insurance offerings, with those of rivals, Tignanelli reached a surprising conclusion: "The majority of people can get a better deal elsewhere."
AARP is best known for its advocacy on behalf of those 50 and over. But AARP also has a thriving business licensing financial and health insurance products. AARP, through a for-profit subsidiary, teams up with companies including New York Life and UnitedHealth Group (UNH), which pay it a royalty on each sale—in some cases up to 3.7%. In 2006, the latest year for which figures are available, such royalties contributed about $400 million to AARP's $1 billion budget, or almost twice the income from member dues.