Advisors, he says, should consider several factors, such as whether the annuity company requires RIAs to have a broker-dealer affiliation or an insurance license, and if it facilitates the application process, allows block trading or helps with billing. “Advisors should explore whether the carrier understands advisor data needs and recognizes the advisor as the owner of the client relationship,” says Fink.
Increasing Tech
Another aspect of simplification is the increased use of technology. “Lincoln is focused on improving the client experience at multiple touch points, including digital connectivity and communications,” says Brian Kroll, head of annuity solutions for Lincoln Financial Group, based in Hartford, Conn. “These features include text alerts, online resolution capabilities, statements, forms, letters and illustrations.”
Hawley at Nationwide confirms that a number of annuity providers are already “offering mobile apps that are designed to make the annuity products easier to understand, with visual aids and simplified planning tools.” Beyond convenient apps for consumers, many companies have built detailed high-tech infrastructure to support busy planners and advisors, too. Nationwide, says Hawley, increasingly “uses advanced analytics and artificial intelligence to ensure that we serve RIAs and fee-based advisors the way they want to be served, using the channels they want to use.”
Simple apps, he says, aren’t “always the best fit when it comes to sophisticated analysis and comprehensive planning. There is a place for both.”
Sluyter at Prudential points to Prudential’s Guaranteed Income For Tomorrow, (GIFT), a “truly completely digital experience [that] will be a model as we expand our products and services in the coming years,” he says. GIFT is a deferred income annuity, launched in April 2018, which allows customers to contribute after-tax dollars via electronic transfers or through payroll deductions. Each contribution buys more guaranteed lifetime income, which can start anytime the customer chooses.
Income Versus Accumulation
The emphasis on guaranteed income isn’t by chance. “The financial planning mind set is fundamentally changing,” says Sluyter, in favor of emphasizing income over principal accumulation. Citing the aging population, increasing longevity, risks to Social Security and stagnant wage growth, he stresses that the need for secure retirement income is more vital than ever. “There is an industry-wide initiative underway to change the dialogue from accumulation to income. If your financial plan doesn’t explicitly address the income challenge in retirement, it’s missing a critical element.”
Indeed, last summer a nonprofit organization called the Alliance for Lifetime Income was formed in Washington, D.C. Supported by a consortium of financial companies, its purpose is to encourage, assist in and educate about the protection of retirement income. Annuities are key ingredients. “We are seeing a number of unique protected lifetime income products introduced that reflect evolving consumer needs and changing market conditions,” says Jean Statler, the alliance’s executive director.
Statler cites target-date funds that are starting to use annuities as a way of guaranteeing retirement income. Other member companies of the alliance are allowing annuitants to “test-drive” income payments “without a long-term commitment,” says Statler. “This can help them gauge how much they will need to help cover their expenses during retirement.”