Why do some advisors hate annuities?
What I hear is: “The fees are too high. They’re complicated. There’s no transparency. There’s an insurance company involved. The back office is a nightmare. Don’t you need a separate license?”
But just like our world has changed, so have annuities. They have evolved at warp speed to meet marketplace demands for competitive pricing, ease of use, and a clear role with measurable value when incorporated into a household portfolio.
As major tech providers integrate annuities into their platforms and work with insurance companies to simplify the process, the lingering reputation of annuities as a product sold, on commission, based on features and benefits is dying quickly.
Annuity Leaders Are Enabling Advisors’ Tech Stack Toolbox
Two of the top sellers of annuities, Allianz and Jackson National, are at the forefront of this sea change. Both were among the first to integrate their offerings with tech-enabled platforms. At the same time, each has developed a robust toolbox of newly designed products that coordinate with financial planning, risk management, tax optimization and income generation tools to support advisors with their current tech stack and in managing household portfolios. They’ve partnered with the likes of eMoney, MoneyGuidePro, LifeYield, Morningstar, Riskalyze and others.
These tech partnerships are vital to bring transparency to annuities. Both firms have created dedicated teams to support a consultative approach where wholesalers are equipped with training and tools to help advisors determine how to improve household portfolio outcomes and capture more assets.
Annuity Pricing Matches Managed Money
This is one of the biggest changes in the thinking driving modern annuity products: they’re built to fill specific needs, not to push products for the sake of sales. Leading annuities are now priced to match managed money. In the right circumstances, they are a vital tool in the toolbox to create a better household-level investment portfolio for optimized accumulation and income.
Their greatest strengths — tax advantages, principal protection, and protection against a negative sequence of returns, or volatile markets – let advisors adjust the levers necessary to achieve improved financial outcomes: lower costs, managing risk, minimizing taxes and maximizing Social Security benefits and retirement income.
Annuities Address Risk And Tax To Improve Outcomes In Household Portfolios
Coming off the existential threat posed by the Department of Labor’s fiduciary standard and best interest rules a few years ago, insurance companies got busy making annuities cost competitive, and easier to use… both in terms of managing risk and taxes in a household portfolio, and in the back office experience. Fintech partnerships have played a major role in creating a more transparent view of how annuities improve after-tax returns and maximize Social Security benefits.
Finally, annuity companies worked with tech providers to help create comprehensive platforms where an insurance license may not be required. These digital platforms are built for ease of use, offering a wide array of product and pricing options and an increasingly seamless back office.